RH Beats Q2 Estimates, Lifts Guidance as Luxury Home Furnishings Demand Improves

RH (NYSE: RH) posted second-quarter fiscal 2026 results that beat the high end of its guidance for both revenue and profitability, signaling that the luxury home furnishings retailer is benefiting from recently launched growth initiatives even as some analysts flagged risks in the fourth-quarter outlook.

GAAP net revenue totaled $922.2 million, up 2.6% from a year earlier and representing a 4.2-percentage-point acceleration from the first quarter, Chairman and Chief Executive Officer Gary Friedman said. Normalized adjusted EBITDA margin came in at 13.4%, also above the company’s guidance range.

The performance reflects “momentum is beginning to build” from new growth initiatives, Friedman said on the earnings call.

The company raised its fiscal 2026 outlook, projecting revenue growth of 5.5% to 7% and an adjusted EBITDA margin of 15% to 16.2%. For the third quarter, RH forecast revenue growth of 5% to 6%, with contributions from backlog reduction, the new RH Estates collection and new galleries. Fourth-quarter revenue growth is projected at 16.1% to 21.2%, with adjusted EBITDA margin between 19.7% and 22.9%.

RH generated $72.3 million of cash during the quarter, including free cash flow and a $42 million distribution from its Aspen joint ventures, excluding tariff refunds of $69.2 million, Friedman said. The company expects free cash flow, asset sales and distributions from equity-method investments of $300 million to $400 million this fiscal year.

**RH Estates as a Major Brand Extension**

Much of the earnings call centered on RH Estates, a traditional and classic furniture collection introduced through a 268-page source book mailed from late June through mid-July. Friedman said the company believes the collection could double RH’s total addressable market, noting that more than 60% of luxury homes in North America have traditional or classic architecture.

The initial Estates assortment carries an average price point about 45% higher than RH’s existing assortment. Friedman said the products have already generated interest from customers who were not previously RH buyers. The company plans to expand Estates circulation in November, place it on the main floor of galleries representing roughly 80% of its business, and build inventory to meet demand.

RH expects Estates to be margin accretive, citing higher expected gross margins and operating leverage from the higher average price points. The company also said most of the collection is protected by trade dress or design patents pending and plans to pursue intellectual-property protections against unauthorized copies.

**International Expansion Underway**

RH opened RH London, The Gallery, Mayfair on June 27. Friedman said the location built a design pipeline of nearly $7 million in its first eight weeks, comparable with the design pipelines of RH Newport and RH New York. Larger, complex projects will take several months to convert into revenue, he noted.

The outlook includes an estimated 340-basis-point drag on adjusted EBITDA margin from pre-opening and startup costs tied to international expansion. RH expects that drag to decline to 150 basis points in fiscal 2027, after cycling opening costs for its global flagships in Paris, Milan and London.

Adjusted capital expenditures are projected to decline to $175 million to $200 million in fiscal 2027 from $240 million to $260 million this fiscal year. New-gallery opening costs are expected to drop to $18 million in 2027 from $48 million this year.

**Tariff Benefits and Supply Chain**

RH recognized a $55.1 million tariff benefit in the second quarter and expects another $13.9 million benefit in the second half. Friedman said the company plans to use tariff proceeds to offset approximately $50 million of unplanned supply-chain costs tied to higher oil prices amid the Middle East conflict. The remaining $19 million is included in the company’s updated margin outlook.

**Mixed Analyst Response**

Despite the earnings beat and raised guidance, not all analysts were uniformly positive. According to Benzinga, RH beat Q2 earnings estimates but missed revenue expectations, and narrowed its fiscal 2026 outlook. The same source said analysts mostly cut price targets even as shares rose 1.5%.

Investing.com reported that UBS lowered its price target on RH, citing fourth-quarter outlook risk. Another Investing.com note observed that RH stock was gaining 8% at one point in the session, suggesting a volatile market response to the report.

RH’s updated outlook includes an anticipated 340-basis-point drag from international startup costs in the current fiscal year, a factor that may weigh on near-term margins even as longer-term revenue growth projections accelerate.