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RH (RH - Free Report) , previously known as Restoration Hardware, is scheduled to report its third-quarter fiscal 2025 (ended Nov. 1) results on Dec. 11, after market close.
In the last reported quarter, the company’s adjusted earnings per share (EPS) and net revenues missed the Zacks Consensus Estimate by 8.2% and 0.7%, respectively. However, on a year-over-year basis, both metrics grew 73.4% and 8.3%, respectively.
RH’s earnings topped the consensus mark in one of the trailing four quarters and missed on the remaining three occasions. The average surprise is shown in the chart below.
Image Source: Zacks Investment Research
How are Estimates Placed for RH Stock?
The Zacks Consensus Estimate for fiscal third-quarter EPS has remained unchanged at $2.13 over the past 60 days. The estimate indicates a decline from the year-ago EPS of $2.48. The consensus mark for net revenues is pegged at $883 million, suggesting an 8.8% year-over-year increase.
For fiscal 2025, RH is expected to register a 10% increase from a year ago in net revenues. Its bottom line is expected to witness growth of 68.5% from a year ago. Below is what to expect in the fiscal third quarter for RH stock.
Image Source: Zacks Investment Research
Factors Likely to Have Defined RH’s Q3 Performance
Favorable Market Trends
RH operates as a luxury retailer in the home furnishing space, and this business operation is gaining value in the United States despite a depressed housing market. The resilience in demand for premium, design-driven and high-end furnishings implies meaningful pent-up replacement and renovation activity for the company. Moreover, its heavy investments surrounding design galleries, interior design services and expanded hospitality concepts have been boding well amid the favorable market fundamentals. As the furniture market shifts toward curated, aesthetic-driven home environments, RH’s integration of architecture, interior design and luxury presentation aligns with evolving U.S. consumer preferences.
Global Expansion Bodes Well
RH’s market presence outside the U.S. borders summarizes the efforts it bestowed across elevating its design, luxury positioning and immersive gallery format over the years. The company sees Europe as the foundational phase of its global strategy, with early traction in RH England and a powerful launch in Paris with RH Paris. This demonstrates that its immersive gallery and hospitality model can generate significant visibility, brand heat and high-value design pipelines in major cultural capitals. RH expects to accelerate this positive momentum with the anticipated openings in London and Milan in 2026.
Besides, RH is also optimistic about going beyond Europe into the Middle East and Asia, noting strong inbound interest from developers and potential partners who view the RH gallery format as a unique luxury anchor. RH’s aim to establish international brand authority, diversifying its revenue base and positioning itself as one of the most admired luxury home brands worldwide is encouraging.
Resourcing Efforts
RH has been aggressively shifting sourcing out of China, reducing receipts from 16% in the first quarter of fiscal 2025 to an expected 2% by the fiscal fourth quarter, with many vendor partners absorbing part of the tariff impact. Given the tariff headwinds in China, RH has been expanding domestic production, particularly in upholstered furniture, which is one of the few categories that can be made competitively in the United States. By the end of fiscal 2025, the company would expectedly have about 52% of its upholstery made in its long-established North Carolina factory, complemented by about 21% premium manufacturing in Italy and nearly 12% cost-effective operations in Mexico.
These efforts aim not only to mitigate tariff exposure but also to strengthen control over lead times, quality and flexibility, which are the key factors in a volatile global trade environment. The combination of reshoring, near-shoring, vendor diversification and strategic partnerships positions RH to navigate industry disruptions, preserve margins and maintain product availability.
Challenges That are Likely to Pressure RH’s Q3 Results
RH is facing several pressures, stemming from macroeconomic, regulatory and industry-specific challenges. The most significant headwind is the ongoing tariff environment, which has resulted in cost inflation, sourcing uncertainty and delays in product launches. The U.S. government’s tariffs on imported furniture and wood products are concerning, with duties starting at 25% on upholstered furniture, kitchen cabinets and vanities, rising to 30-50% in early 2026.
Besides tariffs, RH is navigating through a weak housing market in the United States, which is restricting the natural demand tailwind for home furnishing purchases. Higher interest rates, inflation concerns and overall economic uncertainty add further volatility, making consumer behavior less predictable and complicating planning around pricing, sourcing and inventory. Due to this unfavorable scenario, RH is heavily investing in market-share capture and promotional activity, which is dragging its margins down. Moreover, RH is also absorbing start-up costs and margin drag from its aggressive international expansion, particularly in Europe, where operating structures, regulations and execution complexity are still maturing.
RH’s Fiscal Third-Quarter Guidance
In the fiscal third quarter, RH expects net revenues to increase between 8% and 10% year over year.
Adjusted operating margin is expected in the range of 12-13%, indicating a decline from 15% reported in the year-ago quarter. Adjusted EBITDA expectation of 18-19% also reflects a year-over-year decrease from 20.8% reported a year ago.
