RH(US:RH)2025-12-11 22:20Retail 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].