Good day, everyone, and welcome to the RH Third Quarter 2025 earnings call. As a reminder, this call is being recorded. I would now like to hand the call over to Ms. Allison Malkin. Please go ahead, ma'am. Thank you. Good afternoon, everyone. Thank you for joining us for our Third Quarter Fiscal 2025 earnings call. Joining me today are Gary Friedman, Chairman and Chief Executive Officer, and Jack Preston, Chief Financial Officer. Before we start, I would like to remind you of our legal disclaimer that we will make certain statements today that are forward-looking within the meaning of the federal securities laws, including statements about the outlook of our business and other matters referenced in our press release issued today. These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially. Please refer to our SEC filing as well as our press release issued today for a more detailed description of the risk factors that may affect our results. Please also note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Also, during this call, we may discuss non-GAAP financial measures, which adjust our GAAP results to eliminate the impact of certain items. You will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP to GAAP measures in today's financial results press release. A live broadcast of this call is also available on the Investor Relations section of our website at ir.rh.com. With that, I will now turn the call over to Gary. Great. Thank you, Allison. Good evening to those of you on the East Coast, and good afternoon on the West Coast. To our people, partners, and shareholders, we continue to generate industry-leading growth with revenue increasing 9% in the third quarter and up 18% on a two-year basis, demonstrating the disruptive nature of our brand despite the worst housing market in almost 50 years and the polarizing impact of tariffs. Adjusted operating margin of 11.6% was below the 12.5% midpoint of our guidance due to higher-than-forecasted tariff expense on prior period special order and backorder sales delivered in the quarter and higher-than-expected tariffs opening expenses. Adjusted EBITDA was 17.6%, and we generated $83 million of free cash flow in Q3. Year-to-date free cash flow reached $198 million, and we are on track to achieve our outlook range of $250 million to $300 million for the year. Net debt at the end of the quarter was $2.427 billion, down $85 million from Q2. We ended Q3 with real estate assets that we believe have an estimated equity value of approximately $500 million and that we plan to monetize opportunistically as market conditions warrant. Additionally, we are making progress on our goal of reducing excess inventory estimated at $300 million, with inventory down 11% versus last year and down $82 million versus the second quarter. While a meaningful portion of our market share gains are coming from the fragmented to-the-trade design showrooms, regional high-end furniture stores, and local independent boutiques, we are also gaining share from the better furniture-based national brands, as you can see from the table below. I would point out that our share gains on a two-year basis range from a low of 12 points to a high of 28 points. We find it fascinating that the market chooses to reward companies that set remarkably low expectations and slightly beat them versus setting high expectations, as we do, and at times miss them while still meaningfully outperforming our industry. Let me turn to our outlook. We are providing the following updated financial outlook reflecting our year-to-date performance and our current trends. For the fourth quarter, revenue growth of 7%-8%, adjusted operating margin of 12.5%-13.5%, adjusted EBITDA margin of 18.7%-19.6%. The above outlook includes an approximate negative 200 basis point operating margin impact from investments and startup costs to support our international expansion and 170 basis point impact from tariffs, net of mitigations. Fiscal year 2025, our current outlook now is revenue growth of 9%-9.2%, adjusted operating margin of 11.6%-11.9%, adjusted EBITDA margin of 17.6%-18%, and free cash flow of $250 million-$300 million. The above outlook includes an approximately -210 basis point operating margin impact from investments and startup costs to support our international expansion and a 90 basis point impact from tariffs, net of mitigations. In the short run, the market is a voting machine, but in the long run, it is a weighing machine. Benjamin Graham, we are a company that is playing the long game, historically innovating and investing during certain times. We also believe post this high investment cycle and historically low housing market, the weighing machine, as it has done over our 25-year history, will accurately reward us for the truly unique high-performance brand we are building. On the other hand, there is no denying what an unusual time it is in our industry, and we also believe it's not a time to underestimate risk. We're in the third year of the worst housing market in almost 50 years. In 1978, there were 4.09 million existing homes sold in the U.S. when the U.S. had a population of 223 million people. We were on track to average 4.07 million existing homes sold over the three years from 2023 to 2025, with a population of 341 million, or 53% higher than 1978. This is a market we've never seen before. Not a time to underestimate risk. Tariffs are disrupting supply chains and driving higher prices. There have been 16 different tariff announcements over the past 10 months that have resulted in significant resourcing, product delays, out-of-stocks, and driven multiple rounds of price negotiations and increases. Despite the chaos, we continue to demonstrate our ability to gain meaningful market share while aggressively investing in strategies that we believe will create long-term strategic separation. While not a time to underestimate risk, also not a time to run from it. It's important to separate the signal from the noise, and remember, necessity is the