Results at a glance
RH, the luxury home furnishings retailer, raised its fiscal 2026 outlook after posting first-quarter results that outperformed Wall Street estimates even as tariff-related supply chain issues weighed on sales.
The company reported an adjusted loss of $1.97 per share for the quarter, improving on the analysts' estimate of a $2.09 per-share loss. Revenue for the period fell 1.7% year over year to $800.3 million, but that figure surpassed the consensus revenue estimate of $792.6 million.
Tariff-related backorders and revenue impact
RH said revenue was reduced by about $45 million during the quarter as backorder and special-order balances were roughly $75 million higher than a year earlier. Management attributed the higher balances largely to resourcing efforts tied to tariffs. The company expects these elevated balances to remain through the second quarter and to normalize by the end of 2026. RH estimates that the normalization process could contribute roughly $75 million in revenue during the second half of the year.
Revised full-year and quarterly guidance
Reflecting stronger-than-expected performance in the first quarter, RH raised its full-year fiscal 2026 forecast. The updated guidance calls for revenue growth of 4.5% to 8.0% for the year, adjusted EBITDA margins between 14.2% and 16.0%, and adjusted free cash flow of $300 million to $400 million.
For the second quarter specifically, RH projects revenue growth in the range of 0.5% to 2.5% and adjusted EBITDA margins of 11.5% to 13.0%.
Liquidity, cash flow and leverage
The company generated $13.3 million in free cash flow during the quarter and finished the period with $53.8 million in cash and cash equivalents. Total net debt was approximately $2.37 billion, representing about 4.3 times trailing 12-month adjusted EBITDA.
Management outlook and strategic priorities
Chairman and CEO Gary Friedman said RH expects growth to pick up in the second half of fiscal 2026. Management cited several drivers for the anticipated acceleration: reduction of backlog, new store openings, and expansion of the recently launched RH Estates concept. RH also emphasized continued international expansion, naming flagship locations in Paris, Milan and London as foundational elements of its plan to build a global luxury brand.
Bottom line
RH's first-quarter results showed a narrower adjusted loss per share than expected and revenue that beat estimates despite tariff-driven supply chain challenges. The company has raised its fiscal 2026 targets and signaled that normalization of elevated backorders could add revenue in the back half of the year, while maintaining leverage and a modest positive free cash flow position on a quarterly basis.