Financial Data and Key Metrics Changes - Revenue increased by 8.4% and demand increased by 13.7% in Q2 2025, despite challenges from tariff uncertainty and a weak housing market [4] - On a two-year basis, revenues increased by 12% and demand increased by 21%, indicating significant market share gains [4] - Adjusted operating margin improved to 15.1%, and adjusted EBITDA rose to 20.6%, both up by 340 basis points year-over-year [4] - Net income surged by 79%, with free cash flow generated amounting to $81 million in the quarter [5] Business Line Data and Key Metrics Changes - Gallery demand in RH England rose by 76% in Q2, while online demand increased by 34% [5] - The gallery in the English countryside generated $46 million in demand in its second full fiscal year, with expectations for the Mayfair gallery to perform even better [6] Market Data and Key Metrics Changes - The company is experiencing strong demand trends in Europe, particularly with the opening of RH Paris, which has exceeded traffic expectations compared to RH New York [13] - The company anticipates significant brand-building opportunities in key European markets, including London and Milan, set to open in 2026 [21] Company Strategy and Development Direction - The company is focused on expanding its global presence, with plans to open four additional design galleries in 2025 [20] - The strategy includes creating immersive physical experiences that blend residential and retail spaces, enhancing customer engagement [19] - The company is also shifting sourcing out of China, projecting a decrease from 16% in Q1 to 2% in Q4 2025 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the potential impact of new tariffs on the furniture industry, emphasizing the need for a balanced approach to avoid significant job losses [52] - The company is optimistic about its growth trajectory, projecting revenue growth of 9% to 11% for fiscal 2025, with adjusted operating margins between 13% and 14% [18] - Management highlighted the importance of maintaining focus on long-term investments despite current economic challenges [24] Other Important Information - The company plans to delay the launch of a new brand extension to spring 2026 due to tariff uncertainties [17] - The company is also working on reducing excess inventory, with a target of $200 million to $300 million in inventory reduction by year-end [61] Q&A Session Summary Question: Is real estate monetization still something the company would pursue given the improvement in free cash flow? - Management indicated that they are opportunistic regarding real estate and do not see a pressing need to pursue monetization at this time [30][41] Question: How much visibility is there into the planned launch of the new brand extension? - Management expressed confidence in the launch of the new brand extension, barring any unforeseen tariff issues [58] Question: What are the expected revenues per market or gallery in Europe? - Management noted that while it is early to provide specific figures, they are optimistic about the performance of galleries in England and Paris, with expectations for strong brand awareness in London [75]

Financial Data and Key Metrics Changes - Revenue increased by 8.4% and demand increased by 13.7% in Q2 2025, despite challenges in the housing market and tariff uncertainties [4] - Net income rose by 79%, with free cash flow of $81 million generated in the quarter [5] - Adjusted operating margin improved to 15.1%, and adjusted EBITDA margin reached 20.6%, both up by 340 basis points year-over-year [4] Business Line Data and Key Metrics Changes - Gallery demand in RH England surged by 76%, while online demand increased by 34% [5] - The gallery in the English countryside generated $46 million in demand in its second full fiscal year, indicating strong performance potential for future locations [5] Market Data and Key Metrics Changes - The company is experiencing significant share gains and strategic separation, with a two-year revenue increase of 12% and demand increase of 21% [4] - Current demand trends suggest that the gallery in England could reach approximately $37 million to $39 million in demand for 2025 [5] Company Strategy and Development Direction - The company is focused on expanding its global presence, with plans to open additional design galleries in key markets such as London and Milan [20][21] - The recent opening of RH Paris is seen as a pivotal moment, with expectations of it becoming a major brand-building experience [6][20] - The company aims to create immersive physical experiences that blend residential and retail spaces, enhancing customer engagement [19] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the impact of tariffs and inflation on the industry, noting that many smaller companies may struggle to survive [13][22] - The company is optimistic about its positioning to benefit from potential market dislocation caused by tariffs, while also acknowledging the challenges ahead [13][24] - Future guidance for fiscal 2025 includes revenue growth of 9% to 11% and free cash flow expectations of $250 million to $300 million [18] Other Important Information - The company is shifting sourcing out of China, with expectations that receipts will decrease significantly by Q4 2025 [15] - The company plans to delay the launch of a new brand extension to spring 2026 due to tariff uncertainties [17] Q&A Session Summary Question: Is real estate monetization still something the company would pursue given the improvement in free cash flow? - Management indicated that they do not see a need to pursue real estate monetization aggressively, as they are opportunistic and primarily real estate developers [30][42] Question: How much visibility is there into the planned launch of the new brand extension? - Management expressed confidence in the launch of the new brand extension, barring any unforeseen tariff issues, and highlighted the potential for significant market impact [58][60] Question: What are the expected revenues per market or gallery in Europe? - Management noted that while it is early to provide specific figures, the strong start in Paris and improvements in England suggest positive revenue potential [71][74]

