RH Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Steven Forbes - Guggenheim Securities LLC - Analyst : Good afternoon, Gary, Jack. Gary, you obviously mentioned RH Paris, but curious if you can maybe give us some color on how the demand book is building, noting it's early. And the reason I asked is just curious if you can maybe help inform us how RH Paris has influenced your pro forma expectations ahead of RH Milan and RH London?

Question: Steven Forbes - Guggenheim Securities LLC - Analyst : Thank you, Gary. I'll actually pass it on.

Question: Max Rakhlenko - Cowen and Company LLC - Analyst : Great. So Gary, this is the first time that you guys have taken the pretty outsized price in a while. Can you just talk about how the customer responded in 3Q and the elasticity that you're seeing from the higher price points? What are the learnings? And how are you thinking about the right price points for the brand ahead? And depending on where tariffs go, can we actually see RH continue to take prices further?

Question: Max Rakhlenko - Cowen and Company LLC - Analyst : Not necessarily the first quarter, but you have taken prices just given where tariffs have gone. So just curious what the elasticity looks like, how the customers are responding.

Question: Max Rakhlenko - Cowen and Company LLC - Analyst : Got it. Yes. No, that's helpful. And then Gary, just any more color on the new collection that you're looking to roll out next year? Just how are you thinking about the timing? And just what could it look like as we think about some of the building blocks for next year?

Question: Michael Lasser - UBS AG - Analyst : Gary, you wrote in the letter that the way you offer your guidance is you have very high ambitions. And at times, you may fall short of that. Would it make sense to slow the pace of all the initiatives and aim for a little bit more predictability in light of this very dynamic environment? In that case, profitability might come a little higher as a result? Or is your theory at this point, we're going to drive top-line growth at all costs and the profitability will eventually come?

Question: Michael Lasser - UBS AG - Analyst : My question was not on --

Question: Michael Lasser - UBS AG - Analyst : Yeah. My question wasn't on the ambitions. It was more the face of the -- it was more about the pace of initiatives and slowing down to eventually speed up. And you're not going to love my follow-up question in light of that, so I apologize in advance. But --

Question: Michael Lasser - UBS AG - Analyst : My second question is in light of the guidance that for the fourth quarter call for a slowdown in the top line as well as some absorption of the tariff. Is this a signal that you're running into limitations on being able to manage the tariffs with price and we should consider that as we factor our models for next year, not only did that put a little bit of a drag on the top line, but also we should consider that you may have to absorb some more tariffs into next year.

Question: Simeon Gutman - Morgan Stanley - Analyst : Hi, Gary. Hi, Jack. Maybe one question, maybe let's talk furniture. Can you talk about the backdrop? I know it's been a tough overall market. Can you just talk about how the quarter -- how the customer changed the demand for furniture, how your current lines are resonating? And then barring anything in the backdrop getting worse, can we assume that free cash flow stays positive from here on out?

Question: Jonathan Matuszewski - Jefferies LLC - Analyst : I appreciate the color on market share, Gary. And it's easy for us to track the public players you outlined in the table, but it's less easy for us to assess the health of the fragmented design showrooms, those regional high-end stores, some of the local independent boutiques. Curious if you could give us a sense of what you're seeing from a dislocation standpoint with the majority of your share gains coming from those channels?