RH(US:RH) The Motley Foolยท2025-06-12 21:11Core Viewpoint - RH reported a strong fiscal Q1 2025 financial performance, with adjusted earnings per share beating expectations despite total revenue slightly missing analyst forecasts [2][4][6]. Financial Performance - Total revenue for Q1 2025 was $814 million, a 12% increase from $727 million in Q1 2024, although it fell short of expectations [2][4]. - Adjusted earnings per share improved from a loss of $0.40 in Q1 2024 to a profit of $0.13 in Q1 2025 [2][4]. - Free cash flow turned positive at $34.1 million compared to a negative $10.1 million in the previous year [2]. - Gross margin increased slightly from 43.5% to 43.7%, reflecting a 20 basis points improvement [2]. Market Reaction - Following the positive earnings report, RH's shares surged by 19% in after-hours trading, indicating strong investor confidence [6]. Management Commentary - CEO Gary Friedman expressed pride in the results, highlighting the company's performance in a challenging housing market and attributing success to strategic brand development [5]. - Management maintained its revenue growth guidance for 2025 at 10% to 13%, with expected free cash flow between $250 million and $350 million [7]. Strategic Outlook - The company is shifting production from China to less tariff-sensitive locations, which is anticipated to alleviate tariff-related pressures over time [8]. - Despite previous stock declines, investor sentiment appears to be improving regarding RH's long-term strategic vision as a luxury retail brand [9].