The quarter beat RH’s own target, but no clean published consensus is provided here. Revenue of $922.2 million exceeded the high end of company guidance, while normalized adjusted EBITDA margin of 13.4% also topped its guided range.
| Metric | Q2 FY2026 | Q2 FY2025 | Read-through |
|---|---|---|---|
| Net revenue | $922.2M | $899.2M | +2.6% |
| Adjusted EBITDA | $178.5M | $185.1M | -3.6% |
| Normalized adjusted EBITDA | $123.5M | $185.1M | -33.3% |
| Normalized adjusted EBITDA margin | 13.4% | 20.6% | -720 bps |
| Diluted EPS | $3.06 | $2.62 | GAAP increase, helped by other items |
| Free cash flow | $99.6M | $80.7M | Improved |
The headline margin beat is heavily distorted by a one-time tariff refund. RH recognized $55.1 million of IEEPA tariff benefit in the quarter, adding roughly 600 basis points to gross margin; excluding that benefit, normalized adjusted EBITDA was $123.5 million, well below last year’s $185.1 million. The filing therefore delivers a guidance beat, but not a comparable improvement in underlying profitability.
Growth is recovering, but the cost structure remains a drag. Revenue rose only 2.6% year over year, while adjusted selling, general and administrative expense increased to 35.1% of sales from 30.9% a year earlier. That combination pulled adjusted operating margin down to 13.1% from 15.1%, even before considering the tariff normalization.
The forward outlook is ambitious and increasingly dependent on second-half execution. RH now projects fiscal 2026 revenue growth of 5.5% to 7.0% and adjusted EBITDA margin of 15.0% to 16.2%, with fourth-quarter revenue growth guided to 16.1% to 21.2%. The acceleration relies on backlog conversion, RH Estates, and new Galleries, including a planned November expansion of Estates into Galleries representing 80% of the business. 〔0〕
Net: a narrow beat, not a clean operating reacceleration. The filing is better than the company’s stated Q2 hurdle, supporting a “Beat” scorecard, but the quality of that beat is mixed: normalized margins fell sharply, international expansion still carries a stated 340-basis-point annual drag, and the strong second-half outlook rests on initiatives that have yet to convert fully into revenue.
Read the original 8-K on SEC EDGAR ↗