RH 2026 Q3 Earnings Revenue Surges 8.9% as EPS Grows 7.8%

RH reported fiscal 2026 Q3 earnings on Dec 11, 2025, with revenue rising 8.9% year-over-year to $883.81 million, meeting expectations. The company guided for Q4 revenue growth of 7%-8% and FY2025 revenue growth of 9%-9.2%, though adjusted operating margins fell slightly below guidance midpoints due to tariff and expansion costs.

Revenue

RH’s total revenue climbed to $883.81 million in Q3 2026, driven by strong performance across its segments. The core RH segment generated $835.82 million, reflecting sustained demand for its luxury home furnishings. The WATERWORKS segment contributed $47.99 million, maintaining its niche appeal. Combined, these segments underscored the company’s ability to capitalize on market share gains despite a challenging housing market.

Earnings/Net Income

Earnings per share (EPS) increased 7.8% to $1.93, while net income grew 9.3% to $36.27 million. The earnings growth highlights RH’s operational efficiency, though the non-GAAP EPS of $1.71 fell short of analyst estimates, indicating mixed performance in profitability metrics.

Post-Earnings Price Action Review

The strategy of buying RH shares following a revenue increase quarter-over-quarter and holding for 30 days underperformed significantly, delivering a -40.83% return over three years compared to a 67.12% benchmark. With a Sharpe ratio of -0.25 and volatility of 63.94%, the strategy exhibited high risk and poor risk-adjusted returns.

CEO Commentary

CEO Gary Friedman emphasized RH’s 18% two-year revenue growth, driven by market share gains in design showrooms and national brands. Challenges included a “worst housing market in 50 years” and tariff impacts, which pressured adjusted operating margins to 11.6%. Strategic priorities include international expansion, immersive retail experiences, and global design services, with Friedman expressing confidence in leveraging these investments for long-term growth.

Guidance

RH updated FY2025 guidance: 9%-9.2% revenue growth, 11.6%-11.9% adjusted operating margin, and $250M–$300M free cash flow. Q4 guidance includes 7%-8% revenue growth and 12.5%-13.5% adjusted operating margin, net of 200 bps from international expansion and 170 bps from tariffs.

Additional News

RH’s international expansion plans, including openings in Paris, Milan, and London, remain central to its growth strategy. The company also emphasized mitigating tariff impacts and reducing excess inventory, which declined 11% year-to-date. Leadership reiterated confidence in its long-term innovation roadmap, citing “necessity as the mother of invention” to drive future product differentiation.