RH (RH) Q3 2026 earnings summary

Executive summary

• Net revenues for Q3 increased 8.9% year-over-year to $884 million, driven by core business growth, new product launches, and expanded hospitality offerings.

• Achieved 9% revenue growth in Q3, up 18% on a two-year basis, despite a challenging housing market and tariff impacts.

• Net income rose to $36.3 million from $33.2 million in the prior year quarter, with diluted EPS of $1.83.

• Continued global expansion, opening RH Paris and progressing on new locations in London, Milan, and Sydney.

• Completed acquisitions of Michael Taylor Designs, Formations, and Dennis & Leen to enhance the luxury design platform.

Financial highlights

• Adjusted EBITDA margin for Q3 was 17.6%.

• Gross profit for the quarter increased 7.9% to $390 million, with gross margin at 44.1%.

• Operating income was $106 million, up from $101 million year-over-year.

• Free cash flow for Q3 was $83 million, with year-to-date free cash flow at $198 million.

• Inventory down 11% year-over-year and $82 million sequentially from Q2.

Outlook and guidance

• Q4 outlook: revenue growth of 7%-8%, adjusted operating margin of 12.5%-13.5%, adjusted EBITDA margin of 18.7%-19.6%.

• FY25 outlook: revenue growth of 9%-9.2%, adjusted operating margin of 11.6%-11.9%, adjusted EBITDA margin of 17.6%-18%, free cash flow of $250-$300 million.

• Adjusted capital expenditures for fiscal 2025 projected at $275–$325 million, focused on new Design Galleries and infrastructure.

• Outlook includes negative margin impacts from international expansion investments and tariffs.

• Management expects continued variability in performance due to ongoing strategic initiatives and macroeconomic uncertainty.