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RH (RH) is trading lower following its Q1 (Apr) report, with below-consensus Q2 guidance overshadowing better-than-expected Q1 results. The luxury home furnishings retailer reported an adjusted loss of $1.97 per share, while revenue declined 1.7% yr/yr to $800.3 mln. For Q2, RH expects revenue growth of just 0.5-2.5%, or roughly $904-922 mln, which came in well below consensus. The company did raise the low end of its FY26 revenue outlook, now expecting growth of 4.5-8.0%, or roughly $3.59-3.73 bln, but that was roughly in line with expectations and still depends on a sharp second-half acceleration.

• Revenue timing: Q1 revenue was negatively impacted by approximately $45 mln due to elevated backorder and special order balances, which were roughly $75 mln above last year, primarily due to tariff-related resourcing. RH expects those balances to remain elevated in Q2 before normalizing by year-end.
• Second-half bridge: Management expects revenue growth to accelerate from roughly flat in the first half to about 12% in the second half. The bridge includes 4.5 points from backlog reduction, 2.5 points from new store growth, and 5.0 points from new concept growth, primarily RH Estates.
• Margin framework: Margins were a pressure point, with adjusted EBITDA margin falling to 7.1% from 13.1% last year, reflecting gross margin compression and expense deleverage. RH guided Q2 adjusted EBITDA margin to 11.5-13.0% and FY26 adjusted EBITDA margin to 14.2-16.0%, implying a meaningful recovery from Q1 levels, though international pre-opening and startup costs remain a drag.
• Platform expansion: RH continues to build toward a global luxury brand, with Paris, Milan, and London positioned as key galleries for international recognition. RH Estates, RH Bespoke Furniture, and RH Couture Upholstery extend that strategy into more customized, designer-led categories.

Briefing.com Analyst Insight

RH's Q1 results came in better than expected, but investors are focused on the softer Q2 guide and the sharp second-half acceleration implied by the FY26 outlook. RH argues that some of the near-term weakness is timing-related, with elevated backorder and special order balances tied to tariff-related resourcing. However, investors still have to underwrite a move from roughly flat first-half revenue growth to about 12% growth in the second half, which is a high bar given the still-challenging housing backdrop and uneven luxury home furnishings demand. The company does expect revenue to return to growth in Q2, but the 0.5-2.5% growth guide was well below expectations, and adjusted EBITDA margin still needs to recover materially from Q1 levels to hit the full-year framework. RH's longer-term strategy around international galleries, RH Estates, Bespoke Furniture, and Couture Upholstery remains compelling because it builds the case for a broader luxury platform beyond the housing cycle. However, with Q2 guidance below expectations, international startup costs still weighing on profitability, and the recovery heavily dependent on second-half execution, the report did not fully settle concerns around the timing and durability of the rebound.