Research

A EuroTrip That “Gary Doesn’t Know” - 10/9/25

After a highly disappointing start, the entire international growth story at RH ultimately comes down to just one store: RH Paris. As with all the other openings the early hype is exceptionally high, and optimism abounds towards the beginning of an entirely new chapter for the future of the RH brand. But RH hasn’t had a good track record of living up to that hype for several years now. At some point the excuses run out and investors are likely to conveniently remember the reality of how international expansion was a major obstacle for almost all US based retailers in history (including Home Depot, Walmart, etc).

We circled back to RH Paris now that it has been open for over a month to better understand the local reception after all the fanfare died down. Reviews of the restaurant provide ample consumer feedback and last-minute reservation availability is wide open even during what should be high traffic weekend days. Gary Friedman, CEO, used performance during the first six days of this store to justify new long-term guidance that the total company can double within the next five to seven years, which we also dig deeper into what that implies. Lastly, we investigated the continued heighted levels of promotional email activity and discovered that there appear meaningful diminishing returns as activity accelerated over the past year.  

We believe the reasonable range of EPS outcomes this year is now $7.25 to $9.50. This compares to our prior expectation for a range of $7.00 to $11.00. We are negatively biased relative to current Street consensus. The next half year should be a highly critical period for the stock as any potential weakness in RH Paris dramatically changes the investment story. Current restaurant traffic at that location indicates fears in that regard may be warranted.