What the Zacks Model Says for RH
Our proven model does not conclusively predict an earnings beat for RH this time around. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here.
RH’s Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
RH stock reflects a declining trend and underperformance in the past three months compared with the Hoya Capital Housing ETF (HOMZ) index, as evidenced by the chart below. HOMZ is an exchange-traded fund that offers a diversified glimpse of the U.S. residential housing industry through 100 companies across homebuilding, rental operators, home improvement, furnishings, mortgage services and real estate tech, to name a few.
RH operates in the home furnishings retailer market, which has other key market players, including Williams-Sonoma, Inc. (WSM - Free Report) , Arhaus, Inc. (ARHS - Free Report) and Ethan Allen Interiors Inc. (ETD - Free Report) . During the past three months, RH has also underperformed the other market players, even though Williams-Sonoma, Arhaus and Ethan Allen indicate declines of 11.4%, 4% and 19%, respectively.
Image Source: Zacks Investment Research
RH’s Valuation Trend
RH stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 12.43. This is compared with the forward 12-month P/E ratios of 19.88, 21.68 and 13.64 at which Williams-Sonoma, Arhaus and Ethan Allen are currently trading, respectively. The discounted valuation of the stock compared with the other market players looks promising.
Investment Decision
RH is currently balancing meaningful long-term growth opportunities with near-term pressures that temper its outlook. Strength in the luxury home furnishings market, supported by resilient demand for high-end design and the success of RH’s galleries and hospitality concepts, continues to provide a solid foundation. Moreover, its expanding international presence and resourcing efforts reinforce its ambition to establish itself as a global luxury brand.
However, the company faces meaningful challenges that limit near-term performance. Heavy tariffs, ongoing inflation, higher interest rates and a weak U.S. housing market are weighing on demand and creating cost pressures. RH stock performance has lagged peers in recent months, even as valuation remains attractive relative to competitors.
With a Zacks Rank #3 (Hold) and no clear indicators of an earnings beat, RH presents a balanced investment case—supported by long-term brand strength but constrained by persistent macro headwinds and execution risks. Thus, it is prudent for existing investors to retain RH stock now, whereas new investors might want to wait for a more favorable entry point.
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Should You Buy, Hold or Fold RH Stock Ahead of Q3 Earnings Release?
Key Takeaways
RH (RH - Free Report) , previously known as Restoration Hardware, is scheduled to report its third-quarter fiscal 2025 (ended Nov. 1) results on Dec. 11, after market close.
In the last reported quarter, the company’s adjusted earnings per share (EPS) and net revenues missed the Zacks Consensus Estimate by 8.2% and 0.7%, respectively. However, on a year-over-year basis, both metrics grew 73.4% and 8.3%, respectively.
RH’s earnings topped the consensus mark in one of the trailing four quarters and missed on the remaining three occasions. The average surprise is shown in the chart below.
Image Source: Zacks Investment Research
How are Estimates Placed for RH Stock?
The Zacks Consensus Estimate for fiscal third-quarter EPS has remained unchanged at $2.13 over the past 60 days. The estimate indicates a decline from the year-ago EPS of $2.48. The consensus mark for net revenues is pegged at $883 million, suggesting an 8.8% year-over-year increase.
For fiscal 2025, RH is expected to register a 10% increase from a year ago in net revenues. Its bottom line is expected to witness growth of 68.5% from a year ago. Below is what to expect in the fiscal third quarter for RH stock.
Image Source: Zacks Investment Research
Factors Likely to Have Defined RH’s Q3 Performance
Favorable Market Trends
RH operates as a luxury retailer in the home furnishing space, and this business operation is gaining value in the United States despite a depressed housing market. The resilience in demand for premium, design-driven and high-end furnishings implies meaningful pent-up replacement and renovation activity for the company. Moreover, its heavy investments surrounding design galleries, interior design services and expanded hospitality concepts have been boding well amid the favorable market fundamentals. As the furniture market shifts toward curated, aesthetic-driven home environments, RH’s integration of architecture, interior design and luxury presentation aligns with evolving U.S. consumer preferences.
Global Expansion Bodes Well
RH’s market presence outside the U.S. borders summarizes the efforts it bestowed across elevating its design, luxury positioning and immersive gallery format over the years. The company sees Europe as the foundational phase of its global strategy, with early traction in RH England and a powerful launch in Paris with RH Paris. This demonstrates that its immersive gallery and hospitality model can generate significant visibility, brand heat and high-value design pipelines in major cultural capitals. RH expects to accelerate this positive momentum with the anticipated openings in London and Milan in 2026.