mother of invention. Our most important innovations were birthed during the most challenging and uncertain times. Our strategic separation is a result of innovating and investing during those uncertain times, and this time is no different. Launching the most prolific product transformation in the history of our industry, and believe the launch of our new concept in the spring of next year will re-accelerate our growth and create another step change in our business. We're building an iconic global selling platform that will likely never be duplicated in our lifetimes. Construction costs post-COVID have doubled across the industry, making it very difficult to emulate our immersive platform. At the same time, we have created new equally immersive physical experiences that are massively more capital-efficient that we plan to unveil on our next call next quarter. We just opened what might be the most beautiful and talked-about retail experience in the world, and arguably the most important city in the world, especially if your vision is to build a global luxury brand. You know which one I'm talking about. RH Paris, you have to see it to believe it. We're developing a global hospitality business that generates significant brand awareness, traffic, and cash flow. We have built a powerful restaurant company that is seamlessly integrated into our core business that will generate operating income that represents, on average, 65% of the aggregate galleries' rent they reside in. The RH Ocean Grill at RH Newport Beach is our first $20 million-plus restaurant that we believe will reach the mid-20s in its second full year, and its cash flow next year might cover the rent for the entire 90,000 sq ft gallery. We're establishing a global interior design firm that is moving the brand beyond presenting and selling products to conceptualizing and selling spaces. We opened our first freestanding RH interior design office in Palm Desert, California, with no product except for two small sitting areas in front of our designers' offices. There's four offices in the building and a workspace with clients. It's a real freestanding customer-facing design firm, which really don't exist in the world, if you think about it. It's like finding a dentist. You move to a new area, you buy a new home, you need a dentist. What do you do? You Google it, you ask a friend. Where do you find an interior designer? I mean, you can go online. I don't know how that's going to really help. But if you think about it, the world of interior design is not a customer-facing business, and we opened our first freestanding interior design office in Palm Desert with no product. It's a real freestanding customer-facing design firm, and it's generating $1 million a month in design business in 3,000 sq ft with rent of $200,000 a year. You can do the math. All of which is resulting in building a brand with no peer while generating industry-leading growth with high-teens adjusted EBITDA margin. Imagine what our performance will look like in a robust housing market as we cycle and leverage these investments. Never underestimate the power of the few good people who don't know what can't be done, especially these people. Fat e damned. Operator will now open the call to questions. Thank you. And everyone, if you have a question today, please press star one on your telephone keypad. We do ask that you limit yourself to one question and one follow-up. Our first question comes from Steven Forbes from Guggenheim Securities. Good afternoon, Gary, Jack. Gary, you obviously mentioned RH Paris, but curious if you can maybe give us some color on how the demand book is building, noting it's early, and the reason I ask is just curious if you can maybe help inform us how RH Paris has influenced your performance expectations ahead of RH Milan and RH London. Sure. Well, RH Paris is one. It's really quite different. While we did open our first gallery with hospitality, it was really two hours out of London at RH England. There's not a lot of traffic out there. Against knowing how our business has developed, we kind of talked about it last quarter. But many of the other galleries, as I've spoken about, we didn't open in particularly the way we believed we should open. To acquire the RH Paris and RH London, which we think are one-of-a-kind locations, we had to take a kind of a portfolio of galleries and open some of those before we wanted to. That's why we opened London. RH England, excuse me, to open something that kind of set a tone. I think people know. In Europe, Americans aren't really known for building luxury brands. We're not really looked upon by the Europeans that have a great taste or style. And really, all the luxury brands are from Paris or Italy. The U.K. has a couple, and you can argue that we have a couple. Argue that Ralph Lauren's luxury brand, a very small part of Ralph Lauren's business is luxury. The biggest part of the business is more of a department store-based higher-end business, but not luxury and a giant outlet business. And that's not to say anything bad about Ralph Lauren. It's an incredible company, incredible brand. It's just not a real focused luxury brand. And you can argue that the only one we really had pure luxury brand in many ways was Tiffany, and now the French own it. The road we're on, the path we're on, it's a tricky one. It's a tricky one to travel. We use the metaphor of climbing the luxury mountain, and Eri coined the phrase, "If you get higher and higher in the mountain, it's where the air gets thin and the odds get slim." No one really made this climb, especially from the level we started at 25 years ago, and so the next few moves we're making are really important moves. I heard several years ago that someone asked probably the most famous guy in the luxury world, and I didn't hear him say this, so I'm not going to say who said it, but you can imagine only a couple of people have built really the best luxury platforms in the world. But I heard someone ask a question, "How do you