Building the Foundation for Global Luxury: RH's Q1 2027 Update
Rhode Island-based home furnishings and building products company RH reported a strong first quarter fiscal 2026, exceeding expectations despite back order and special order balances being approximately $75 million higher than a year ago, primarily due to tariff-related resourcing. In the company's Q1 2027 earnings call transcript, Gary Friedman, Chairman and Chief Executive Officer, highlighted the company's performance, stating that first quarter revenues of $800.3 million and adjusted EBITDA of 7.1% exceeded expectations.
The company raised its outlook for fiscal year 2026, providing a revenue growth range of 4.5%-8%, an adjusted EBITDA margin of 14.2%-16%, and an adjusted free cash flow of $300 million-$400 million. The second quarter 2026 outlook was also updated, with a revenue growth range of 0.5%-2.5% and an adjusted EBITDA margin of 11.5%-13%. Friedman emphasized that there are three key components that will drive the company's performance in the second half: a backlog reduction worth 4.5 percentage points, new store growth of 2.5 percentage points, and new concept growth of five percentage points for RH Estates.
The company is investing heavily in building its global luxury brand, with plans to unveil immersive brand experiences in Paris, Milan, and London. These openings are expected to form the foundation necessary to earn the respect and recognition of not only European and UK customers but a global one. Friedman likened these efforts to climbing the luxury mountain, stating that it's "not for the faint of heart" and requires dedication, capital, and perseverance.
The success of RH Estates, which aims to provide exclusive, high-end experiences for homeowners, was highlighted by Friedman as a key driver of the company's growth. He referenced Ronald Reagan's famous phrase, "Mr. Gorbachev, tear down this wall," stating that RH is committed to tearing down walls and building bridges to connect with customers on a deeper level.
The company's performance in Q1 2027 has set a strong foundation for the remainder of the year, with expectations for revenue growth and adjusted EBITDA margin expansion. As RH continues to invest in its global luxury brand, customers can expect even more immersive and inspiring experiences that reflect the company's commitment to excellence and quality.
