Rh

RH reported second-quarter fiscal 2026 GAAP net revenues of $922.2 million, up 2.6% versus last year and above the high end of guidance. Normalized adjusted EBITDA margin was 13.4%, also above the high end of guidance, and the company generated $72.3 million of cash in the quarter, inclusive of free cash flow and a $42 million distribution from Aspen joint ventures, excluding tariff refunds of $69.2 million. Management said it recognized a tariff benefit of $55.1 million in Q2 and expects an additional $13.9 million tariff benefit in the second half, with $50 million of that planned to offset unplanned supply-chain cost increases from higher oil prices. Updated fiscal 2026 guidance calls for revenue growth of 5.5% to 7%, adjusted EBITDA margin of 15% to 16.2%, and free cash flow, asset sales and distributions of equity method investments of $300 million to $400 million. For Q3, RH guided to revenue growth of 5% to 6% and adjusted EBITDA margin of 12.5% to 13.5%; for Q4, it guided to revenue growth of 16.1% to 21.2% and adjusted EBITDA margin of 19.7% to 22.9%. The outlook includes about a negative 340 basis point full-year margin impact from preopening and start-up costs tied to international expansion.

Gary Friedman’s core message was that RH is entering a new growth phase built around RH Estates, international flagships and newer store formats. He said Estates has the potential to double the brand’s total addressable market, argued the assortment is differentiated and highly incremental, and emphasized that the company is broadening from a mostly contemporary/modern focus into traditional/classic luxury homes. His tone was highly confident and expansive, repeatedly saying the brand is only at the beginning of a multi-year build and that the company is positioned for “extraordinary results” as the housing backdrop improves and the new concepts scale.

Jack Preston focused on the numbers behind the outlook and the earnings bridge. He reiterated that the reported drag from Europe should fall from 340 basis points in 2026 to 150 basis points in 2027 as the company cycles the costs of opening Paris, Milan and London, and he noted there will be no more European openings in 2027. He also pointed to lower future investment intensity, with adjusted capex expected to decline from $240 million to $260 million in 2026 to $175 million to $200 million in 2027, and new gallery opening costs to fall from $48 million in 2026 to $18 million in 2027.

Analysts focused on the early demand for RH Estates, the 45% price premium, the implied ramp in the second half, and how much of the Q4 guide is actually driven by Estates versus backlog and new galleries. Friedman said early demand looks mostly incremental from new customers, that the premium is justified by exclusivity, quality and value, and that the big lift comes when product moves from the Sourcebook/website into galleries and in-stock presentation. Questions also centered on Europe and the company’s growth drag there; management said the economics should improve as opening costs roll off and revenue builds, with London starting well but Paris and Milan still in early learning mode.