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Investing.com -- Shares of RH (NYSE:RH) rose 17.1% Thursday after the luxury furniture retailer reported stronger-than-expected Q1 earnings and reaffirmed a strong full-year outlook, easing investor concerns around ongoing macroeconomic pressure on the home sector. While quarterly revenue of $814 million came in just below consensus estimates of $818 million, the company delivered $0.13 in adjusted EPS, 20 cents ahead of Wall Street expectations.
The rally was fueled by RH’s confident guidance for fiscal 2025, including projected revenue growth of 10% to 13%, an adjusted EBITDA margin of up to 21%, and as much as $350 million in free cash flow. Second-quarter revenue is expected to grow between 8% and 10%, even as the company absorbs near-term pressure from tariffs and international expansion costs.
Despite operating in what management calls “the worst housing market in almost 50 years,” RH increased net revenues 12% year-over-year while maintaining 7% adjusted operating margins. CEO Gary Friedman said RH’s expanding physical footprint, especially in Europe, continues to drive brand elevation and strategic separation. “We believe RH Paris…the Gallery on the Champs Élysées, will be our most elegant and inspiring Gallery yet,” he wrote in a shareholder letter.
International performance remains a key bright spot. RH England reported a 47% demand increase in Q1, while RH Munich and Düsseldorf saw combined growth of 60%. The company noted those investments are creating long-term value even as they temporarily weigh on margins, with demand in Paris, London, and Milan expected to scale following gallery openings over the next year.
To support growth, RH is maintaining a disciplined capital allocation strategy. It plans to monetize $500 million in real estate equity and reduce inventory by up to $300 million, helping fund international rollout and mitigate elevated debt levels, which currently stand at a net $2.56 billion.
While tariff risks linger, RH has shifted much of its sourcing out of China and delayed the launch of a major new concept to 2026. Still, the company remains confident, projecting continued share gains as it invests in top-tier design, hospitality, and international flagship locations. Investors responded to the steady outlook with optimism, betting RH’s premium brand strategy will pay off as consumer demand stabilizes.