Will Strong Q3 Earnings and Global Galleries Shift RH's (RH) Luxury Growth Narrative?

• In the third quarter of 2025, RH reported higher sales of US$883.81 million and net income of US$36.27 million, with earnings per share rising versus a year earlier despite tariff and housing market pressures.
• Management highlighted that international galleries such as RH Paris are surpassing traffic expectations and, along with a new long-term product collection, are intended to serve as significant growth drivers for the luxury-focused brand.
• We’ll now examine how RH’s stronger earnings amid housing weakness and its ambitious international gallery rollout shape the existing investment narrative.

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RH Investment Narrative Recap

To own RH, you need to believe it can grow as a global luxury home and design platform despite a weak housing market, tariff pressures and heavy leverage from past buybacks. The latest quarter’s higher sales and earnings support the near term catalyst of gallery and product expansion, while also underscoring that the biggest current risk remains execution and demand sensitivity in what management still describes as one of the toughest housing backdrops in decades.

The third quarter result, with revenue up 9% year over year to US$883.81 million and improved net income of US$36.27 million, is central to that story because it arrived despite tariff headwinds and softness in housing. Management framed RH Paris and other new international galleries, together with the expanded collection, as intended “ten year growth drivers,” directly tying recent performance to the same initiatives that are expected to carry the brand through a more challenging macro period.

Yet behind RH’s higher earnings, investors should be aware that its US$2.2 billion buyback funded with debt still leaves the business exposed if...

Read the full narrative on RH (it's free!)

RH's narrative projects $4.3 billion revenue and $442.6 million earnings by 2028. This requires 9.6% yearly revenue growth and about a $358.5 million earnings increase from $84.1 million today.

Uncover how RH's forecasts yield a $262.25 fair value, a 53% upside to its current price.

Exploring Other Perspectives

Six members of the Simply Wall St Community currently estimate RH’s fair value between US$179 and US$420.02, a wide spread that underlines how differently people view the company’s international gallery and product expansion plans in light of housing and tariff pressures, and invites you to weigh several contrasting cases for RH’s future performance.

Explore 6 other fair value estimates on RH - why the stock might be worth over 2x more than the current price!

Build Your Own RH Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your RH research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.
• Our free RH research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate RH's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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