Q1 Revenue and EBITDA Beat
Reported first quarter revenue of $800.3 million and adjusted EBITDA margin of 7.1%, both exceeding the high end of company expectations.
June 11th, 2026
Summary
- Earnings Call Date:
- 2026-06-11
- Change Since:
- -1.74%
- Next Earnings Date:
- 2026-09-03
Earnings Call Sentiment
NeutralThe call mixed a clear operating beat and an upgraded FY26 outlook with an ambitious strategic push (RH Estates and major European galleries) and a concrete plan to convert backorders and drive H2 acceleration. However, material near-term margin headwinds from international preopening/start-up costs (hundreds of basis points), elevated backorders (~$75M), post‑COVID capital cost inflation, and macro weakness temper the optimism. Management emphasized long-term upside (IP, unique product assortment, trade program, and deleveraging actions) while acknowledging short-term execution and cost pressures.
Company Guidance
RH reported Q1 FY26 revenue of $800.3 million and adjusted EBITDA margin of 7.1% (above the high end of expectations) and raised its FY26 outlook to revenue growth of +4.5%–8%, adjusted EBITDA margin of 14.2%–16% and adjusted free cash flow of $300–$400 million (the full‑year outlook includes an estimated -270 basis‑point EBITDA drag from international pre‑opening/start‑up costs). Q2 guidance is revenue growth of +0.5%–2.5% and adjusted EBITDA margin of 11.5%–13% (including an approximate -380 bps pre‑opening/start‑up impact). Management noted backorder/special‑order balances are roughly $75 million higher year over year, expects a 4.5‑percentage‑point H2 benefit from backlog reduction plus 2.5 ppts from new‑store growth and 5 ppts from RH Estates (supporting a move from roughly flat H1 to +12% in H2), guidance does not assume any further tariff refunds, and the company targets ~$200–$250 million of asset sales per year and a goal of being debt‑free by 2029.
Raised Fiscal Year 2026 Outlook
Management raised FY26 guidance to revenue growth of 4.5%–8.0%, adjusted EBITDA margin of 14.2%–16.0%, and adjusted free cash flow of $300M–$400M (note: guidance includes estimated headwind from international preopening/start-up costs).
RH Estates Launch and International Expansion
Announced RH Estates (bespoke furniture and RH Couture upholstery) and openings in Madrid and Milan with London upcoming; management expects Estates to contribute ~500 basis points (~$100M) to the back half of the year and to materially expand addressable luxury market share.
Concrete Bridge to Second-Half Acceleration
Management outlined a three-part plan to accelerate from flat H1 to ~+12% H2: backlog reduction (~4.5 percentage points), new store growth (~2.5 points), and new-concept (Estates) growth (~5 points).
Intellectual Property and Exclusive Assortment
Company disclosed patent pendings and claimed 65%–80% of the Estates book is protected; acquisitions (e.g., Dmitriy & Co., Joseph Jeup) and exclusive sourcing position RH with unique high-end assortments not broadly available at retail.
Balance Sheet and Deleveraging Plan
Management reiterated priority to reduce debt (targeting being debt-free by 2029), plans for asset monetization with expected asset sales roughly $200M–$250M per year over next two years, and completed transactions gaining 100% control of 8 Aspen properties to accelerate monetization.
Operator
Hello and welcome to the RH First Quarter Fiscal 26 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during this time, please press star then the number 1 on your telephone keypad. I would now like to turn the conference over to Allison Malkin of ICR. Alison, please go ahead.
Allison Malkin
Thank you. Good afternoon, everyone. Thank you for joining us for our first quarter fiscal 26 earnings call. Joining me today are Gary G. Friedman, Chairman and Chief Executive Officer and Jack Preston, Chief Financial Officer. Before we start, I would like to remind you of our legal disclaimer. That we will make certain statements today that are forward looking within the meaning of the federal securities laws including statements about our outlook for the business and other matters referenced in our press release issued today. These forward looking statements involve a number of risks, and uncertainties that could cause actual results to differ materially.
Please refer to our SEC filings as well as our press release issued today. For a more detailed description of the risk factors that may affect our results. Please also note that these forward looking statements reflect our opinion only as of the date of this call. And we undertake no obligation to revise or publicly release results of any revision to these forward looking statements in light of new information or future events. Also, during this call, we may discuss non GAAP financial measures, which adjus...
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