Luxury furniture retailer RH (NYSE: RH) fell short of the market’s revenue expectations in Q4 CY2025 as sales rose 3.7% year on year to $842.6 million. Next quarter’s revenue guidance of $789.5 million underwhelmed, coming in 10.2% below analysts’ estimates. Its non-GAAP profit of $1.53 per share was 30.6% below analysts’ consensus estimates.
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RH (RH) Q4 CY2025 Highlights:
- Revenue: $842.6 million vs analyst estimates of $873.7 million (3.7% year-on-year growth, 3.6% miss)
- Adjusted EPS: $1.53 vs analyst expectations of $2.20 (30.6% miss)
- Adjusted EBITDA: $149.1 million vs analyst estimates of $163.7 million (17.7% margin, 8.9% miss)
- Revenue Guidance for Q1 CY2026 is $789.5 million at the midpoint, below analyst estimates of $879.5 million
- Operating Margin: 11.5%, up from 8.7% in the same quarter last year
- Free Cash Flow was $54.61 million, up from -$69.67 million in the same quarter last year
- Market Capitalization: $2.48 billion
Company Overview
Formerly known as Restoration Hardware, RH (NYSE: RH) is a specialty retailer that exclusively sells its own brand of high-end furniture and home decor.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $3.44 billion in revenue over the past 12 months, RH is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers.
As you can see below, RH’s demand was weak over the last three years. Its sales fell by 1.4% annually despite opening new stores and expanding its reach.
This quarter, RH’s revenue grew by 3.7% year on year to $842.6 million, falling short of Wall Street’s estimates. Company management is currently guiding for a 3% year-on-year decline in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 9.7% over the next 12 months, an acceleration versus the last three years. This projection is noteworthy and implies its newer products will catalyze better top-line performance.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
RH has generally opened new stores over the last two years and averaged 2% annual growth, faster than the broader consumer retail sector.
When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.
Note that RH reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
RH’s demand has been healthy for a retailer over the last two years. On average, the company has grown its same-store sales by a robust 3.1% per year. This performance suggests its measured rollout of new stores could be beneficial for shareholders. When a retailer has demand, more locations should help it reach more customers and boost revenue growth.
Note that RH reports its same-store sales intermittently, so some data points are missing in the chart below.
Key Takeaways from RH’s Q4 Results
We struggled to find many positives in these results. Its revenue guidance for next quarter missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 19.5% to $114.07 immediately after reporting.
The latest quarter from RH’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here (it’s free).
