A luxury home furnishings retailer and lifestyle brand that sells furniture, decor, and outdoor pieces under names like RH Interiors, RH Modern, and RH Outdoor, plus restaurants and wine bars inside its galleries. It began in 1979 when founder Stephen Gordon, restoring a Queen Anne Victorian home in Eureka, California, hung a sign reading "Restoration Hardware" on his porch and took orders from a binder of photocopied vendor pages. The company renamed itself from Restoration Hardware to RH in 2017 and now also runs guesthouses, private jets, and a charter yacht.
RH gross margin fell 2.3 points to 41.4% as new Gallery occupancy costs and lower product margins outweighed a $32M legal settlement.
RH's product transformation is driving , but not yet profit. Revenue fell 1.7% to $800 million and contracted 2.3 points to 41.4%, as higher occupancy costs from new Galleries and lower product margins more than offset a $32 million legal settlement that kept positive. The company is spending heavily to build its global brand while core profitability erodes.
Key takeaways
fell 2.3 points to 41.4%, driven by higher occupancy costs from new Gallery openings and decreased product margins in the RH outlet and core businesses.
declined 1.7% to $800 million, as lower core and Contract revenue in the RH was partially offset by hospitality growth from new Galleries.
fell 38.8% to $34.2 million, but the result included a $32 million favorable legal settlement from credit card interchange fees; excluding it, SG&A as a percentage of rose 4.4 points to 40.8%.
Section summaries
Management's Discussion and Analysis
Q1 FY2026 revenue fell 1.7% to $800M; gross margin contracted 230 bps on higher occupancy costs and lower product margins.
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Consolidated net revenues decreased 1.7% to $800 million, driven by lower core and Contract in the , partially offset by hospitality growth from new Galleries.
fell to $56.9 million from $106.4 million a year ago, reflecting lower and the absence of a prior-year $7.9 million distribution from an equity method investment.
was $13.3 million, down 61% , as $78 million in adjusted for new and infrastructure consumed most of the $52.5 million in .
Cash and equivalents ended the quarter at $53.8 million, with $361.3 million in availability under the and $2.42 billion in total debt.
What changed
The Q1 FY2026 of 41.4% fell well below the 44.1% FY2025 annual level that was flagged as a potential floor, as occupancy costs from new Galleries and lower product margins deepened the contraction.
growth, which had been positive for five consecutive quarters, turned negative at -1.7%, suggesting the initial product transformation cycle flagged in the FY2025 10-K may be maturing faster than new launches can offset.
Cash and equivalents rose to $53.8 million from $41.2 million at year-end, but the balance remains low against $240–$260 million in planned FY2026 , keeping the liquidity concern flagged in prior quarters in focus.
The $32 million legal settlement masked underlying SG&A pressure; excluding it, SG&A as a percentage of rose 4.4 points, a sharp reversal from the gained in Q2 FY2025 when reduced Sourcebook circulation lowered advertising costs.
What to watch
Q2 FY2026 to see if the 41.4% level represents a trough as new Gallery occupancy costs begin to , or if product margin pressure persists and drives further contraction.
trajectory in Q2 FY2026, particularly whether the spring 2026 launch of with furniture and upholstery can return the top line to growth after this quarter's 1.7% decline.
SG&A as a percentage of in Q2 FY2026, excluding any one-time items, to gauge whether the underlying 40.8% rate continues to rise or if the company can regain as new Galleries mature.
Cash and equivalents balance and availability, given the $53.8 million on hand, $240–$260 million in planned annual , and the $2.42 billion variable-rate debt load.
Consolidated declined 230 to 41.4%, primarily due to higher occupancy costs from new Gallery openings and decreased product margins in RH outlet and core businesses.
included a $32 million favorable legal settlement from credit card interchange fees; excluding this, SG&A as a percentage of net revenues rose 440 to 40.8%.
fell to $56.9 million from $106.4 million, reflecting lower and the absence of a prior-year $7.9 million equity-method distribution.
Adjusted were $78 million, with full-year of $240–$260 million, focused on new and infrastructure.
Liquidity remains supported by $53.8 million in cash, $361.3 million in ABL availability, and $2.42 billion in total debt; management expects existing resources to cover needs beyond 12 months.
Quantitative and Qualitative Disclosures About Market Risk
There have been no significant changes in our exposures to market risk since January 31, 2026. Refer to Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk in our 2025 Form 10-K for a discussion on our exposures to market risk.
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There have been no significant changes in our exposures to market risk since January 31, 2026. Refer to Part II, Item 7A—Quantitative and Qualitative Disclosures About Market Risk in our 2025 Form 10-K for a discussion on our exposures to market risk.
Company discloses routine litigation risk but no material pending proceedings.
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The company states it is involved in litigation, claims, and investigations from time to time in the ordinary course of business.
Matters may include class actions, securities litigation, employment and wage claims, intellectual property disputes, and consumer claims.
Product liability and personal injury claims arise from products sold and operated; vendor indemnification may fail if a vendor lacks insurance or becomes insolvent.
Employee claims could cover discrimination, privacy, labor, , and disability issues, potentially leading to regulatory action by agencies such as the EEOC.
No specific material proceeding, party, or estimated financial exposure is identified in this section.
We operate in a rapidly changing environment that involves a number of risks that could materially and adversely affect our business, financial condition, prospects, operating results or cash flows. For a detailed discussion of certain risks that affect our business, refer to th…
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We operate in a rapidly changing environment that involves a number of risks that could materially and adversely affect our business, financial condition, prospects, operating results or cash flows. For a detailed discussion of certain risks that affect our business, refer to the section entitled “Risk Factors” in our 2025 Form 10-K. There have been no material changes to the risk factors disclosed in our 2025 Form 10-K.
The risks described in our 2025 Form 10-K are not the only risks we face. We describe in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part I of this Quarterly Report on Form 10-Q certain known trends and uncertainties that affect our business. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business, operating results and financial condition.
PART II. OTHER INFORMATION 2026 FIRST QUARTER FORM 10-Q | 45
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