RH reported third‑quarter fiscal 2025 revenue of $883.8 million, a 9% year‑over‑year increase that matched or slightly beat analyst expectations of roughly $883 million. The company’s earnings per share fell to $1.71, a miss of about 20% versus the consensus range of $2.13 to $2.16, and a decline from the prior‑year Q3 EPS of $2.48.
Revenue growth was driven by strong demand in the company’s core retail and design‑service segments, which offset modest weakness in the home‑accessories line and the impact of a slower housing market. The 9% increase reflects a 10% rise in U.S. gallery sales and a 7% rise in e‑commerce revenue, while international sales grew 5% as the Paris gallery opened in late November.
The earnings miss was largely attributable to higher tariff costs on prior‑period special‑order and back‑order sales delivered in the quarter, as well as the one‑time expense of launching the Paris gallery. These costs pushed operating expenses up, reducing the adjusted operating margin to 11.6% from 15.1% in the prior quarter and 15.0% in Q3 2024. The adjusted EBITDA margin held steady at 17.6%, indicating that the company was able to preserve profitability in its core operations despite the margin squeeze.
Management lowered its full‑year 2025 outlook, narrowing revenue growth guidance to 9.0%–9.2% from the previous 9%–11% range and trimming the adjusted operating margin target to 11.6%–11.9% from 13%–14%. The free‑cash‑flow target of $250 million to $300 million remains unchanged, underscoring confidence in the company’s ability to generate cash even as it continues to invest in international expansion and inventory optimization.
CEO Gary Friedman highlighted the company’s resilience, noting that revenue growth and market‑share gains demonstrate the brand’s disruptive power even amid the worst housing market in nearly 50 years and persistent tariff pressures. He emphasized that RH is “playing the long game” and that the Paris gallery is a “beautiful and talked‑about retail experience.” Investors reacted positively to the revenue performance, the reaffirmed cash‑flow target, and the CEO’s focus on long‑term strategy, despite the earnings miss and tighter guidance.
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