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1. Company Snapshot

1.a. Company Description

RH, together with its subsidiaries, operates as a retailer in the home furnishings.It offers products in various categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings.The company provides its products through its retail galleries; and Source Books, a series of catalogs, as well as online through rh.com, rhbabyandchild.com, rhteen.com, and rhmodern.com, as well as waterworks.com.


As of January 29, 2022, it operated a total of 67 RH Galleries and 38 RH outlet stores in 30 states in the District of Columbia and Canada, as well as 14 Waterworks showrooms throughout the United States and the United Kingdom.The company was formerly known as Restoration Hardware Holdings, Inc.and changed its name to RH in January 2017.


RH was incorporated in 2011 and is headquartered in Corte Madera, California.

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1.b. Last Insights on RH

RH's recent performance was negatively impacted by its Q2 earnings miss, with revenue of $899.2 million and EPS of $2.93, falling short of expectations. The company lowered its fiscal 2025 outlook due to tariff concerns and a challenging consumer and housing backdrop. Analysts have slashed their forecasts following the downbeat Q2 results. According to Marketbeat Ratings, RH has a consensus rating of "Hold" from twenty research firms. Additionally, AXQ Capital LP and Boston Partners have increased their holdings in RH, indicating some investor confidence.

1.c. Company Highlights

2. RH's Strong Q2 Results Driven by Innovation and Global Expansion

RH reported a robust second-quarter 2025 performance, with revenue growth of 8.4% and demand increasing by 13.7% despite a challenging housing market and tariff uncertainty. The company's adjusted operating margin stood at 13% to 14%, while the adjusted EBITDA margin was between 19% to 20%. Earnings per share (EPS) came in at $2.93, slightly below the estimated $3.19. Revenue growth is guided between 9% to 11% for the fiscal year 2025.

Publication Date: Sep -12

📋 Highlights
  • Strong Revenue & Demand Growth:: Q2 2025 revenue up 8.4%, demand rose 13.7% amid housing market and tariff challenges.
  • Global Expansion Momentum:: RH Paris opened with strong traffic, and 4 new galleries (Manhasset, San Diego, Detroit, Palm Desert) drive growth.
  • Financial Resilience:: 2025 guidance projects 9–11% revenue growth, 19–20% adjusted EBITDA margin, and $250M–$300M free cash flow.
  • Strategic Brand Initiatives:: New brand extension targeting $2B revenue via 3 galleries; Paris flagship boosts experiential retail success.
  • Tariff Impact & Pricing Strategy:: Anticipates industry-wide price hikes in 2025 due to tariffs; leverages single-brand sourcing for cost control.

Financial Performance and Guidance

The company's financial performance was driven by significant share gains and strategic separation, fueled by a focus on innovation, platform expansion, and immersive brand experiences. RH's strong performance was also reflected in its international expansion, with RH England's gallery demand up 76% and online demand up 34%. The opening of RH Paris has generated strong initial traffic and design pipeline, demonstrating the company's commitment to global expansion.

Global Expansion and New Initiatives

RH is continuing to expand its global presence, with new galleries opening in Manhasset, San Diego, Detroit, and Palm Desert. The company is also investing heavily in its interior design and architecture capabilities, positioning itself as a comprehensive design solution provider. The success of "The World of RH" in Paris reinforces the company's strategy of building experiential retail environments that elevate the brand and drive growth.

Valuation and Cash Flow

RH's valuation metrics indicate a mixed picture, with a P/E Ratio of 38.17 and an EV/EBITDA of 11.42. The company's free cash flow is projected to be between $250 million to $300 million in 2025, with plans for significant and growing cash flow from operations in the coming years. Adjusted capital expenditures are expected to decrease to $200 million to $250 million in 2026 and $150 million to $200 million in 2027 and beyond.

Tariff Concerns and Industry Outlook

RH has expressed concerns regarding the potential for further tariffs and their impact on the American furniture industry, urging policymakers to consider the wider economic consequences. The company believes that tariffs will necessitate pricing increases across the furniture industry in the second half of the year. Despite these challenges, RH remains confident in its success, driven by its focus on innovation, inventory management, and strategic expansion.

