It’s been a rocky couple of years for RH, especially on Wall Street, where its share price has taken some big hits and its stock is often shorted. This comes as RH chairman and CEO Gary Friedman has embarked on an unprecedented investment period, much of which began back when the company’s stock was trading at over $700, and it seemed there would be no letup in the retailer’s climb up the allegorical luxury mountain.
That all seems to be a distant memory now as the entire home furnishings sector grapples with the double whammy of a dismal housing market and a consumer much more interested in their next vacation or fancy dinner than upgrading their furniture—to say nothing of tariffs and inflation. Meanwhile RH has come under some serious criticism for its ambitious expansion plans, which it has defended as smart moves to get ready for when business starts to return to something resembling “normal” … whatever that is.
Normal may be a ways off, but with last week’s opening of its London gallery—the third and final (for now) glitzy location in a European metropolis after Milan and Paris—there’s a case to be made that RH is entering a new chapter. That’s precisely the conclusion of a new report from analyst firm TD Cowen that predicts the worst is over and the company will start to see big gains over the next few months. The thesis: With its expansion into European retail largely completed, and its rollout of its all-important Estates program in full swing, RH is ready to start collecting on its massive investments.
“Last week RH launched its new Estates collection and opened its RH London gallery,” wrote TD Cowen analyst Max Rakhlenko. “These events begin the conclusion of a multi-year investment cycle and RH is now positioned to begin to reap the rewards of its work. Both should unlock large TAMs [total addressable markets], Estates will drive higher product margins and RH should generate stronger incrementals as investments slow.”
In predicting an uptick in the company’s stock price, TD Cowen’s forecast has to be music to investors’ ears. During a weak period for the furniture sector, RH’s stock is down about 14 percent since the start of the year and about 22 percent versus a year ago.
TD expects revenues and margins to begin to inflect in the second half of fiscal 2026 and into FY27, estimating that the company stock price, now at about $169 per share, will advance to $185, up from its previous estimate of $175 per share—all thanks to the Estates and London launches.
So, why does TD believe these two key initiatives will reverse RH’s fortunes? Estates, the brand’s newly launched traditional furniture line, is the biggest investment RH has made since its Modern collection in 2015, and the size of Estates is set to double over the next year. The company will support the line’s growth through other business strategies, including dedicated galleries. That kind of investment, the brand hopes (and TD believes), will bring a major return.
As for the new U.K. location, both TD and RH expect this gallery to be the most profitable of all its European stores. It also represents the peak of the brand’s spending on new outposts, which will help its margins. TD expects the London store to hit a $50 million run rate by the end of its first year and then scale up to over $100 million in its third year in operation. That would put it in the realm of RH’s best locations.
Said the analyst firm in summing up its forecast: “We believe RH remains in the mid-innings of a multi-year transformation journey driven by new gallery and product launches, despite near-term macro headwinds.”
RH has always had its share of naysayers, but TD Cowen is certainly not one of them right now.
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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.