build a luxury brand in China?" And the response was, "You build great stores in Paris, London, and New York." And I heard that years ago, and I've always thought about that, thought about RH, and how do we unveil this brand? We built RH New York, and we opened it in 2018, and we said that was our bridge to Europe. So we did it a little backwards. And as we think about it for our business, it's really Paris, London, Milan, and New York, because Milan is really one of the design capitals of the world, not only for design, but also for fashion. But it's where the biggest design show in the world is Salone, where 500,000 people go once a year. And it's also the time we're going to open RH Milan. But Paris, we pushed ourselves to another level. And it's not a particularly large gallery, but it's very unique, and I can describe it on the last call. And if you haven't seen it, we've had a video. Is it a Is it a video on the website or no? Yeah, it's a video. We're also making a kind of a documentary video. We have some of our other iconic buildings, and you'll see that come out probably in the next couple of weeks. But I don't know if it sounds like we're bragging about it, but it might be one of the most beautiful and aspirational and inspiring retail stores that was ever created. And there's a lot of natural things that we loved about it. One, it's the only building on the Champs-Élysées that doesn't have an entrance on the Champs-Élysées. You can't enter the building. You enter through these 22-foot gold leaf gates, and you go down 195 steps to the front door. We built a freestanding interior design office there. We're able to get a building approved, and there's so many elements of it. It's where we built the first World of RH, which is an immersive experience that brings to life all the places and spaces that we've built around the world. We think it's an important part of communicating who we are and connecting with consumers. Well, we only totally, I think, in hotspot, we have about 150-155 seats, so it's really like a normal restaurant, but it's really two because it's in two smaller spaces. One's on a terrace. It's leisure and restaurant. We invented some very new dishes there that we're going to be rolling out in the U.S. because they're so good. And also Le Petit, which is on the top floor on the rooftop. And the rooftop, I'm so happy we figured out how to work with Foster + Partners, and when we saw the building, we went up the side stair ladder thing to get on the rooftop. We couldn't believe we could see the Eiffel Tower and the Grand Palais and the Louvre and everything we've got. Is there any way to use this rooftop? And there's no way to get to the rooftop. You said you'd have to build an elevator, but you'll never get an elevator approved because it'll block people's views of the Eiffel Tower and Foster + Partners. Why you want to work with the best people is they said, "Well, maybe we can design a rooftop. I could design an elevator that a hatch opens on the roof and a glass elevator pops up, and then it disappears." And I said, "Well, have you ever done that before?" They said, "No, but we love to do things that haven't been done before." But once you see the rooftop, you couldn't unsee it. Once you're up there, you're saying, "We've got to figure out how to activate this." And what's interesting, we have 40 seats, I think, on the rooftop. And unfortunately, right now, the rooftop's closed because weather in Paris gets pretty grim in the winters, and we can't evacuate the roof if it starts to rain and pours. There's not enough seats to relocate everybody to the level below. But the rooftop, when it was open the first few months we were open, it is the highest grossing part of the restaurant operation in the two restaurants. We're doing more there per seat than anywhere else. So just, again, learning about creating incredible spaces that has made us kind of rethink some of the work in Milan and some of the work in London and some tweaks there. And then we found out that we're building this world of RH, and we have this space where the building tears back, and we thought, "God, well, I don't know. What if we put a bar in here and try to make it a lounge?" And so we put a bar in there, and then we were like, "Well, we found out you couldn't have a bar in Paris unless you had food, and you couldn't just have nuts and snacks. So we had to have a small menu. So So we had a small menu. The day we opened, we served our first meal in a place that, in our mind, wasn't even a restaurant. And on opening night, it was a place that was packed. And now we actually had to kind of retrofit it and put real tables in there if they were big enough. And now we're serving most of the menu here. Are we tasty? Yeah. Yeah. And it's a great offset as we've lost the seats on the roof. But there's just been so many lessons and so much we're learning about the customer and who knows us and who doesn't know us and how truly international the business in Paris is. I mean, I wish I had the list in front of me right now of all the design jobs we have in Mallorca and Morocco and you name it, the Middle East. And we do the design jobs that the team works on. It's truly a global story, and the clientele is incredible. But so many people don't know us. And the team's walking people up to the world of RH and walking people through. And people, I think, are kind of shocked by our body of work because many still don't know us. Just the thought of how important that world of RH is and what a tool that is for our teams to kind of not just try to explain who we are or try to pull it up on the website, but walk people into a really immersive experience that brings our spaces and places to life and speaks to our authority and architecture and interior design and landscape architecture because all of our buildings are representatives of those kind of core competencies. And at the last minute, we decided the entry was a small little entry. We didn't think it was communicating