Core Viewpoint - Inflation is expected to significantly increase this year and is projected to accelerate into 2026 and beyond, according to RH CEO Gary Friedman [1] Group 1 - The company anticipates a notable rise in inflation rates [1]

Retail Expansion - As of August 2, 2025, the company operated a total of 72 retail locations globally, including 67 in North America and 5 in Europe[135] - The company anticipates an annual revenue opportunity of $5 to $6 billion from opening new Design Galleries in major North American markets[144] - The company aims to build a projected $20 to $25 billion global brand in terms of annual revenues through international expansion[146] - The company opened RH Paris, The Gallery on the Champs Élysées, in September 2025, marking a significant step in its European expansion[146] - The company plans to incorporate hospitality into new Design Galleries, enhancing the retail experience and driving incremental sales[144] - The company is exploring new real estate strategies, including transitioning from leasing to development models for Design Galleries[227] Digital Transformation - The company is actively pursuing digital reimagination, enhancing its online portal "The World of RH" to elevate customer experience[147] Financial Performance - Net revenues for the three months ended August 2, 2025, were $899,151 thousand, representing a 8.4% increase from $829,655 thousand for the same period in 2024[149] - Gross profit for the six months ended August 2, 2025, was $764,592 thousand, up 10.6% from $690,795 thousand in the prior year[149] - Operating income increased to $128,876 thousand for the three months ended August 2, 2025, a 33.9% increase compared to $96,127 thousand in the same period of 2024[149] - Adjusted net income for the three months ended August 2, 2025, was $57,812 thousand, compared to $33,468 thousand for the same period in 2024, reflecting a 72.3% increase[157] - EBITDA for the six months ended August 2, 2025, was $265,732 thousand, an increase of 28.9% from $206,071 thousand in the same period of 2024[163] - Consolidated net revenues increased by $69 million, or 8.4%, to $899 million for the three months ended August 2, 2025, compared to $830 million for the same period in 2024[174] - RH Segment net revenues rose by $66 million, or 8.4%, to $847 million for the three months ended August 2, 2025, compared to $781 million for the same period in 2024[175] - Gross profit increased by $35 million, or 9.2%, to $409 million for the three months ended August 2, 2025, with a gross margin of 45.5%[178] - Consolidated net revenues increased by $156 million, or 10.1%, to $1,713 million for the six months ended August 2, 2025, compared to $1,557 million for the same period in 2024[195] - RH Segment net revenues rose by $154 million, or 10.5%, to $1,612 million for the six months ended August 2, 2025, driven by higher core business revenue and increased hospitality revenue from new Gallery openings[196][197] Cost Management - The company is adapting its supply chain to mitigate risks related to tariffs and trade policies, which may affect product costs[137] - Selling, general and administrative expenses increased by $1.8 million, or 0.6%, to $280 million for the three months ended August 2, 2025[182] - Selling, general and administrative expenses rose by $40 million, or 7.4%, to $580 million for the six months ended August 2, 2025[203] - RH Segment selling, general and administrative expenses as a percentage of net revenues decreased to 30.6% for the three months ended August 2, 2025, from 33.2% for the same period in 2024[183] Interest and Debt Management - The company reported interest expense—net of $57,358 thousand for the three months ended August 2, 2025, down from $59,262 thousand in the same period of 2024[149] - Interest expense—net decreased to $57.4 million for the three months ended August 2, 2025, from $59.3 million for the same period in 2024[187] - Interest expense—net decreased to $113.961 million for the six months ended August 2, 2025, down from $116.034 million in the prior year[208] - The ABL Credit Agreement was amended to provide an asset-based credit facility with initial availability of up to $600 million, expandable to $900 million under certain conditions[221] - The company entered into a $2,000 million Term Loan B with a maturity date of October 20, 2028, requiring quarterly principal payments of $5.0 million[222] - An incremental term debt financing (Term Loan B-2) of $500 million was secured in May 2022, also maturing on October 20, 2028, with quarterly principal payments of $1.3 million[223] Cash Flow and Capital Expenditures - Net cash provided by operating activities for the six months ended August 2, 2025, was $224 million, driven by net income of $60 million and an increase in non-cash items of $169 million[228][230] - Net cash used in investing activities was $134 million, including $110 million for retail stores and $32 million for a business acquisition[232] - Net cash used in financing activities totaled $87 million, primarily due to net repayments under the asset-based credit facility of $65 million[234] - Adjusted capital expenditures for the six months ended August 2, 2025, totaled $156,051 thousand, compared to $132,801 thousand for the same period in 2024, indicating an increase of 17.5%[165] - Adjusted capital expenditures for the six months ended August 2, 2025, were $156 million, with an anticipated range of $275 million to $325 million for fiscal 2025, primarily for growth and expansion[224] - As of August 2, 2025, $201 million remains available for future share repurchases under the authorized $2,450 million Share Repurchase Program[243] Economic Challenges - The company is facing challenges due to macroeconomic conditions, including high interest rates and inflation, which have negatively impacted its business[136] - The company expects variability in financial performance due to ongoing strategic initiatives and market conditions[141] - For every 100-basis point change in interest rates, the company's annual interest expense could change by approximately $25 million[250] - Anticipated adjusted capital expenditures may be adjusted in response to macroeconomic factors such as increased inflation and higher interest rates[224]

