Core Insights - RH reported lower-than-expected second-quarter fiscal 2025 results, with adjusted earnings and net revenues missing the Zacks Consensus Estimate, although both metrics increased year-over-year [1][4][5] Financial Performance - Adjusted EPS was $2.93, missing the estimate of $3.19 by 8.2%, but up from $1.69 in the same period last year [4][8] - Net revenues were $899.2 million, slightly below the consensus mark of $906 million by 0.7%, but improved 8.3% year-over-year [5][8] - Demand rose 13.7% despite a challenging housing market, with two-year revenue growth at 12% and demand growth at 21% [5] Margin Analysis - Adjusted gross margin expanded by 80 basis points to 46% [6] - Adjusted operating margin increased by 340 basis points year-over-year to 15.1% [6] - Adjusted EBITDA rose 30% year-over-year to $185 million, with an adjusted EBITDA margin of 20.6% [6] Balance Sheet and Cash Flow - Cash and cash equivalents increased to $34.6 million from $30.4 million at the end of fiscal 2024 [7] - Merchandise inventories decreased to $957 million from $1.02 billion at the end of fiscal 2024 [7] - Net cash provided by operating activities was $224.3 million for the first six months of fiscal 2025, compared to $67.3 million in the prior year [8] Future Guidance - For Q3, RH expects net revenues to grow between 8% and 10% year-over-year, with adjusted operating margin projected between 12% and 13% [10] - Fiscal 2025 revenue growth expectations have been lowered to between 9% and 11%, with adjusted operating margin now expected between 13% and 14% [11][12]
RH Stock Down on Q2 Earnings and Revenue Miss, Guidance Lowered