enough about our truth. And so we, I don't know, we had four weeks to go or six weeks to go, decided to build an architecture and design library in RH England. And now you can't unsee it. It's so incredible. You walk in, you look through the main doors, and if you've seen pictures of the gallery, you've seen the Vitruvian Man and the artist design ethos. You have to interact with it. I think most people will stop and read it and take pictures in front of it. And then left and right, we have these beautiful fountains. And above the fountain, we came up with this line that my wife came up with. I thought I wrote a really great letter to Paris, and she read it, and she said, "Give me a day." And I said, "What do you mean? You don't like it?" Got insecure. And then she wrote that last night, the last line, "If any of you got the invite to our party, we used the letters, an invite with music and so on and so forth, and used it for the opening of our video." And it says, "In Paris, the measure is eternity. This we know and have built accordingly." And you walk into that entry, and you can't help but read that as you go left and right around the design ethos. And then you go into this immersive architecture and design library. Yet there's no product. You don't see. It doesn't look like a furniture store at all to anybody, right? You actually see we've now owned two copies of De architectura, 10 books on architecture, where the first modern printings were in 1521, and we've got one in French. We have three iconic French architects, de l'Orme, Haussmann, and who's the third? We've got Vitruvius, da Vinci, and Palladio displayed with busts and historic books and so on and so forth. It's something you've never seen anywhere. I've never even really seen one. We built our first one in RH England because there was a library there, and we came up with the idea, and we created something, I think, really meaningful. I remember telling the team the night before we opened. We were in the architecture design library. I said, "This might be the most important work we did here because it really communicates our truth and why we do this and what we believe in." Now we went back, and you're going to walk into the entry of Milan, which kind of looks like a lobby of a building. It looks beautiful, but we didn't know what to do. A couple of couches and a couple of chandeliers. And it didn't really you might interact with the first person and go, "Oh, excuse me, but is this a condominium building? Is this a" because it doesn't look like a store. You walk in, and you immediately look through this kind of loggia into a backyard. And you have to kind of go up and left and right. It doesn't have a grand staircase except for that goes down underground. We did our first underground restaurant. Everybody's going to go, "Oh, well, do they have a rooftop restaurant like this place or that place?" No, we have a restaurant that's underground that's got a skylight in the middle of the park. But we're putting an architecture and design library now in the entry. And all of a sudden, you're going to kind of go, "Wait, who are these people? Look at this, Vitruvius and da Vinci and Palladio and Scamozzi and Alberti and all the Italian iconic architects that shaped the way that most of the world was designed and built very early on." So that's going to come to life there. We're going to have a world of RH in Milan in a place in a space that we probably wouldn't have done anything with. It's kind of like, I don't know, an attic. But the team reconcepted it as this incredible lounge. And I think it's going to be an iconic place that'll help people understand who we are and what we believe in. And also, these are great spaces that we can rent out and do events in that bring the right people into our galleries. And we're starting to test the event business because we've got these incredible spaces. And I've said no for I don't know how many years now, 15 years, 20 years. My line was always, "Our galleries are our homes, and we don't rent our homes." I've turned down Oscar parties and Grammys parties with the top artists and everything. And I thought, "We finally did an event." We did. I go to a lot of Warriors games, and I'm friends with Joe Lacob and Nicole Lacob and Peter Guber, the owners of the Warriors. And they hosted the NBA All-Stars, and they wanted to use RH San Francisco to do the owners' party, the opening party for the NBA All-Star weekend. And we did it. And we just got tremendous response and had all the right people there. And it made us think like, "Huh, well, maybe we should for the right to attract the right clientele." We have such incredible spaces. So we're in Paris so far. Right away, Chanel wanted to take the world of RH to hold a dinner. And we've been contacted now about, "Can so-and-so do their fashion show here and take over your gallery for the evening?" And so I think we're learning about this idea of we're doing these iconic spaces and the ability to actually we have these unique architectural masterpieces and the ability to bring the right people because we have the right place. And I think it's even more important. Everybody thinks everything's moving online. I think people are dying for experiences. They're dying for authentic connections, not only with people, but with places and with history and with beauty and with food. And I mean, how many nights can you order DoorDash or Grubhub? I mean, I love the services when I have no time, and you want to get something delivered. But I don't know about anybody else on the phone, but I'd much rather go somewhere and see people and feel like I'm somewhere and connected. And I think that's why people still congregate and aggregate. And maybe they're not going to a movie theater so much anymore because that experience is not as unique and differentiated. And maybe we don't want to be in a place where someone's coughing behind you and so on and so forth. So that one I get. But I just think the places that we're building, people