Market Performance - U.S. equities experienced a robust rally on September 11, 2025, with all three major indices closing at record highs, driven by optimism over a potential Federal Reserve interest rate cut [1][2] - The S&P 500 rose 0.9% to approximately 6586 points, marking a 17.69% increase year-over-year [2] - The Dow Jones Industrial Average surged 1.3%, closing above 46,000 for the first time, adding over 500 points [2] - The Nasdaq Composite climbed 0.7%, achieving a new record high, influenced by mixed performances among technology stocks [2] Economic Indicators - The Consumer Price Index (CPI) report for August indicated a headline annual inflation of 2.9% and core inflation steady at 3.1%, with a monthly rise of 0.4% in headline CPI [3] - Initial jobless claims reached a near four-year high, signaling a softening labor market, which reinforced expectations for a Federal Reserve rate cut [3] - Treasury yields eased in response to the economic reports, as traders anticipated the Fed's first rate cut of the year [3] Upcoming Events - The Federal Reserve's meeting on September 17, 2025, is highly anticipated, with expectations for the first interest rate cut of the year [4] - Key economic data releases are scheduled, including the Michigan Consumer Sentiment report and Retail Sales, Industrial Production, and Housing Starts [5] Corporate News - Oracle (ORCL) shares fell 3.6% after a previous surge of nearly 36% due to excitement over AI-related contracts [6] - Tesla (TSLA) gained 6%, while Apple (AAPL) rose over 1%, and Microsoft (MSFT) and Alphabet (GOOGL) saw slight increases [7] - Warner Bros. Discovery (WBD) shares soared 29% following news of a potential takeover bid from Paramount Skydance [8] - Synopsys Inc. (SNPS) plummeted 35.8% after missing earnings estimates, while GameStop Corp. (GME) rose 3.3% after beating expectations [10] Earnings Announcements - Adobe Inc. (ADBE) is expected to report earnings with a forecasted EPS of $4.21, a 10.50% increase year-over-year [11] - Other companies reporting include RH and RF Industries, with RF Industries expected to show a significant 200% increase in EPS year-over-year [11]

Yeah, hi there, John. Sorry, we're just going through this. It's a pretty long release that you usually end up seeing here.Uh we are It looks like RH is reporting n uh $2.93% adjusted. It's unclear if that is comparable to estimates, but the revenues of $899 million are shy of what the street was looking for, which was 95 million. Um and then when we are looking at the tariff impact here, they're going through fairly detailed um information in the outlook and they're calling out a $30 million hit.They're al ...

Group 1 - RH's second-quarter results fell below expectations, leading to a decline in stock price by 13% after the announcement [3] - The company has revised its forecast for the year downward, indicating potential challenges ahead [3]

Company Performance - RH reported quarterly earnings of $2.93 per share, missing the analyst estimate of $3.20 [1] - Quarterly revenue was $899.15 million, falling short of the Street estimate of $904.64 million [1] - Revenue increased by 8.4% year-over-year, with demand rising by 13.7% despite challenging market conditions [2] Market Conditions - The company is facing tariff uncertainties and the worst housing market in nearly 50 years [2] - Strong brands like RH are expected to benefit from potential industry dislocation due to tariffs, while smaller companies may struggle [3] Future Outlook - RH has lowered its fiscal 2025 revenue outlook from a range of $3.49 billion to $3.59 billion to a new range of $3.46 billion to $3.53 billion, compared to the previous estimate of $3.52 billion [4] - The company is hopeful that the investigation into potential tariffs will consider a broad perspective from industry leaders [4] Stock Performance - Following the earnings report, RH stock dropped by 12.8%, trading at $198.91 in extended trading [5]

Luxury furniture company RH slumped in late trading after cutting its sales outlook for the full year https://t.co/xVD1kLzZZQ ...

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