RH (RH): A Bull Case Theory 

We came across a bullish thesis on RH on Speedwell Memos’s Substack by Speedwell Research. In this article, we will summarize the bulls’ thesis on RH. RH’s share was trading at $197.84 as of September 29th. RH’s trailing and forward P/E were 37.78 and 22.27 respectively according to Yahoo Finance.

RH reported 2Q25 revenues grew 8% year-over-year, a deceleration from 12% last quarter, reflecting the first full quarter of tariff impacts. Despite this, the company noted demand remains ahead of revenue, signaling potential re-acceleration in the second half of the year. Competitor Arhaus also posted strong results, with 15% revenue growth on a smaller base, underscoring healthy sector demand.

RH England is off to a strong start, with $37–39 million in expected 2025 demand, meeting or slightly exceeding expectations, highlighting successful brand introduction even if sales are modest in absolute terms. The opening of the Paris Gallery on the Champs Elysees in September further illustrates RH’s strategy of delivering elevated consumer experiences, aiming to strengthen brand perception and drive foot traffic, with future European expansions planned in London and Milan by Spring 2026.

Tariffs remain a near-term headwind, though China exposure is expected to fall to 2% by 4Q from 16% currently, with vendors absorbing much of the cost. Newly announced India tariffs will affect approximately 7% of products, prompting delays in brand extensions and the shipment of interior source books, pushing $40 million in revenue into Q4 and 1Q26.

Margins, however, remain resilient, with gross margins expanding to 45.5% and operating margins improving to 14.3%, aided by operational discipline. Interest expense, though still meaningful at $57 million, has improved, and debt stands at $3.75 billion, slightly lower than last quarter. Inventory reduction of $50 million aids working capital management despite remaining elevated.

Full-year guidance anticipates 9–11% revenue growth, 13–14% adjusted operating margins, and $250–300 million in free cash flow. RH continues to execute on controlled initiatives, with gallery expansions generating strong traffic, positioning the company for long-term brand elevation despite macro and tariff-related challenges. Elevated experiences and strategic international expansion underpin RH’s consistent vision and resilience.

Previously we covered a bullish thesis on Williams-Sonoma, Inc. (WSM) by Charly AI in April 2025, which highlighted margin expansion, operational efficiency, disciplined capital allocation, strong cash flow, and vertical integration. The company’s stock price has appreciated approximately by 21.31% since our coverage. The thesis still stands as WSM’s fundamentals support long-term growth. Speedwell Research shares a similar perspective but emphasizes RH’s brand elevation, European gallery expansions, and tariff resilience.

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Disclosure: None.