Luxury furniture retailer RH soared after it reported higher growth than rivals as the industry contends with pressure from tariffs and a sluggish housing market https://t.co/qVK6L6m9s4 ...

Financial Data and Key Metrics Changes - Revenue increased by 9% in Q3 and 18% on a two-year basis, despite challenging housing market conditions [4] - Adjusted operating margin was 11.6%, below the guidance midpoint of 12.5% due to higher-than-expected tariff expenses [4] - Adjusted EBITDA margin was reported at 17.6%, with free cash flow of $83 million in Q3 and $198 million year-to-date, on track to meet the annual target of $250 million to $300 million [4][5] Business Line Data and Key Metrics Changes - The company is making progress in reducing excess inventory, estimated at $300 million, with inventory down 11% year-over-year and $82 million lower than Q2 [5] - Market share gains are being achieved from fragmented design showrooms and high-end furniture stores, with two-year share gains ranging from 12 to 28 points [5] Market Data and Key Metrics Changes - The current housing market is described as the worst in nearly 50 years, with existing home sales projected to average 4.07 million from 2023 to 2025, compared to 4.09 million in 1978 [8] - Tariffs have disrupted supply chains, leading to increased prices and multiple rounds of price negotiations [8] Company Strategy and Development Direction - The company is focused on long-term growth, emphasizing innovation and investment during challenging times, with plans for a significant product transformation launch in spring next year [9] - A global hospitality business is being developed to enhance brand awareness and cash flow, with the RH Ocean Grill expected to generate significant operating income [10][11] - The establishment of a freestanding interior design firm aims to expand the brand's presence beyond product sales to conceptualizing and selling spaces [11][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the unusual market conditions and the risks involved, emphasizing the importance of navigating these challenges strategically [8][9] - The outlook for Q4 includes revenue growth of 7%-8% and an adjusted operating margin of 12.5%-13.5%, factoring in the impact of international expansion and tariffs [6][7] - For fiscal year 2025, the revenue growth outlook is set at 9%-9.2%, with adjusted operating margins expected to be between 11.6%-11.9% [7] Other Important Information - The company is launching a new collection targeting high-end architectural aesthetics, with plans to unveil it at the Salone in Milan [59][61] - The acquisition of Michael Taylor Designs is expected to enhance the brand's offerings in the high-end market [64] Q&A Session Summary Question: Demand for RH Paris and its influence on performance expectations for RH Milan and RH London - Management noted that RH Paris is unique and has set a tone for future openings, with expectations for strong performance in Milan and London [16][17] Question: Customer response to recent price increases and elasticity - Management indicated that they are learning from the price increases and navigating the tariff situation, aiming for a fair playing field in the market [51][53][55] Question: Guidance for Q4 and potential limitations on managing tariffs - Management acknowledged the dynamic situation with tariffs and indicated that while there may be some slowdown, they are proud of their navigation strategies [76][78]

Financial Data and Key Metrics Changes - Revenue increased by 9% in Q3 and 18% on a two-year basis, despite challenging housing market conditions [4] - Adjusted operating margin was 11.6%, below the guidance midpoint of 12.5% due to higher-than-expected tariff expenses [4] - Adjusted EBITDA was 17.6%, with free cash flow of $83 million in Q3 and $198 million year-to-date, on track to meet the annual target of $250 million to $300 million [4][5] Business Line Data and Key Metrics Changes - Inventory decreased by 11% year-over-year and by $82 million compared to Q2, with a goal to reduce excess inventory estimated at $300 million [5] - Market share gains were noted from fragmented design showrooms and high-end furniture stores, with two-year share gains ranging from 12 to 28 points [5] Market Data and Key Metrics Changes - The company is navigating the worst housing market in nearly 50 years, with existing home sales projected to average 4.07 million from 2023 to 2025, a significant decrease compared to historical figures [9] - Tariffs have disrupted supply chains, leading to increased costs and product delays, with 16 tariff announcements in the past 10 months impacting operations [9] Company Strategy and Development Direction - The company is focused on long-term growth, emphasizing innovation and investment during challenging times, with plans for a significant product transformation launch in spring 2026 [10][11] - A global hospitality business is being developed to enhance brand awareness and cash flow, with the opening of RH Paris as a key milestone [11][12] - The establishment of a freestanding interior design firm aims to expand the brand's presence beyond product sales to space conceptualization [12][13] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the unusual market conditions and the risks associated with tariffs and supply chain disruptions, but remains optimistic about gaining market share [9][10] - The company plans to continue its aggressive investment strategy, believing that it will be well-positioned for growth when the housing market improves [10][62] Other Important Information - The company has acquired Michael Taylor Designs, enhancing its portfolio in the high-end interior design space [58] - The upcoming collection launch at Salone in Milan is expected to significantly impact the brand's growth trajectory over the next decade [54][55] Q&A Session Summary Question: How has the customer responded to price increases in Q3? - Management noted that they have implemented several price increases due to tariffs and are observing customer elasticity in response [47][48] Question: Can you provide insights on the new collection launching next year? - The new collection is anticipated to be the biggest incremental move for the company, targeting high-end architectural aesthetics and launching at Salone in Milan [54][55] Question: Should the company consider slowing the pace of initiatives for predictability? - Management emphasized the importance of maintaining high ambitions and not compromising on growth strategies, even in a challenging environment [60][62]

