RH

RH operates primarily in the home furnishings market as a leading retailer and luxury lifestyle brand. The company offers merchandise assortments across categories including furniture, lighting, textiles, bathware, décor, outdoor and garden, and baby, child and teen furnishings. Its curated and fully integrated assortments are presented consistently across retail locations, websites, and Sourcebooks. The company operates retail locations throughout the United States, Canada, and Europe, and has an integrated RH Hospitality experience in 25 of its Design Gallery locations, which includes restaurants and wine bars.

The home furnishings sector is highly competitive. RH competes primarily on the basis of the design, style, and quality of its products, the breadth of its assortment of high-quality merchandise, and the luxury positioning of its brand. The company competes with a number of home furnishings retailers, including regional, national, and international businesses, as well as new market participants that operate predominantly online. It also competes with the interior design trade, specialty stores, antiques dealers, and other merchants that provide unique items and custom-designed products at higher price points. Many competitors seek to compete by offering products similar to RH's merchandise at lower price points. Certain competitors are larger and have greater financial, marketing, and other resources. However, many smaller specialty retailers may lack the financial resources, infrastructure, scale, and brand identity necessary to compete effectively with RH.

RH generates revenue through a fully integrated sales platform comprising its retail locations, including RH Galleries, RH Interior Design Studios, and Waterworks Showrooms, in addition to its websites, Sourcebooks, Trade, Contract, and Outlets. The company collects annual membership fees related to the RH Members Program, which are recorded as deferred revenue and recognized as revenue based on expected merchandise revenues over the annual membership period. During fiscal 2025, members drove approximately 97% of sales in the core RH business, and the company had approximately 262,000 members at year-end. The business model is channel agnostic, encouraging customers to shop across all channels.

The company's product assortment is presented across multiple collections and brand concepts known as RH Interiors, RH Modern, RH Outdoor, RH Beach House, RH Ski House, RH Baby & Child, RH Teen, and Waterworks. The strategy is to continue to elevate the design and quality of product, with the most prolific collection of new products in the company's history introduced beginning with the RH Interiors Sourcebook in fall 2023 and continuing through 2024 and 2025, with the spring 2026 launch of RH Estates featuring RH Bespoke furniture and RH Couture upholstery. As of January 31, 2026, the company operated 75 total RH retail locations, including 39 Design Galleries in North America, 25 Legacy Galleries, 2 Outdoor Galleries, 1 Modern Gallery, 1 Baby & Child Gallery, 1 Interior Design Studio, and 6 Design Galleries in Europe. Additionally, it operated 14 Waterworks Showrooms and 44 outlet stores. The RH Segment net revenues were $3,241,389,000 ¹ in fiscal 2025, and Waterworks net revenues were $198,147,000 ².

Significant operational developments during the period included the opening of several new Design Galleries: Detroit (40,900 selling square feet), Oklahoma City (31,100), Montreal (31,100), San Diego (20,000), Manhasset (16,600), Paris (14,300), and Pittsburgh (8,400). The company also opened two new Outdoor Galleries in Greenwich and East Hampton. In September 2025, RH Paris, The Gallery on the Champs-Élysées, opened. The company expects to open RH Milan and RH London in 2026, and RH Sydney in Australia in the coming years. In fiscal 2025, the company acquired a business for $32,000,000 ³ and an intangible asset for $3,100,000 ⁴. The company also received a distribution from an equity method investment of $7,900,000 ⁵ and proceeds from insurance recoveries of $2,100,000 ⁶. The company did not repurchase any shares of its common stock during fiscal 2025, and the remaining amount available under its share repurchase program is $201,000,000 ⁷.

Consolidated net revenues increased 8.1% to $3,439,536,000 ⁸ in fiscal 2025 compared to $3,180,753,000 ⁹ in fiscal 2024. Net income was $124,787,000 ¹⁰ in fiscal 2025 compared to $72,412,000 ¹¹ in fiscal 2024. Diluted net income per share was $6.31 ¹² in fiscal 2025 compared to $3.62 ¹³ in fiscal 2024. Operating income was $387,268,000 ¹⁴ in fiscal 2025 compared to $322,587,000 ¹⁵ in fiscal 2024. Adjusted EBITDA was $596,509,000 ¹⁶ in fiscal 2025 compared to $539,099,000 ¹⁷ in fiscal 2024.

The company expects adjusted capital expenditures to be $240,000,000 ¹⁸ to $260,000,000 ¹⁹ in fiscal 2026, primarily related to growth and expansion, including construction of new Design Galleries and infrastructure investments.

A key growth vector is the Gallery Transformation strategy, which aims to open new Design Galleries in every major market in the United States and Canada, generating an expected total annual revenue opportunity of $5,000,000,000 ²⁰ to $6,000,000,000 ²¹. The company plans to continue opening smaller scale Design Galleries and bespoke Design Galleries in neighborhoods, towns, and small cities. In 2026, the company expects to introduce RH Design Compounds, consisting of six to eight independent buildings connected by garden courtyards, currently being developed in Naples and Miami, Florida, and Walnut Creek, California. The company also plans to continue opening larger bespoke Design Galleries in top metropolitan markets, with planned openings of RH Milan and RH London in 2026.