like to see, and they like to be there. There's not a lot of places that are public like ours that you can get a meal in and experience. So we're learning in Paris. We're having all these people coming from all over the world, seeing it. And we're thinking about, "Gosh, we have to have more people fluent in more languages." We need to ramp the design teams faster. Our design team in Paris kind of got overwhelmed. We had no idea that we'd have the traffic we had in Paris. It was just so many people that came in, and we were just overwhelmed. I mean, and even finding out how early you have to hire people because people have to give long tenures. They can't just give a two-week notice and come to work for you. We kind of got behind in hiring for the restaurants. And we were behind. We had to fly people from America to kind of help run the restaurant and cover the shifts. And they didn't speak French. And that was important. There's just so many things we're learning, especially bringing hospitality into the high-volume space. But just a little about the build. I did my own little math, and I was trying to understand. We tried to isolate the hospitality business because the hospitality business lost 25% of its seats after the first couple of months. And so we expect that to be a little off. And it's only a tiny bit off with all the seats we lost and the highest productive seats. But we're thinking that, gosh, we might be able to tent that rooftop and actually do events there and maybe bring in just as many people, if not more, because we only seat 40 people - 44 people max there. Just about the staffing, about design, we're learning a ton. We're way ahead of we've done. The team sent some incredible recaps and learnings. We're going to be so much more prepared and so much more efficient. The builds are really interesting. The math I was looking at, I kind of looked at the first eight weeks because, well, September was a five-week month. We didn't open the first week, open on the 5th, which is kind of a day. The next week started. I kind of try to isolate just our business because when you open cold in a market like this, right, you're not shipping to anyone here. You've got no revenues happening. It's interesting what we're learning all around. This one with high volume, high traffic, iconic location, international people coming from all over the place. The first eight weeks, I looked at the first eight weeks. I kind of got the four weeks of September, the four weeks that we were open in, the four weeks of October. I've looked at it in the next really almost six weeks. I had to estimate the last three days just to kind of because we didn't have the business. When you look at the demand on the core business, and we haven't seen ramps like this. The six weeks, the average per week is 62% higher than the first eight weeks. The first eight weeks actually had more traffic because I think it was still the fall, and there was a lot of people in Paris. You had a lot of people coming in. We still have very good traffic. But you can tell the team's starting to kind of get their feet underneath them. People are starting to kind of figure out who we are and trust them, kind of buy furniture from them. And we have some people that know us because they've either lived in America or they travel internationally, and they know us from America. But I didn't expect the ramp on the core goods because we opened with such good traffic. But I wouldn't have thought it'd be a 62%-63% ramp those weeks or the other weeks. So when you start to think about that and how that might build, I think it's going to take a while to kind of really understand it because we got to get our arms around the design opportunity. I mean, when you look at all the places we're doing work, and you think, "Oh, man, our designers are going to have to fly here and fly there." And our customers pay for that. We've been flying people from America to all the major cities in the world, so many of the major cities. We've had customers flying our people to Sydney, Australia, to Melbourne, to Shanghai, to all over Italy. I mean, I can't say it's almost every country. Middle East. Yeah, Middle East. Yeah, we did for the let's see, the Prince of Qatar, right? Four homes on his compound and a $3 million job or something. But we're doing jobs hundreds of thousands into the millions. We just got a famous building in New York. I can't talk about it exclusively. We're doing a $3 million design project in one of the most famous mansions in New York City and done another $1.8 million project for someone I can't talk about, very famous. And that's why I think I made the point about the design firm. And so there's so much that we're learning about Europe and so much we're learning about just the potential of our brand as it's evolved. And so, long rambling answer, but you started with a question. I could talk about Paris for a long time. Thank you, Gary. I'll actually pass it on. Thanks so much. The next question comes from Max Rakhlenko from TD Cowen. Great. Hi, everyone. So, Gary, this is the first time that you guys have taken the pretty outsized price in a while. Can you just talk about how the customer responded in 3Q and the elasticity that you're seeing from the higher price points? What are the learnings, and how are you thinking about the right price points for the brand ahead, and depending on where tariffs go, could we actually see RH continue to take prices further? Hey, Max, can I just ask clarifying? You're saying you observed Q3 was the first time we raised prices for a while. Is that what you're saying? Not necessarily the first quarter, but you have taken prices just given where tariffs have gone. So just curious what the elasticity looks like, how the customer is responding. We're learning. We've taken a lot of price increases this year. We've had a lot of movement in tariffs, and tariffs are set at one level, and then they went up, and they're moving around. It takes a while. I mean, everybody