RH (RH) Q1 2027 earnings summary

Executive summary

• First quarter revenue reached $800.3 million, exceeding expectations, but net revenues for the quarter ended May 2, 2026, were $800 million, down 1.7% year-over-year, with a net loss of $13.7 million compared to net income of $8 million in the prior year period.

• Adjusted EBITDA margin was 7.1%, with operating income at $34 million, down from $56 million, and adjusted EBITDA of $57 million versus $106 million last year.

• Raised full-year 2026 outlook, citing strong Q1 performance and strategic initiatives including international expansion and the launch of RH Estates.

• Emphasized the launch of RH Estates, aiming to merge high-end design with scalable production and broaden market reach, especially among trade professionals.

• A $32 million favorable legal settlement related to credit card interchange fees was recognized in the quarter.

Financial highlights

• Q1 revenue: $800.3 million; adjusted EBITDA margin: 7.1%; net revenues decreased by $14 million year-over-year.

• Gross margin declined to 41.4% from 43.7% year-over-year, primarily due to higher occupancy costs and lower product margins.

• Q2 2026 outlook: revenue growth of 0.5%-2.5%, adjusted EBITDA margin of 11.5%-13%.

• Full-year 2026 outlook: revenue growth of 4.5%-8%, adjusted EBITDA margin of 14.2%-16%, adjusted free cash flow of $300-$400 million.

• Pre-opening and start-up costs for international expansion are expected to impact adjusted EBITDA margin by -270 bps for the year and -380 bps in Q2.

Outlook and guidance

• Second half acceleration expected, driven by backlog reduction (4.5 pts), new store growth (2.5 pts), and RH Estates (5 pts).

• Management expects continued variability in net revenues and adjusted net income due to ongoing business initiatives and macroeconomic uncertainty.

• Adjusted capital expenditures for fiscal 2026 are anticipated to be $240–$260 million, focused on new Design Galleries and infrastructure.

• Guidance does not include further tariff refunds; any such refunds are not reflected in free cash flow projections.

• Margin expansion anticipated as investment cycle ends and new galleries and RH Estates scale.