Financial Data and Key Metrics Changes - Revenue increased by 9% in Q3 2025 and 18% on a two-year basis, despite challenging housing market conditions [4] - Adjusted operating margin was 11.6%, below the guidance midpoint of 12.5% due to higher-than-expected tariff expenses [4][6] - Adjusted EBITDA margin was reported at 17.6%, with free cash flow of $83 million in Q3 and $198 million year-to-date, on track to meet the annual target of $250 million to $300 million [4][5][7] Business Line Data and Key Metrics Changes - The company is making progress in reducing excess inventory, which is estimated at $300 million, with inventory down 11% year-over-year and $82 million lower than Q2 [5] - Market share gains are primarily coming from fragmented design showrooms and regional high-end furniture stores, with two-year share gains ranging from 12 to 28 points [5] Market Data and Key Metrics Changes - The company is navigating the worst housing market in nearly 50 years, with existing home sales projected to average 4.07 million from 2023 to 2025, compared to 4.09 million in 1978 [9] - Tariffs have disrupted supply chains, leading to increased prices and multiple rounds of price negotiations [9] Company Strategy and Development Direction - The company is focused on long-term growth, emphasizing innovation and investment during challenging times, with plans for a significant product transformation in the spring of next year [10][11] - The launch of RH Paris is seen as a pivotal move in building a global luxury brand, with plans for additional locations in Milan and London [20][21] - The company is developing a global hospitality business to enhance brand awareness and cash flow, with the RH Ocean Grill expected to generate significant operating income [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the unusual market conditions and the risks associated with tariffs and supply chain disruptions, but remains optimistic about gaining market share [9][10] - The company is preparing for a potential recovery in the housing market and believes its investments will pay off in the long run [8][61] Other Important Information - The company has opened a freestanding interior design office in Palm Desert, generating $1 million a month in design business [13] - The acquisition of Michael Taylor Designs is expected to enhance the company's offerings in the high-end market [56] Q&A Session Summary Question: How has RH Paris influenced performance expectations ahead of RH Milan and RH London? - Management noted that RH Paris is unique and has set a tone for future openings, emphasizing the importance of location and brand perception in Europe [16][17] Question: How did customers respond to price increases in Q3? - Management indicated that they are learning from the price increases and navigating the tariff situation, with a focus on maintaining fairness in pricing [47][48] Question: Is the company considering slowing the pace of initiatives for predictability? - Management expressed a commitment to high ambitions and strategic growth, emphasizing the importance of long-term brand building over short-term results [58][60]

