RH 2026 Q2 Earnings Misses Targets, Net Income Surges 78.6%

RH (RH) reported its fiscal 2026 Q2 earnings on Sep 11th, 2025. The company delivered a significant rise in profitability but fell short of analyst expectations on both revenue and earnings per share, while also lowering its 2025 revenue guidance. The stock reacted poorly post-earnings, reflecting investor concerns over the revised outlook and broader economic headwinds.

Revenue

The total revenue of RH increased by 8.4% to $899.15 million in 2026 Q2, up from $829.65 million in 2025 Q2.

Earnings/Net Income

RH's EPS rose 75.8% to $2.76 in 2026 Q2 from $1.57 in 2025 Q2, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $51.71 million in 2026 Q2, marking 78.6% growth from $28.95 million in 2025 Q2. This robust net income growth indicates improved cost controls and operational leverage, despite the company missing Wall Street's EPS estimate.

Price Action

The stock price of RH has edged down 1.30% during the latest trading day, has dropped 3.03% during the most recent full trading week, and has climbed 6.14% month-to-date.

Post-Earnings Price Action Review

Following the earnings report, RH shares fell significantly in after-hours trading, declining 12.8% to $198.91. The drop came after the company reported quarterly earnings of $2.93 per share, below the $3.20 analyst estimate, and revenue of $899.15 million, which also missed the expected $904.64 million. The stock’s sharp decline reflected disappointment over the underperformance and the company’s downward revision to its 2025 revenue forecast.

CEO Commentary

Gary Friedman, Chairman & CEO, highlighted strong business performance, noting 8.4% revenue growth and 13.7% demand increase in Q2 2025, despite challenges like tariffs and a weak housing market. He emphasized RH England's success, with 76% gallery demand growth, and the strategic importance of immersive retail experiences, citing RH Paris as a transformative milestone. Friedman outlined investments in European expansion, including RH Paris, and underscored the need for navigating tariff uncertainties. He stressed long-term positioning through iconic global locations, expanding hospitality concepts, and leveraging interior design services to drive growth. The tone was optimistic, framing challenges as opportunities for market leadership, with a focus on innovation, resilience, and capitalizing on industry dislocation caused by tariffs.

Guidance

RH provided updated 2025 guidance: revenue growth of 9% to 11%, adjusted operating margin of 13% to 14%, and adjusted EBITDA margin of 19% to 20%. Third-quarter revenue growth is expected at 8% to 10% with an adjusted operating margin of 12% to 13% and adjusted EBITDA margin of 18% to 19%. The guidance includes negative margin impacts from international expansion and tariffs. Free cash flow for 2025 is projected at $250 million to $300 million, with capital expenditures declining to $200 million to $250 million in 2026 and $150 million to $200 million thereafter. The company expects continued growth through strategic investments and operational leverage post-peak investment phase.

Additional News

RH shares plunged after the company reported disappointing Q2 earnings, with both revenue and EPS falling below Wall Street expectations. The stock fell 12.8% in extended trading following the announcement. CEO Gary Friedman acknowledged the challenges posed by tariffs and a weak housing market but also noted the potential for industry consolidation and growth. He addressed concerns over future furniture tariffs, warning that they could force U.S. manufacturers to shift production overseas. RH also lowered its 2025 revenue forecast, citing the need to reflect current market conditions. The revised outlook, along with the earnings miss, contributed to the sharp sell-off, as investors weighed the company’s ability to maintain momentum amid ongoing economic uncertainties.