Another major growth vector is Global Expansion, which the company believes will provide a substantial opportunity to build a projected $20,000,000,000 ²² to $25,000,000,000 ²³ global brand in terms of annual revenues. The company is actively pursuing expansion globally, which began with openings in England, Munich, and Düsseldorf in 2023, followed by Brussels and Madrid in 2024, and Paris in September 2025. In 2026, the company expects to open RH Milan, The Gallery on Corso Venezia, and RH London, The Gallery in Mayfair. The company also plans to open RH Sydney, The Gallery in Double Bay, in Australia in the coming years. Additionally, the company is constructing its second RH Guesthouse in Aspen, with the goal of creating a new market in the $200,000,000,000 ²⁴ North American hotel industry.

The company's strategy includes continuing to elevate the design and quality of its product, with the spring 2026 launch of RH Estates, featuring RH Bespoke furniture and RH Couture upholstery. The company expects to continue investing in its digital reimagination initiatives in 2026, having made meaningful investments to elevate and differentiate the online experience in 2025. The company plans to incorporate hospitality into many of the new Galleries that it opens in the future, which it believes further elevates the brand and drives incremental sales of home furnishings.

The company expects to continue to incur significant capital expenditures in respect of new Galleries and other initiatives in fiscal 2026. The company anticipates adjusted capital expenditures to be $240,000,000 ²⁵ to $260,000,000 ²⁶ in fiscal 2026. The company may elect to pursue additional capital expenditures beyond those anticipated during any given fiscal period. The company also received landlord tenant allowances under finance leases subsequent to lease commencement of $15,000,000 ²⁷ in fiscal 2025.

As of January 31, 2026, $201,000,000 ²⁸ remains available for future share repurchases under the Share Repurchase Program. The company regularly reviews share repurchase activity and considers various factors in determining whether and when to execute investments in connection with the program. The company may undertake other repurchase programs in the future with respect to its securities.

The company faces headwinds from macroeconomic conditions, including high interest rates and mortgage rates, volatility in global financial markets, and the slowdown in the luxury home market, as well as lingering higher inflation and increased costs, including higher construction expenses. The company also faces uncertainty and risks related to tariffs and other trade policies, which may increase the costs of securing products from vendors. The company has taken steps to move its supply chain away from countries with higher tariff rates, but these countermeasures may prove ineffective. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended.

The company faces constraints related to its ability to successfully open new Galleries within time frames or cost parameters initially targeted. The company has experienced delays in opening some new Galleries and higher than expected levels of capital and other expenditures associated with some new Gallery locations. Construction costs and the price of construction materials have increased substantially in recent years. The company's ability to renegotiate favorable terms on expiring leases or negotiate favorable terms for suitable alternate locations could depend on conditions in the real estate market, competition for desirable properties, and other factors not within the company's control.

The company is undertaking a large number of business initiatives simultaneously, including international expansion, product transformation, and new business initiatives such as real estate development and the expansion of RH Hospitality, including constructing a second RH Guesthouse in Aspen. If these initiatives are not successful, they may have a negative impact on results of operations. The company has experienced significant fluctuations in the growth of its business and may not experience high rates of growth in future periods. Changes in consumer spending, particularly among higher-end consumers, may significantly affect revenue and results of operations. The company is subject to risks associated with its dependence on foreign manufacturing and imports, with 69% of products sourced from Asia in fiscal 2025, including 39% from Vietnam and 13% from China. The company faces uncertainty related to tariffs and other trade policies, including new Section 232 tariffs targeting wood and wood-containing furniture products and broad reciprocal tariff measures. The company's operations have significant liquidity and capital requirements, with $2,500,000,000 ²⁹ of Term Debt outstanding as of January 31, 2026, and the company is subject to risks related to obligations of indebtedness, including variable interest rate exposure.

Management's message emphasizes the company's long-term strategies of product transformation, platform expansion, and cash generation, with a focus on key strategies including Product Elevation, Gallery Transformation, Brand Elevation, Global Expansion, and Digital Reimagination. Management believes the company has built the most comprehensive and compelling collection of luxury home furnishings under one brand in the world. The company is focused on moving the brand beyond curating and selling product to conceptualizing and selling spaces by building an ecosystem of Products, Places, Services, and Spaces. Management believes the opening of RH Paris marks a major step forward in the European expansion of the business. The company expects to open RH Milan and RH London in 2026, which management believes will be inspiring spaces that celebrate the heritage of historic structures and integrate full expressions of hospitality experiences. Management also believes an opportunity exists to create similar strategic separation online as the company has with its Galleries offline.