It looks like all those investments that RH has been making are finally starting to pay off—and some tariff refunds didn’t hurt, either. Announcing its second-quarter earnings on Thursday, the company formerly known as Restoration Hardware saw improvements in both its top and bottom lines, and generally beat analyst forecasts. Wall Street liked what it saw, pushing the stock up about 7 percent in after-hours trading after the results were announced.

In his letter to shareholders, chairman and CEO Gary Friedman noted the sign at the entrance to the company’s Center of Innovation at its corporate headquarters outside San Francisco: The Home Of The Extraordinary, The Remarkable & The Amazing. “I’m sure there are people who visit, or come in for an interview, and think the above is some corporate nonsense,” he wrote. “I’m here to tell you it’s not. It’s logic, experience, and I would argue common sense.”

This quarter, RH had the numbers to back up Friedman’s bravado. Net revenues were up 2.6 percent to $922.2 million, above the forecast consensus of 1.9 percent. Adjusted EBITDA was way up, to $178.5 million, though a lot of that came from $55 million in tariff refunds. Friedman expects the good times to keep rolling: For its full fiscal year, RH is predicting revenues to grow 5 percent to 7 percent, with an especially big kick in the fourth quarter.

Much of the optimism is coming from early positive reactions to RH’s new traditional-leaning line, Estates, which began rolling out to select galleries in recent months. The collection’s 268-page Sourcebook dropped in June and July, in what Friedman called “a conservative initial mailing.” The results, so far, are promising: Friedman said the program is attracting “an almost entirely new customer,” adding that perhaps RH had been “too modern for the past eight years.”

RH plans to hit the gas pedal on Estates. Friedman wrote that he expects to expand the assortment over the next five years, to the point that it will come to represent half of the company’s overall offering. What’s more, Friedman predicted that it will be more profitable than RH’s current fare.

“We also believe RH Estates will be margin accretive on multiple levels,” he wrote. “One, we believe the quality, design and exclusivity of the offering will command higher margins, and two, the average price point is currently 45 percent higher than our existing assortment, thus creating cost leverage and margin accretion throughout our operating model.”

In his always-colorful call with investors, Friedman further outlined the case for RH’s pivot to traditional, while describing the previous evening’s gallery opening in Greenwich, Connecticut—an outpost that heavily featured Estates. “You could drive around here for hours and you might not see modern homes,” he said. “We do $47 million in Greenwich … We have 14,000 square feet of interior selling space, and it’s all contemporary … and so I’m thinking: What could Estates do?”

On the bottom line, the tariff refund check offered a major infusion of cash. RH said its margin was also helped by the fact that it has moved beyond peak spending on its international expansion. “We expect adjusted capital expenditures to decrease from $240 million to $260 million in 2026 to $175 million to $200 million in 2027,” wrote Friedman. “We expect Gallery opening costs to decrease from $48 million in 2026 to $18 million in 2027.”

On his last call with investors, Friedman outlined a new outreach to designers, unveiling a revamped RH trade program. Though he didn’t share any hard numbers this time, he was optimistic about early momentum: “Firms are reengaging us,” he said. “We’ve seen a meaningful acceleration [and] we’re already at a level that offsets the discount. … We’re looking at doing more events in our galleries. … We’re going to be a lot more open on multiple levels with the trade.”

Though the housing market is still frozen and the conflict in the Middle East promises further global uncertainty, Friedman was in no mood to wallow in the challenges of the moment. Sharing laughs with investors and riffing on everything from the pizza in RH’s restaurants to why he leaves red sofas to other brands, the mood was upbeat and optimistic. “We’ve been running through the mud for the past four years of the worst housing market in four decades,” he said. “We’ve also made some amazing investments, done remarkable work, and expect extraordinary results over the next several quarters and years.”

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Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.