RH Reports Second Quarter Results and Updated Outlook

September 13, 2026  by Karen Parrish in Business Strategy, Industry   

SECOND QUARTER 2026 HIGHLIGHTS

- GAAP Net Revenues Increased 2.6% to $922.2M

- GAAP Net Income of $60.2M, EBITDA of $168.3M and EBITDA Margin of 18.3%

- Adjusted EBITDA of $178.5M and Adjusted EBITDA Margin of 19.4%, inclusive of $55.1M, or 600 bps of tariff benefit

- Normalized Adjusted EBITDA of $123.5M and Normalized Adjusted EBITDA Margin of 13.4%

- Cash Generation of $72.3M, inclusive of Free Cash Flow and a $42.0M distribution from our Aspen Joint Ventures (exclusive of $69.2M of cash received for tariff refunds)

CEO & President, Gary Friedman wrote a letter to people, partners and shareholders

GAAP net revenues of $922.2 million exceeded the high end of our guidance increasing 2.6% versus last year and accelerating 4.2 points over the first quarter as our momentum begins to build from the significant growth strategies we have recently put into motion.

Normalized adjusted EBITDA margin of 13.4% also exceeded the high end of our guidance for adjusted EBITDA margin and we generated $72.3 million of cash in the quarter, inclusive of Free Cash Flow and a $42.0 million distribution from our Aspen Joint Ventures, excluding tariff refunds of $69.2 million.

We recognized a tariff benefit of $55.1 million in the second quarter and expect to recognize an additional $13.9 million tariff benefit in the second half of the year, which we plan to use to offset $50 million of unplanned cost increases across our supply chain due to the significant and sustained spike in oil prices as a result of the continued conflict in the Middle East. The remaining $19 million of tariff proceeds will benefit earnings and is included in our updated adjusted EBITDA margin outlook for fiscal 2026.

UPDATED FISCAL YEAR 2026 OUTLOOK

Revenue Growth of 5.5% to 7.0%

Adjusted EBITDA Margin of 15.0% to 16.2%

Free Cash Flow, Asset Sales and Distribution of Equity Method Investments of $300M to $400M

The above outlook includes an approximate negative 340 basis point Adjusted EBITDA margin impact from preopening and startup costs to support our international expansion.

THIRD QUARTER 2026 OUTLOOK

Revenue Growth of 5.0% to 6.0% (Inclusive of Backlog Reduction +2.5pts, RH Estates +2.0pts, New Galleries and Other +1.0pts)

Adjusted EBITDA Margin of 12.5% to 13.5%

The above outlook includes an approximate negative 310 basis point Adjusted EBITDA margin impact from preopening and startup costs to support our international expansion.

FOURTH QUARTER 2026 OUTLOOK

Revenue Growth of 16.1% to 21.2% (Inclusive of Backlog Reduction +6.5pts, RH Estates +8.0pts, New Galleries and Other +4.0pts)

Adjusted EBITDA Margin of 19.7% to 22.9%

The above outlook includes an approximate negative 190 basis point Adjusted EBITDA margin impact from preopening and startup costs to support our international expansion.

EXPANDING THE BRAND AND DOUBLING THE TAM

We believe the introduction of RH Estates, our latest brand extension introduced with a 268 page Sourcebook that arrived in homes late June through mid-July has the potential to double the total addressable market of the RH Brand.

Over 60% of luxury homes across North America have traditional or classic architecture with a higher concentration in Europe. A home’s architectural vernacular is generally the driving factor influencing stylistic direction for both interior designers and consumers.
 

RH INTERNATIONAL

We expect the drag from International to decrease from 450 basis points in half one of this year, to 250 basis points in half two, or 340 basis points for the year.

We further expect the drag from International to decrease from 340 basis points in 2026 to 150 basis points in 2027 as we cycle the significant investments of opening our three Global Flagships in Paris, Milan and London over a 10month period from September 2025 to July 2026.

OUR RECORD INVESTMENT CYCLE IS NOW POST PEAK WHICH WILL RESULT IN LOWER CAPITAL SPENDING AND HIGHER RETURNS ON INVESTED CAPITAL

We expect adjusted capital expenditures to decrease from $240M to $260M in 2026 to $175M to $200M in 2027.

We expect Gallery opening costs to decrease from $48M in 2026 to $18M in 2027.

We have cycled through our real estate pipeline that included the three Global Flagships and several multi-story Galleries with rooftop restaurants where construction costs doubled post COVID. We have one multi-story Gallery left to complete in Houston opening in 2027.

Our new real estate strategy includes RH Compounds, a multi-building shopping experience with connecting garden courtyards and a central atrium restaurant under construction in Naples Florida, scheduled to open at the end of 2026 or beginning of 2027, and another RH Compound that should begin construction soon in Aventura, Florida, opening in 2027. Both projects are projected to have a payback in 12 to 18-month range, with return on capital metrics we were accustomed to prior to the pandemic.

Additionally, as previously mentioned we have developed a single-story RH Design Gallery with integrated restaurants with similar expected 12 to 18-month payback ranges and we are confident that our multiple go to market retail strategies of RH Compounds, RH Ecosystems, RH Design Galleries (single story) and RH Interior Design Offices will significantly increase our return on invested capital and decrease construction timelines.

OUR LONG TERM SUCESS AND STRATEGIC SEPARATION IS THE RESULT OF INNOVATING AND INVESTING DURING UNCERTAIN TIMES, AND THIS TIME IS NO DIFFERENT

Launching RH Estates, the most compelling collection in the history of our industry that has the potential to Expand the Brand and Double the TAM. Opening the three most innovative Global Flagships that will likely never be duplicated in our lifetimes. Developing a Global Hospitality Brand with restaurants that drive significant traffic, brand awareness and generate on average 65% of the aggregate Galleries rent they reside in. Building the world’s largest Residential Interior Design Firm that is moving our brand beyond presenting and selling product to conceptualizing and selling spaces. All during the darkest days and most prolonged housing downturn in four decades is not for the faint of heart.