RH's Q2 Earnings Reveal Resilience Amid Stock Downturn
New York, Thursday, 11 September 2025.
Despite RH’s revenue meeting expectations, its Q2 earnings disappointed with a 7.4% stock dip post-release, highlighting challenges amidst a robust revenue increase and strategic shifts.
Revenue Meets Expectations, But Challenges Persist
RH (NYSE:RH), a top-tier luxury retailer, reported a Q2 revenue of $899.2 million, marking an 8.4% increase year-over-year and aligning with analyst expectations [1][2]. Despite this, the company’s earnings per share (EPS) fell short of projections, with an adjusted EPS of $2.93 compared to the anticipated $3.22, representing an 8.9% miss [2]. The adjusted EBITDA also missed estimates, coming in at $185.1 million against a forecast of $191.5 million, reflecting a 3.3% shortfall [2].
Stock Decline and Market Reactions
Following the earnings announcement, RH’s stock experienced a significant decline, dropping 7.4% to $212.00, underscoring investor concerns despite the revenue increase [2]. The company’s guidance for Q3 also fell short of Wall Street expectations, with projected revenues of $884.8 million compared to the anticipated $902.6 million [2]. These financial results highlight the market’s reaction to the earnings miss and the cautious outlook for the upcoming quarter.
Strategic Shifts and Operational Insights
RH is actively shifting its sourcing strategy to mitigate the impact of tariffs, which has seen a marked decrease in tariff-impacted receipts from 16% in Q1 to an expected 2% by Q4 [3]. Furthermore, RH is enhancing its production capabilities domestically, with 52% of upholstered furniture production expected to occur in the U.S. by the end of FY2025 [3]. These strategic moves are part of RH’s broader efforts to navigate a complex economic landscape while maintaining growth.
Future Prospects and Market Positioning
Despite the immediate challenges, analysts maintain a positive long-term outlook for RH, anticipating a 10.9% revenue growth over the next 12 months, driven by new product lines and strategic expansions [2]. The recent opening of a new store in Paris underscores RH’s commitment to expanding its international presence and aligning with its brand elevation strategy [3][4]. As the company continues to adapt to market conditions, its focus on experiential retail and luxury offerings positions it for sustained success.