RH (NYSE: RH) is a luxury lifestyle brand and curator of design, taste, and style, offering collections through retail galleries, sourcebooks, and online platforms. For its first quarter of fiscal 2025, ended on May 3, 2025, RH reported a revenue increase of 12% year-over-year, reaching $814 million, up from $727 million in the same quarter of the previous year. The company achieved a GAAP operating margin of 6.9% and an adjusted operating margin of 7.0%, while EBITDA margin stood at 12.7%, with adjusted EBITDA margin at 13.1%.

The financial results reflect a stable performance amid challenging economic conditions, including significant uncertainties related to tariffs and the worst housing market in almost 50 years. The adjusted EBITDA reached $106 million compared to $89 million a year ago. PRH also reported positive free cash flow of $34 million during the quarter.

In terms of demand, RH saw strong trends from its galleries, particularly RH England, which experienced a demand increase of 47%, while online demand surged 44%. The company forecasts demand from RH England to reach approximately $37 million to $39 million in its second full fiscal year, along with an estimate of $8 million in online demand. Across Europe, the demand grew by 60% for RH Munich and RH Dusseldorf, further demonstrating the brand’s expansion capabilities.

Moving forward, RH aims to generate total revenue growth of 10% to 13% for the fiscal year 2025, with adjusted operating margins projected between 14% and 15%, and adjusted EBITDA margins set between 20% and 21%. Free cash flow is also expected to be between $250 million and $350 million for the year. For the second quarter of fiscal 2025, RH anticipates revenue growth between 8% and 10%, alongside adjusted operating and EBITDA margins of 15.0% to 16.0% and 20.5% to 21.5%, respectively.

Despite disruptions caused by recent tariff adjustments, RH maintains its current guidance, assuming existing tariffs remain unchanged. The company also noted a significant negative operating margin impact of approximately 180 basis points from investments tied to international expansions.

As of May 3, 2025, RH’s total debt was reported at approximately $2.6 billion, with total net debt amounting to about $2.6 billion as well. The company holds an estimated equity value of approximately $500 million in real estate assets, which it plans to monetize as market conditions allow. RH expects to decrease its adjusted capital expenditures to the range of $200 million to $250 million by fiscal year 2026.

Overall, RH’s financial performance reflects ongoing strategic investments to create market differentiation and capitalize on potential long-term growth opportunities, as evidenced by its expansion plans, including the anticipated openings of various galleries worldwide, such as in Paris and Milan.