Retail Operations - As of November 1, 2025, the company operated a total of 74 retail locations globally, including 68 in North America and 6 in Europe[139]. - The company plans to incorporate hospitality experiences into new Design Galleries, enhancing the retail experience and driving incremental sales[148]. - The company has invested significant capital in developing new Design Galleries, with adjusted capital expenditures of $223 million for the nine months ended November 1, 2025[230]. Financial Performance - Net revenues for the three months ended November 1, 2025, were $883,810,000, representing a 8.9% increase from $811,732,000 for the same period in 2024[152]. - Gross profit for the three months ended November 1, 2025, was $389,736,000, with a gross margin of 44.1%, compared to $361,340,000 and 44.5% in the prior year[152]. - Operating income for the three months ended November 1, 2025, was $105,930,000, or 12.0% of net revenues, compared to $101,468,000, or 12.5% in the same period last year[152]. - Net income for the three months ended November 1, 2025, was $36,265,000, a 6.3% increase from $33,168,000 in the prior year[158]. - Adjusted operating income for the three months ended November 1, 2025, was $102,555,000, compared to $121,874,000 for the same period in 2024[158]. - EBITDA for the three months ended November 1, 2025, was $143,418,000, compared to $133,012,000 in the same period last year[166]. - Adjusted EBITDA for the three months ended November 1, 2025, was $155,810,000, down from $168,547,000 in the prior year[166]. - Consolidated net revenues increased by $72 million, or 8.9%, to $884 million for the three months ended November 1, 2025, compared to $812 million for the same period in 2024[176]. - RH Segment net revenues rose by $68 million, or 8.8%, to $836 million for the three months ended November 1, 2025, compared to $768 million in the prior year[177]. - Consolidated net revenues increased by $229 million, or 9.7%, to $2,597 million for the nine months ended November 1, 2025, compared to $2,368 million for the same period in 2024[199]. - RH Segment net revenues rose by $221 million, or 9.9%, to $2,448 million for the nine months ended November 1, 2025, driven by higher core business revenue and increased hospitality revenue from new Gallery openings[200][201]. - Consolidated gross profit grew by $102 million, or 9.7%, to $1,154 million for the nine months ended November 1, 2025, with a gross margin of 44.5%[203]. - RH Segment gross profit increased by $97 million, or 9.9%, to $1,074 million, maintaining a gross margin of 43.9%[204]. Expenses and Taxation - Selling, general and administrative expenses rose by $24 million, or 9.2%, to $284 million for the three months ended November 1, 2025, compared to $260 million in the same period in 2024[185]. - Selling, general and administrative expenses rose by $64 million, or 8.0%, to $864 million for the nine months ended November 1, 2025[207]. - Income tax expense for the three months ended November 1, 2025, was $11,625,000, compared to $9,256,000 in the prior year[158]. - Income tax expense increased to $33.8 million with an effective tax rate of 26.0% for the nine months ended November 1, 2025, compared to 15.7% in the previous year[217]. - The effective tax rate increased to 24.3% for the three months ended November 1, 2025, compared to 21.8% for the same period in 2024[193]. Capital Expenditures and Financing - Adjusted capital expenditures for the nine months ended November 1, 2025, were $223,078 thousand, compared to $212,929 thousand for the same period in 2024[169]. - The company anticipates adjusted capital expenditures of $275 million to $325 million in fiscal 2025, mainly for growth and expansion initiatives[230]. - The company has a total authorized share repurchase program of $2,450 million, with $201 million remaining available for future repurchases as of November 1, 2025[246]. - The company entered into a $2,000 million term debt financing in October 2021, with a maturity date of October 20, 2028, requiring quarterly principal payments of $5 million[227]. - For the nine months ended November 1, 2025, net cash used in financing activities was $163 million, primarily due to net repayments under the asset-based credit facility of $135 million[238]. - The company amended the ABL Credit Agreement in July 2025, providing an asset-based credit facility with an initial availability of up to $600 million, expandable to $900 million under certain conditions[226]. Market Conditions and Strategic Initiatives - The company is facing challenges due to macroeconomic conditions, including high interest rates and inflation, which have negatively impacted the luxury home market[140]. - The company is adapting its supply chain to mitigate risks related to tariffs and trade policies, which may affect product costs[141]. - The company is focused on digital reimagination, enhancing its online presence through The World of RH portal and plans to upgrade its website throughout 2025[151]. - The company is committed to elevating its brand by conceptualizing and selling spaces, creating an ecosystem of products and experiences[149]. - The company is exploring new real estate models, including transitioning from leasing to development, which may require different levels of capital investment[231]. - The company expects to continue taking an opportunistic approach regarding capital allocation and may pursue additional debt financing for investments[224]. - The company is implementing significant business initiatives that may lead to variability in financial performance and results of operations[145].

Core Viewpoint - RH reported mixed third-quarter earnings, with a notable revenue beat but earnings per share falling short of analyst expectations [2][3]. Financial Performance - Quarterly earnings were $1.71 per share, missing the analyst estimate of $2.16 by 20.87% [2]. - Quarterly revenue reached $883.81 million, surpassing the Street estimate of $883.69 million [2]. Growth Metrics - Revenue increased by 9% in the third quarter and by 18% on a two-year basis, indicating strong growth despite challenging market conditions [3]. Future Outlook - For the fourth quarter, RH projects revenue between $869.27 million and $877.4 million, which is below the analyst estimate of $896.97 million [4]. - Following the earnings report, RH stock rose by 9.58% to $168 in extended trading [4].

Exhibit 99.2 THIRD QUARTER 2025 FINANCIAL RESULTS AND SHAREHOLDER LETTER RH REPORTS THIRD QUARTER 2025 REVENUES INCREASED 9%, NET INCOME INCREASED 9% AND FREE CASH FLOW OF $83M THIRD QUARTER 2025 HIGHLIGHTS GAAP Net Revenues Increased 9% to $884M GAAP Net Income Increased 9% to $36M GAAP Operating Margin of 12.0%, Adjusted Operating Margin of 11.6% EBITDA Margin of 16.2%, Adjusted EBITDA Margin of 17.6% Free Cash Flow of $83M Please see the tables below for reconciliations of all GAAP to non-GAAP measures r ...

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CORTE MADERA, Calif.--(BUSINESS WIRE)--RH (NYSE: RH) has released its financial results for the third quarter ended November 1, 2025, in a shareholder letter from Chairman and Chief Executive Officer Gary Friedman, available on the Investor Relations section of its website at ir.rh.com. As previously announced, RH leadership will host a live conference call and audio webcast at 2:00 pm Pacific Time (5:00 pm Eastern Time) today. The live conference call may be accessed by dialing 800.715.9871 or. ...

RH (NYSE:RH) is set to release its quarterly earnings with an anticipated EPS of $2.13 and projected revenue of $884 million.The company's focus on gallery expansion and maintaining a premium market position is crucial for its growth amidst challenges in the U.S. housing market.RH faces pressures on its fiscal third-quarter margins due to elevated tariffs and weak housing demand, despite a strong track record of year-over-year growth in EPS and net revenues.RH, formerly known as Restoration Hardware, is a l ...