RH Bets Big on Physical Retail Expansion Despite Sales Dip

Luxury furniture retailer RH plans to open lavish new European flagship stores as it doubles down on its physical-first strategy.

Apr. 3, 2026 at 11:54am

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A minimalist, photorealistic studio still life featuring a polished, geometric sculpture made of premium materials like metal, glass, and wood, floating on a clean, monochromatic background to symbolize the luxurious, tactile nature of RH's furniture and design products.RH's lavish retail 'compounds' aim to redefine the furniture shopping experience through high-end, immersive design.Corte Madera Today

Despite falling short of revenue expectations, RH is continuing its aggressive expansion of high-end, immersive retail galleries and compounds, including a new 70,000-square-foot flagship in Milan. CEO Gary Friedman believes RH's physical-first approach, featuring luxury restaurants and design studios, will pay off in the long run as the company taps into growing wealth and real estate trends.

Why it matters

RH's strategy of investing heavily in large-scale, experiential retail spaces runs counter to the broader industry trend of downsizing physical footprints and shifting more sales online. The company is betting that its unique, luxury in-person shopping experience will give it an edge, even as it faces economic headwinds and rising costs.

The details

RH is set to open a new European flagship in a 70,000-square-foot former palace on Milan's Corso Venezia this month, timed to coincide with the Salone del Mobile design fair. The company is also launching its new RH Estates brand extension, which will feature traditional and customizable furniture collections. RH plans to open 30-40 RH Estates Galleries by the end of the year. Despite a revenue guidance miss for the next quarter, RH remains committed to its physical-first strategy, with plans to continue expanding its network of lavish retail 'compounds' featuring restaurants, wine bars, and design studios.

  • RH is set to officially open its new European flagship in Milan this month.
  • The Milan opening is timed to coincide with Salone del Mobile 2026.
  • RH Estates will launch in early summer, with 30-40 galleries planned by the end of the year.

The players

Gary Friedman

RH's chairman and CEO, who believes the company's physical retail strategy will pay off in the long run.

Veronica Schnitzius

RH's new president and chief manufacturing and sourcing officer, tasked with building a global manufacturing platform for the company's furniture business.

Dave Stanchak

A real estate veteran hired by RH to lead the company's European expansion and monetize its real estate assets through sale-leaseback transactions.

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What they’re saying

“We'll have significant costs with sourcebook and advertising and launching costs without having much revenue until we get into the third and fourth quarter.”

— Gary Friedman, Chairman and CEO, RH

“This is a good time to buy our stock. We're in a kind of a real peak investment cycle. We're opening Europe, we're launching new businesses. And, so, we have the opportunity to have a leapfrog, if we're more right than wrong.”

— Gary Friedman, Chairman and CEO, RH

“We believe RH Estates will become our largest and highest-margin brand extension, driving significant growth over the next several years.”

— Gary Friedman, Chairman and CEO, RH

What’s next

RH plans to open 30-40 RH Estates Galleries by the end of 2026, expanding the new brand extension across North America and Europe.

The takeaway

RH's bold physical-first strategy, centered around lavish retail 'compounds' and new brand extensions, represents a high-stakes bet that the company can buck industry trends and capitalize on growing wealth and real estate trends. While the approach carries significant short-term costs, RH believes it will pay off in the long run by creating a unique, immersive shopping experience that competitors will struggle to replicate.