3. NewsRoom

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RH to Report Third Quarter Fiscal 2025 Financial Results on December 11, 2025

Dec -04

Source: businesswire.com

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RH UNVEILS RH DETROIT, THE GALLERY IN BIRMINGHAM

Dec -03

Source: businesswire.com

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Cetera Investment Advisers Boosts Stock Position in RH $RH

Dec -02

Source: defenseworld.net

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RH (RH) Advances While Market Declines: Some Information for Investors

Dec -01

Source:

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Boston Partners Purchases 1,517 Shares of RH $RH

Dec -01

Source: defenseworld.net

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RH: 3 Catalysts Could Drive The Stock Higher By Spring 2026

Nov -27

Source: seekingalpha.com

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AXQ Capital LP Boosts Holdings in RH $RH

Nov -25

Source: defenseworld.net

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RH (RH) Stock Falls Amid Market Uptick: What Investors Need to Know

Nov -25

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.06%)

6. Segments

RH

Expected Growth: 2.0%

RH's 2.0 growth driven by expanding product offerings, increasing online presence, and strategic pricing. Strong brand recognition, high-end interior design, and luxury furniture demand also contribute to growth. Additionally, the company's focus on Galleries, outlets, and international expansion further supports revenue increase.

Waterworks

Expected Growth: 3.0%

Waterworks from RH with 3.0 growth driven by increasing demand for luxury home furnishings, expanding product offerings, and strategic marketing efforts. Additionally, RH's focus on experiential retail and investments in digital capabilities are expected to contribute to growth.

7. Detailed Products

Furniture

RH offers a wide range of high-quality, stylish, and comfortable furniture for the living room, dining room, bedroom, and outdoor spaces.

Lighting

RH's lighting collection features a variety of stylish and functional lighting fixtures, including chandeliers, sconces, table lamps, and floor lamps.

Textiles

RH offers a wide range of luxurious textiles, including fabrics, rugs, and throws, in a variety of materials, patterns, and colors.

Decor

RH's decor collection features a curated selection of stylish and unique decorative pieces, including vases, sculptures, and wall art.

Baby & Child

RH's baby and child collection features a range of stylish and functional furniture and decor for nurseries and kids' bedrooms.

Outdoor

RH's outdoor collection features a range of stylish and durable outdoor furniture, decor, and accessories for patios, gardens, and outdoor living spaces.

Bath & Bed

RH's bath and bed collection features a range of luxurious bedding, towels, and bath accessories in a variety of materials and styles.

8. RH's Porter Forces

Forces Ranking

Threat Of Substitutes

RH's products are highly customizable, making it difficult for substitutes to emerge. However, the rise of online marketplaces and DIY furniture platforms poses a moderate threat.

Bargaining Power Of Customers

RH's high-end products and strong brand loyalty reduce the bargaining power of customers. Additionally, the company's focus on luxury and exclusivity limits price sensitivity.

Bargaining Power Of Suppliers

RH's suppliers have some bargaining power due to the company's reliance on high-quality materials and craftsmanship. However, RH's strong relationships with suppliers and its ability to negotiate prices mitigate this threat.

Threat Of New Entrants

The luxury furniture market has high barriers to entry, including significant capital requirements and the need for established relationships with suppliers and designers. This limits the threat of new entrants.

Intensity Of Rivalry

The luxury furniture market is highly competitive, with established players like Williams-Sonoma and Crate & Barrel. RH's focus on high-end products and exclusive designs helps to differentiate it, but the company still faces intense competition.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 113.07%
Debt Cost 7.71%
Equity Weight -13.07%
Equity Cost 16.58%
WACC 6.55%
Leverage -865.31%

11. Quality Control: RH passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Ulta Beauty

A-Score: 5.5/10

Value: 3.4

Growth: 7.7

Quality: 6.5

Yield: 0.0

Momentum: 9.0

Volatility: 6.7

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Etsy

A-Score: 5.4/10

Value: 6.0

Growth: 7.8

Quality: 7.0

Yield: 0.0

Momentum: 8.5

Volatility: 3.3

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Advance Auto Parts

A-Score: 4.9/10

Value: 9.0

Growth: 1.6

Quality: 4.4

Yield: 4.0

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Volatility: 1.3

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Carvana

A-Score: 4.2/10

Value: 0.8

Growth: 7.6

Quality: 6.3

Yield: 0.0

Momentum: 9.0

Volatility: 1.7

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Wayfair

A-Score: 4.0/10

Value: 5.7

Growth: 4.6

Quality: 4.0

Yield: 0.0

Momentum: 8.0

Volatility: 1.7

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RH

A-Score: 2.9/10

Value: 6.9

Growth: 2.9

Quality: 4.4

Yield: 0.0

Momentum: 1.5

Volatility: 2.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

160.82$

Current Price

160.82$

Potential

-0.00%

Expected Cash-Flows