RH

What they do

RH sells curated home furnishings across categories including furniture, lighting, textiles, bathware, decor, outdoor and garden, and baby, child and teen furnishings. It operates an integrated model of retail Galleries, e-commerce websites and print Sourcebooks, with locations in the United States, Canada and Europe. As of January 31, 2026, it operated 75 RH retail locations, 44 outlets, 14 Waterworks showrooms and one Guesthouse. Hospitality (restaurants and wine bars) is integrated into 25 Design Gallery locations.

Revenue drivers

• RH brand furniture and upholstery collections — The core merchandise business spans RH Interiors, RH Modern, RH Outdoor, RH Beach House, RH Ski House, RH Baby & Child, RH Teen and Waterworks, sold via Galleries, websites and Sourcebooks; furniture and upholstery are the primary revenue categories.
• Design Gallery real estate platform — The company is converting its legacy retail footprint into larger Design Galleries sized to each market, which it says will unlock an expected total annual revenue opportunity of $5 to $6 billion.
• RH Hospitality — Restaurants and wine bars operate inside 25 of the Design Galleries; management states hospitality drives incremental home furnishings sales in those locations and creates an experience not replicable online.
• RH Estates (new brand extension) — Launched spring 2026 with a 268-page Sourcebook featuring RH Bespoke furniture and RH Couture upholstery; management believes it can double the brand's total addressable market given over 60% of North American luxury homes have traditional or classic architecture.

Recent performance

Second quarter 2026 GAAP net revenues were $922.2 million, up 2.6% versus last year and 4.2 points faster than the first quarter. GAAP net income was $60.2 million, EBITDA was $168.3 million (18.3% margin), and adjusted EBITDA was $178.5 million (19.4% margin), including $55.1 million of IEEPA tariff refunds equal to 600 basis points. Normalized adjusted EBITDA was $123.5 million at a 13.4% margin. The company generated $72.3 million of cash in the quarter, inclusive of free cash flow and a $42.0 million Aspen joint venture distribution, excluding $69.2 million of tariff refund cash received.

Strategy

RH's stated priorities are product elevation, Gallery transformation, brand elevation and global expansion. It is broadening collections across RH Interiors, RH Modern, RH Outdoor, RH Baby & Child and RH Teen, and launched RH Estates in spring 2026. It is converting legacy stores into Design Galleries with hospitality, citing a $5 to $6 billion annual revenue opportunity, and is extending the brand to RH Guesthouses, RH England, private jets and a charter yacht. Investment in international expansion is a headwind: pre-opening and startup costs are expected to reduce fiscal 2026 adjusted EBITDA margin by about 340 basis points.

Risks

• International expansion startup costs — Pre-opening and startup costs for international expansion are projected to cut adjusted EBITDA margin by roughly 340 basis points in fiscal 2026.
• Input cost inflation from oil prices — Management says it will use $50 million of tariff benefit to offset unplanned supply chain cost increases tied to a spike in oil prices from Middle East conflict.
• Dependence on tariff refunds — The second quarter's reported margins relied on $55.1 million of IEEPA tariff refunds (600 basis points of gross margin), and $14 million more is held in inventory to benefit the third and fourth quarters.
• Consumer demand and backlog dependence — Guidance depends on backlog reduction, contributing 2.5 points of third-quarter revenue growth guidance and 6.5 points of fourth-quarter guidance.

Outlook

For fiscal 2026, management guides to revenue growth of 5.5% to 7.0% and adjusted EBITDA margin of 15.0% to 16.2%, with free cash flow, asset sales and distributions of equity method investments of $300 million to $400 million. Third quarter guidance is revenue growth of 5.0% to 6.0% with adjusted EBITDA margin of 12.5% to 13.5%. Fourth quarter guidance is revenue growth of 16.1% to 21.2% with adjusted EBITDA margin of 19.7% to 22.9%. All ranges include negative margin impacts from pre-opening and startup costs for international expansion.