RH's 2025 Earnings Calls: Unpacking Contradictions in Strategy, Tariffs, and European Expansion

Membership discount strategy and market share, tariff mitigation and strategic sourcing, inventory management and reduction goals, European expansion strategy and strategic focus are the key contradictions discussed in RH's latest 2025Q1 earnings call.



Revenue and Profitability Growth:
- RH reported a 12% increase in revenue for Q1 fiscal 2025, despite challenges from tariff uncertainty and the worst housing market in almost 50 years.
- The growth was driven by strategic investments to elevate and expand their product and platform, resulting in significant share gains and strategic separation in the industry.

International Expansion and Demand Trends:
- Demand at RH England grew 60% in the first quarter across comparable galleries RH Munich and RH Dusseldorf.
- This was attributed to the brand's disruption and productivity in European markets, with plans to further accelerate growth through openings in Paris, London, and Milan.

Product and Platform Elevation:
- The company's product elevation efforts included a 2025 RH Outdoor Sourcebook and improvements in in-stock positions for the season.
- These efforts were aimed at enhancing market share and positioning the RH brand for continued growth.

Tariff Mitigation and Strategic Pricing:
- RH has shifted sourcing out of China to reduce receipts from 16% to 2% by Q4, with a significant portion of tariffs absorbed by vendor partners.
- The company resourced a significant portion of upholstered furniture production to its own North Carolina factory, focusing on leveraging long-term strategic sourcing and pricing strategies.