from manufacturers to product designers and everybody who's involved in the development process. It's the first time we're all trying to navigate this through the thing. I don't know if maybe it's going to stop moving for a while, but for a while that we're kind of frozen. I think so far, as long as it's fair to everyone, I think that there's some businesses that might be kind of violating the rules. I think that there are some people that are coming in, businesses in other countries that are opening up in the U.S., and they might be making the goods. They know they might not be bringing them in at the right price. They're trying to. Yeah, I mean, there's a lot of things going on, especially where there's marketplaces. You might have manufacturers bringing in goods, and they're figuring out how to get around tariffs. We hope that any of those kind of things get. If we're going to all have tariffs, let's just make it fair. Don't let some foreign manufacturer come in here. Those are the people you're trying to stop. There's actually loopholes. They're kind of getting product in here. I think we're going to end next to nothing. That might be an advantage for certain people for a certain amount of time. I think that stuff's getting to the administration. Hopefully, it'll become a fair playing field for everybody. Then if it is, it is. The market will kind of conform to the reality. I mean, the customer is going to have to conform. If things cost more, that's what happens. We've had inflation forever in this country, many times much worse than this. So I think we just think about, "Hey, just make it a fair game. Don't let manufacturers come in and open a U.S. entity." And if their price is really $1,000 for something, don't let them bring it in for $100 and pay almost no tariff because they're shipping it to themselves. Got it. Yeah. No, that's helpful. And then, Gary, just any more color on the new collection that you're looking to roll out next year? Just how are you thinking about the timing and just what could it look like as we think about some of the building blocks for next year? Yeah. We just got back from the trip that we worked exclusively on that. And I don't think we've ever been more excited about anything that we've worked on. I mean, and I think we've never worked any harder, not because we had to, just because we wanted to. I think Ari, Lisa, and anybody who's put this on the trip that has any perspective of the big moves that we've made over the years, I think this is going to be the biggest incremental move we've ever made. And I think it's going to be a 10-year thing. It's not only is it a part of our assortment that we're way underpenetrated in. If you look at the architecture that it's targeting and the homes it's targeting, it's targeting the biggest architectural block, an aesthetic block, especially at the high end. I mean, some of our data says 60% of homes $5 million and above represent this kind of architecture. And it's where we used to be strong. And when the launch of modern and contemporary and really the modern book is the modern book and modern's modern, interiors kind of became contemporary. And that's why we consolidated it all together. And then kind of the major look, that saying too much is and where we kind of built the company on, it's more classic. It's not only big, it's the next trend. And what we're doing is our best work and our partner's best work. And I mean, everybody is excited about it, especially after this last trip. And so our target is to launch it at Salone in Milan, the biggest design show in the world, when we have probably the biggest opening party that anybody's had in Salone and have the world come see it and talk about it and try to get it into as many galleries as we can as quickly as we can. It's what our interior designers and teams are getting to ask the most about, what they're most excited about. We don't really represent it very well. And the work we're doing is, I think, just incredible work. And I think we can't wait to jump back on a plane and go do some work that it can be so big. So I think I kind of look at it and I say, "I don't know. It's worth a few billion dollars over the next several years." I don't know if it's 5 years or 10 years, but it's going to, it could be the biggest part of the brand. It should be, especially with the trend that's going to be powering it over the next, and that trend should go 15 years - 20 years when you look at the cycles. And this is the first time we're going to actually kind of lead a cycle. I used to say, "Don't go too early on the wave. You're like a surfer. If you get a false negative, the wave will go underneath you. Wait until the wave breaks. Let a few people ride that wave, learn from it, and then go own the wave." But this one, it's actually the first cycle. I actually was a consumer. I bought my first house. My wife was a high-end interior designer. And when she actually first I met her. She was an interior designer. The first place I ever bought it, a small condo in San Francisco. And I was the consumer for that look. And my house in Belvedere, it was the first house I built. And we did that house, and that was the look. So I kind of know this one. I actually was like, "Wow, I'm old enough to live through the cycle here." That's a good and a bad thing, right? But why did we announce? We bought. We We didn't even announce that stuff yet. Yeah. Yeah. Okay. I got to get off stage. It came out of business. came out of business. Oh, okay. Yeah. So if you guys know, we bought Michael Taylor, Michael Taylor Designs. Michael Taylor was the godfather of the California look and one of the most famous interior designers of the time in the '80s. And he did the Auberge du Soleil. And his famous diamond table was in the lobby of the Auberge du Soleil. And I have the dining table in my Belvedere house. It's. I've had the Michael Taylor dining chairs and the sacks, really very cool iconic pieces. So we bought the Michael Taylor brand. We own