Core Viewpoint - RH shares increased despite missing Q3 earnings estimates and lowering full-year guidance, indicating investor focus on long-term expansion plans rather than short-term challenges [1] Q3 Miss & Guidance Cuts - RH reported Q3 earnings of $1.71 per share, missing the analyst estimate of $2.16 by 20.87% [2] - Telsey Advisory Group analyst Cristina Fernández reiterated a Market Perform rating and reduced the price target from $220 to $185 [2] - Key factors for the earnings miss included tariff pressures on backlogs and costs associated with the opening of RH Paris [3] - The company narrowed its 2025 sales growth guidance to 9.0%–9.2% from a previous range of 9%–11% and cut the operating margin outlook to 11.6%–11.9% from 13%–14% [3] Revised Analyst Outlook - Fernández lowered the 2025 EPS estimate to $7.20 from $9.10, projecting $3.47 billion in revenue [4] - For 2026, the EPS forecast was cut to $10.15 from $12.35, citing ongoing headwinds from tariffs and upcoming gallery openings in London and Milan [4] Strategic Pivot: RH Antiques - Despite the cuts, the company plans to launch RH Antiques in spring 2026, shifting focus towards classic styles after years of modern emphasis [5] - This initiative follows the acquisition of the Michael Taylor brand and will coincide with the RH Milan opening in April [5] - New antique galleries are planned for San Francisco, West Hollywood, and Greenwich, Connecticut [5] Strong Unit Economics - The company expects to generate $250 million to $300 million in free cash flow for 2025, with capital spending anticipated to decrease as international investments wind down [6] - RH shares were up 8.77% at $166.76 at the time of publication [6]

Core Viewpoint - RH shares increased despite missing Q3 earnings estimates and lowering full-year guidance, indicating investor focus on long-term expansion plans rather than short-term challenges [1] Q3 Miss & Guidance Cuts - RH reported Q3 earnings of $1.71 per share, missing the analyst estimate of $2.16 by 20.87% [2] - The company narrowed its 2025 sales growth guidance to 9.0%–9.2% from a previous range of 9%–11% and cut its operating margin outlook to 11.6%–11.9% from 13%–14% [3] Revised Analyst Outlook - Analyst Cristina Fernández lowered her 2025 EPS estimate to $7.20 from $9.10, based on projected revenue of $3.47 billion [4] - For 2026, the EPS forecast was cut to $10.15 from $12.35, citing tariff headwinds and upcoming gallery openings in London and Milan [4] Strategic Pivot: RH Antiques - Despite the cuts, the company plans to launch RH Antiques in spring 2026, shifting focus to classic styles after years of modern emphasis [5] - This initiative follows the acquisition of the Michael Taylor brand and will coincide with the RH Milan opening in April, with new antique galleries planned for San Francisco, West Hollywood, and Greenwich, Connecticut [5] Strong Unit Economics - The company expects to generate $250 million to $300 million in free cash flow for 2025, with capital spending anticipated to decrease as international investments wind down [6] - RH shares were up 8.77% at $166.76 at the time of publication [6]