RH Earnings Miss And Soft Fiscal Guidance

RH reported fourth-quarter and fiscal-year results on March 31, 2026, missing profit and revenue expectations. The company issued FY2026 guidance projecting lower near-term margins as tariffs, adverse weather, and a peak investment year weigh on results.

Fourth-Quarter Results and Headwinds

RH reported adjusted fourth-quarter earnings of $1.53 a share, below the $2.20–$2.24 consensus and slightly under the prior year’s $1.58, with net revenue of $843 million, up 3.7% year over year but short of the $873 million expected, the company said in an 8-K filing. The adjusted EBITDA margin was 17.7% and the operating margin 11.5%. GAAP net income rose about 107% to roughly $29 million. The company attributed roughly $30 million of tariff-related charges and about $10 million of adverse weather to the weaker results. The 8-K and a press release noted these factors negatively impacted fourth-quarter and fiscal 2025 net revenues.

Fiscal 2025 Cash Flow, Leverage, and Investment

For fiscal 2025, RH reported revenue of $3.44 billion, an 8.1% increase from the prior year, and GAAP net income of about $125 million. Adjusted EBITDA was roughly $597 million, a 17.3% margin, up 58 basis points. Adjusted free cash flow improved to $252 million from a negative $214 million the previous year. Net debt stood near $2.38 billion, about four times adjusted EBITDA. Inventory declined to $818.6 million from $1.02 billion. Fiscal 2025 was a peak investment year, with about $289 million of adjusted capital spending plus $37 million of acquisitions, which management said is weighing on near-term margins.

FY2026 Guidance and Outlook

RH guided fiscal 2026 revenue growth of 4%–8%, an adjusted EBITDA margin of 14%–16%, and adjusted free cash flow of $300 million–$400 million. The company said growth is expected to be back-weighted and include international expansion. For the first quarter, it forecast revenue down 2%–4% and an adjusted EBITDA margin of 5.5%–6.5%, reflecting pre-opening and startup costs tied to international expansion. Longer-term targets include 10%–12% revenue growth in 2027, a plan to be debt-free by 2029, and cumulative free cash flow of $3.0 billion by 2030 on revenue of roughly $5.4 billion–$5.8 billion. This outlook reframes near-term priorities around investment and expansion and, combined with the company’s leverage, indicates downside risks for the upcoming quarter.

"RH reported stronger results for the fourth quarter and fiscal year 2025," the company said in the 8-K summary.