all the IP. And you'll see a fresh, whole new thing coming. So I'm giving the competition a little heads-up. I better shut up. Why didn't you do anything? Ernie called. I I was almost going to kind of do this thing. And I thought, "No way. In the world of AI, everybody's going to drink coffee." But we bought another company besides that. And so we're well on our way. It's going to be a big deal. Awesome. Thanks a lot, guys. Best of luck. Up next, we'll take a question from Michael Lasser, UBS. Good evening. Thank you so much for taking my question. Gary, you wrote in the letter that the way you offer your guidance is you have very high ambitions, and at times, you may fall short of that. Would it make sense to slow the pace of all the initiatives and aim for a little bit more predictability in light of this very dynamic environment? And in that case, profitability might come a little higher as a result. Or is your theory at this point that we're going to drive top-line growth at all costs, and the profitability will eventually come? I guess if I thought that, I would have wrote that, right? I mean, that's what I wrote. I just think that Wall Street's a funny thing. A lot of people said to me throughout my career, "Hey, I hate being a public company. And you got to report quarterly earnings, and it gets you to think small." And I said, "I think that's a choice." I actually like the discipline of being a public company. I actually like that we have to report earnings once a quarter, right, report numbers. And it makes us stop and think and assess and prioritize and so on and so forth. And I like that we have quarterly board meetings. And I like that we have to go through that process and distill things down and simplify and assess everything. So I don't mind it. The thing I've learned and I've observed, I think so many people, they get so focused on quarterly results that that becomes their whole mission as a CEO or a leadership team. It's like, "How do we make the quarter?" And they do a lot of stupid things to make a quarter that aren't brand building or business model building or anything. And I just think it's not a smart way to build something great. And one of our board members grew up in Silicon Valley, and she's an early Facebook team member and everything. And she always says, "We're like a Silicon Valley startup. We're a semi-mature public company." And I think that's a good thing to be. It creates energy. It attracts great people. Great people don't want to come in and just like, "Oh, how are we going to make the next quarter? Oh, let's lower our expectations. Let's make sure we make it." That's like a downward spiral a lot of times. I mean, we want to do something great. We want to be the best in the world at what we do, and that's not for the faint of heart. It's not for everyone, but we don't need everyone to buy the stock, and we don't. Our strategy is really simple here. From a business point of view, I say we do what we love with people that we love, for people that love what we do. We don't do focus groups. We don't do stuff like that. This is very personal business to us, and it probably reflects the same way shareholders. We have some people who have been with us forever, and some people are out of stock. And that's okay. They love us sometimes. Some of us don't love us. It's a free world. But I don't know. Sometimes, in good markets, we're eating quarters and making quarters. In a market like this, this is the time to make moves and take market share and create real strategic separation on the other side of it, ready for the turn. And I don't think anybody's going to be more ready than we are. I didn't look out when the housing market comes back. We're just - you think we're creating this - you look at our two-year numbers, just the handful. It's not that many publicly reported people. But if you look at furniture-based retailers, and a lot of those people, even on the list, they sell a lot of accessories and other things. There's not too many that are just focused on furniture that are even—that they've been in stores and they say, "Look, they'll put this company there." Well, are they even in California? Why would we think about them as a competitor? They don't sell anything like that. They're not at our price point or anything. But we took kind of national public players and have at least 50% furniture. We're 80% furniture. And so we're going to be more cyclical because of the furniture content. But furniture is the biggest part of the business. And so should we lower our ambitions? No. I don't think so. I mean, my question was not on—be more stable? I don't know. Are we not stable? I don't know. I mean, we're going to make high teens EBITDA. Yeah. My question wasn't on the ambitions. It was more the pace of—it was more about the pace of initiatives than slowing down to eventually speed up. And you're not going to love my follow-up question in light of that, so I apologize in advance. But given—I like you, Michael. You have good questions. It makes me think. Thank you. My second question is, in light of the guidance for the fourth quarter that calls for a slowdown in the top line as well as some absorption of the tariffs, is this a signal that you're running into limitations on being able to manage the tariffs with price? And we should consider that as we factor our models for next year. Not only could that put a little bit of a drag on the top line, but also we should consider that we may have to absorb some more tariffs in the next year. Thank you. You want to take that, Jack? Yeah. I'm thinking, Michael. Yeah. The tariff piece, we didn't materially change the impact from a basis point perspective. Obviously, that's just representative cost alone. The other piece that's not calculated on that is the price increase. Gary called out in the letter one of the Q3 items was just the tariffs on the backorder and special order goods. Some of that was timing, right? Because we experienced an increase in expected, have expected an