Besides, RH is also optimistic about going beyond Europe into the Middle East and Asia, noting strong inbound interest from developers and potential partners who view the RH gallery format as a unique luxury anchor. RH’s aim to establish international brand authority, diversifying its revenue base and positioning itself as one of the most admired luxury home brands worldwide is encouraging.
Resourcing Efforts
RH has been aggressively shifting sourcing out of China, reducing receipts from 16% in the first quarter of fiscal 2025 to an expected 2% by the fiscal fourth quarter, with many vendor partners absorbing part of the tariff impact. Given the tariff headwinds in China, RH has been expanding domestic production, particularly in upholstered furniture, which is one of the few categories that can be made competitively in the United States. By the end of fiscal 2025, the company would expectedly have about 52% of its upholstery made in its long-established North Carolina factory, complemented by about 21% premium manufacturing in Italy and nearly 12% cost-effective operations in Mexico.
These efforts aim not only to mitigate tariff exposure but also to strengthen control over lead times, quality and flexibility, which are the key factors in a volatile global trade environment. The combination of reshoring, near-shoring, vendor diversification and strategic partnerships positions RH to navigate industry disruptions, preserve margins and maintain product availability.
Challenges That are Likely to Pressure RH’s Q3 Results
RH is facing several pressures, stemming from macroeconomic, regulatory and industry-specific challenges. The most significant headwind is the ongoing tariff environment, which has resulted in cost inflation, sourcing uncertainty and delays in product launches. The U.S. government’s tariffs on imported furniture and wood products are concerning, with duties starting at 25% on upholstered furniture, kitchen cabinets and vanities, rising to 30-50% in early 2026.
Besides tariffs, RH is navigating through a weak housing market in the United States, which is restricting the natural demand tailwind for home furnishing purchases. Higher interest rates, inflation concerns and overall economic uncertainty add further volatility, making consumer behavior less predictable and complicating planning around pricing, sourcing and inventory. Due to this unfavorable scenario, RH is heavily investing in market-share capture and promotional activity, which is dragging its margins down. Moreover, RH is also absorbing start-up costs and margin drag from its aggressive international expansion, particularly in Europe, where operating structures, regulations and execution complexity are still maturing.
RH’s Fiscal Third-Quarter Guidance
In the fiscal third quarter, RH expects net revenues to increase between 8% and 10% year over year.
Adjusted operating margin is expected in the range of 12-13%, indicating a decline from 15% reported in the year-ago quarter. Adjusted EBITDA expectation of 18-19% also reflects a year-over-year decrease from 20.8% reported a year ago.
What the Zacks Model Says for RH
Our proven model does not conclusively predict an earnings beat for RH this time around. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here.
RH’s Earnings ESP: The company has an Earnings ESP of 0.00%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
RH’s Zacks Rank: It currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
RH Stock’s Price Performance
RH stock reflects a declining trend and underperformance in the past three months compared with the Hoya Capital Housing ETF (HOMZ) index, as evidenced by the chart below. HOMZ is an exchange-traded fund that offers a diversified glimpse of the U.S. residential housing industry through 100 companies across homebuilding, rental operators, home improvement, furnishings, mortgage services and real estate tech, to name a few.
RH operates in the home furnishings retailer market, which has other key market players, including Williams-Sonoma, Inc. (WSM - Free Report) , Arhaus, Inc. (ARHS - Free Report) and Ethan Allen Interiors Inc. (ETD - Free Report) . During the past three months, RH has also underperformed the other market players, even though Williams-Sonoma, Arhaus and Ethan Allen indicate declines of 11.4%, 4% and 19%, respectively.
Image Source: Zacks Investment Research
RH’s Valuation Trend
RH stock is currently trading at a forward 12-month price-to-earnings (P/E) ratio of 12.43. This is compared with the forward 12-month P/E ratios of 19.88, 21.68 and 13.64 at which Williams-Sonoma, Arhaus and Ethan Allen are currently trading, respectively. The discounted valuation of the stock compared with the other market players looks promising.
Investment Decision
RH is currently balancing meaningful long-term growth opportunities with near-term pressures that temper its outlook. Strength in the luxury home furnishings market, supported by resilient demand for high-end design and the success of RH’s galleries and hospitality concepts, continues to provide a solid foundation. Moreover, its expanding international presence and resourcing efforts reinforce its ambition to establish itself as a global luxury brand.
However, the company faces meaningful challenges that limit near-term performance. Heavy tariffs, ongoing inflation, higher interest rates and a weak U.S. housing market are weighing on demand and creating cost pressures. RH stock performance has lagged peers in recent months, even as valuation remains attractive relative to competitors.
With a Zacks Rank #3 (Hold) and no clear indicators of an earnings beat, RH presents a balanced investment case—supported by long-term brand strength but constrained by persistent macro headwinds and execution risks. Thus, it is prudent for existing investors to retain RH stock now, whereas new investors might want to wait for a more favorable entry point.