RH is attempting something it has not tried in a generation: reopen the traditional and classical half of the luxury home after nearly a decade of a modern-only assortment, while three European flagships are still in their first year and the housing market remains the weakest cycle Chairman and Chief Executive Gary Friedman has described in four decades. The second-quarter print cleared the high end of guidance, but the quality of the beat is the whole debate. Revenue rose just under three percent, to $922 million. That is an acceleration of a bit more than four points versus the first quarter, yet it is not yet proof that demand has turned.
The margin story is even less clean. Gross margin jumped toward forty-eight percent, but six hundred basis points of that lift came from International Emergency Economic Powers Act tariff refunds of $55 million. Strip the refund and the operating picture is a company still spending through gallery openings, the Estates sourcebook, and international startup costs. Selling, general and administrative expense rose more than twenty percent. Operating income actually declined versus last year. Cash did improve, helped by a $42 million Aspen joint-venture distribution and roughly $69 million of tariff cash, neither of which repeats as a run-rate.
What the next two quarters resolve is whether RH Estates, backlog conversion, and the London, Paris, and Milan flagships can deliver the second-half acceleration management has now written into guidance. The fourth-quarter outlook calls for growth in a sixteen-to-twenty-one percent band, with Estates alone contributing eight points. If that print arrives without another tariff windfall, the cycle-trough narrative starts to look earned. If it does not, the equity is still a thin residual claim sitting under more than two billion of term loans.