RH Shares Jump 6% as Revenue Tops Estimates Despite Earnings Miss

Core Viewpoint - RH's shares increased over 6% intra-day following a third-quarter revenue report that surpassed expectations despite challenging operating conditions in the housing market [1] Financial Performance - The company reported third-quarter revenue of $884 million, slightly above the consensus estimate of $883.26 million, reflecting a 9% year-over-year growth [2] - Adjusted earnings per share were $1.71, missing analyst expectations of $2.16 [2] - Free cash flow for the quarter was $83 million, bringing the year-to-date total to $198 million, with a reaffirmed full-year guidance of $250 million to $300 million [2] Operating Metrics - Adjusted operating margin was 11.6%, below the midpoint of management's guidance of 12.5%, attributed to higher-than-expected tariff costs and expenses related to the Paris location opening [3] - For the fourth quarter, the company forecasts revenue growth of 7% to 8% and an adjusted operating margin of 12.5% to 13.5% [3] - Fiscal 2025 revenue growth outlook has been narrowed to 9.0% to 9.2% [3] Inventory Management - Inventory declined by 11% year-over-year and decreased by $82 million from the second quarter, indicating progress in reducing excess inventory previously estimated at $300 million [4]