Breaking Through the Clutter: RH's Exceptional Growth and Innovative Strategies
RH, the luxury home furnishings retailer, continues to defy expectations with its exceptional growth and innovative strategies. In the first quarter of fiscal 2025, the company reported a 12% increase in revenue, despite the challenges posed by tariff uncertainty and a weak housing market.
Adjusted operating margin stood at 7%, and adjusted EBITDA reached 13.1%, both within the company's expectations. Additionally, RH achieved positive free cash flow of $34 million in the quarter, a testament to its efficient operations.
The company's substantial investments in elevating and expanding its product and platform have paid off, resulting in significant share gains and strategic separation. This positioning has set the stage for continued growth over the next decade, with RH poised to become an even more prominent player in the luxury home furnishings market.
In particular, the demand trends at RH England are impressive, with gallery demand up 47% in the first quarter and online demand increasing by 44%. The company projects that gallery demand will reach approximately $37 million to $39 million in 2025, its second full fiscal year, while online demand is expected to reach around $8 million.
RH's decision to open its first gallery in a remote location was met with skepticism, but the company has proved its doubters wrong. The success of RH England serves as a prime example of how doing something extraordinary and remarkable can break through the clutter and create a conversation that is authentic and uniquely one's own.
Moreover, RH's business in Europe continues to accelerate, with demand growth of 60% in the first quarter across two comparable galleries. The company is also pleased with the continued demand acceleration in its non-comparable galleries, RH Brussels and RH Madrid.
The upcoming opening of RH Paris, located on the famous Champs-Élysées, is a major highlight for the company. This gallery will be its most elegant and inspiring yet, featuring a 20-foot gold building gate, beautifully landscaped gardens, and a freestanding interior design studio.
RH's leadership recently visited RH England, RH Madrid, and the soon-to-open RH Paris to meet with their teams and identify opportunities for growth. The company believes that these efforts could double its current business over the next couple of years.
Finally, RH is thrilled to welcome Lisa [indiscernible] back to Team RH as President, Co-Chief Merchandising and Creative Officer. This appointment brings a proven creative and merchandising force to the company, one who has previously led product transformation and brand elevation at RH.
