RH 2026 Q3 Earnings Revenue Surges 8.9% Amid EPS Miss

RH reported fiscal 2026 Q3 earnings on Dec 11, 2025, with revenue growth outpacing expectations but EPS falling short. The company provided updated guidance, reflecting cautious optimism for the remainder of the fiscal year despite challenges like tariffs and housing market volatility.

Revenue

RH’s total revenue rose 8.9% year-over-year to $883.81 million, driven by robust performance across its core segments. The RH segment contributed $835.82 million, while Waterworks added $47.99 million, reflecting diversified demand. This growth underscores the company’s resilience in a challenging macroeconomic environment.

Earnings/Net Income

EPS increased 7.8% to $1.93, outpacing the prior year’s $1.79, while net income grew 9.3% to $36.27 million. Despite these gains, non-GAAP EPS of $1.71 missed estimates by $0.45, signaling mixed performance in profitability.

Post-Earnings Price Action Review

The strategy of buying RH shares post a revenue beat and holding for 30 days yielded a -40.83% return, underperforming the benchmark’s 67.12%. With a CAGR of -16.15% and a Sharpe ratio of -0.25, the approach highlights a high-risk, low-reward profile marked by volatility.

CEO Commentary

Gary Friedman emphasized 9% revenue growth and 18% two-year growth, crediting innovation and international expansion. However, he acknowledged margin pressures from tariffs and logistics costs, while outlining plans to leverage EBITDA margins for future cycles.

Guidance

RH updated FY2026 guidance to 9%-9.2% revenue growth, 11.6%-11.9% adjusted operating margin, and $250M-$300M free cash flow. Q4 targets include 7%-8% revenue growth and 12.5%-13.5% operating margin, accounting for 210-basis-point drag from international expansion.

Additional News

RH’s stock surged 8% post-earnings despite a 20.87% EPS miss, driven by revenue exceeding estimates. The company highlighted progress in inventory reduction, cutting excess stock by 11% YoY, and plans for Paris and Milan expansions. Analysts noted the stock’s -60.1% YTD decline versus the S&P 500’s 17.1% gain, with a Zacks Rank #3 (Hold) reflecting cautious sentiment.