increase in tariffs. We do our mitigation efforts. We do our resourcing efforts. But we concurrently also change prices. But you're never perfect. You have some delays in the effectiveness of those. But you're never going to call your customers back and say, "Oh, by the way, the thing you just bought, we're going to be importing it at a 20% tariff, so can you give us more money?" So as we thread that needle and get all that dialed in, that was some of the things that surprised us in Q3, and it'll slow a little bit in Q4. But I don't know that we're ready to say that make a statement like you're describing. It's a dynamic situation. Not to mention looking at competitors, what do competitors do? We don't lose sight of that. So as far as what 2026 looks like, obviously, we're a little early for that. I understand the question and the desire to know. We'll talk about that at the end of March. But I think we're proud of how we've been navigating the tariff situation with price, with mitigation, with resourcing, with vendor partnerships, with price increases, everything that you would expect us to do, so. Yeah. I mean, and plus, we probably had the most difficult situation based on where we were sourcing from and what we did. And we read it wrong. We thought the President was going to like moving goods to Vietnam. And Vietnam is a smart place for us to move goods into. And all of a sudden, Vietnam got hit with a 47% tariff or 46% tariff. And we're like, "Uh-oh." That was costly to move it to Vietnam. And it was a lot of work and a lot of effort. And we were just getting ramped up. And then, "Okay. Now, where are we going to put it?" And then China's going from one tariff to another. And there's other places we're moving goods to and moving it to the U.S. And that's a bit chaotic right now. I don't know. Again, I kind of look at it all in context, and I say, "Everything that we're investing in, we're building a restaurant company." I don't know. Name somebody who's ever done restaurants of our quality integrated into a retail experience, especially a furniture store. Now, you'll say, "Well, I hear something. They sell meatballs or something, right?" And actually, we're generating cash. We're paying for 65%. It's an offset. 65% of the rent of the buildings, on average. Some are higher. Some are lower. And I think we're one of what is one of seven global luxury hospitality companies that own and operate their own business. But a lot of people go, "Who's your chef? What hospitality company runs your restaurants?" We run them. We're the chefs. And obviously, we have culinary leaders and chefs, and we all get together and collaborate. But they're a reflection of what we love and what we do. And we're getting good at it. We're getting better and better. And I have an interesting point for that. Case Wynne, our average ticket was $38. $38 in 2019. In 2019, yeah. So I mean, here's the interesting fact. We just had our 10-year anniversary in October of being in the restaurant business. We opened in Chicago. And that restaurant did get the partner that we did it with is a great guy, still a good friend, and super successful. A lot of times, you really want to do something. Someone's full-time, and they're doing this. And we just realized most of the chefs driven businesses that are doing hospitality for other people, it's kind of a license-to-name thing. They're not there. I mean, we had a deal with Brendan, and he was we had half his time for a while. But then he had so many other opportunities. And we realized this is turning into a real thing for us. And we need to make it a core competency. So we've invested now for many years. And it's like, "But that restaurant in Chicago that we opened, they did $5 million. Its first year." I mean, the estimate was going to do about $1 million its first year, and it did $5 million. It does $9 million or $10 million now, Case? Yeah. Yeah. Just shy of $10 million. Just shy of $10 million. And we opened a second restaurant, a second gallery in a suburb not too far from that that's doing $11 million. So you'd think it would have been cannibalized more. And our team is growing and maturing and collaborating, and we're getting better and better. But if someone would have said 10 years ago that, "Hey, how many people want to wake up in the morning and go to a furniture store for dinner or for lunch?" I don't think anybody would have. So think about that one. I don't know. Should we not have done it? Because you could have said, "Gary, that was really hard. Why didn't you do that?" Well, we do hard things. And we do things that are unique and differentiated. And I think because we're more ambitious than others, we think more deeply than others. And we're not just managers of something. Managers arrange and organize the status quo. We're leaders. And leaders are leading people somewhere they've never been, doing things they've never done. And leaders have to be comfortable making others uncomfortable because that's what leaders do. And starting with the leader, the leader's going to be somewhat uncomfortable. So I'm sorry if I'm making you uncomfortable. It's just what I do. That's how I know I'm leading. That's how you know you're on the right path. But if you can build things that other people haven't built, and if you can lead, you can create a lot of value. And we believe we're going to create a lot of value. Maybe not at this moment. We look really risky, I guess, because we have debt. But we've said we're comfortable with paying down the debt. There's lots of things we can do. Heck, we've done more zero-convertible notes than anybody in history, I think. We did four. I don't think anybody's done four. Yahoo had done two. And at some point, we might tap the convert market. At some point, we may refinance some of the debt. At some point, who knows? We've got a lot of real estate, and we think we can monetize that over time. And our inventory has been high. We're turning inventory into cash. But I'm pretty comfortable. Hell, I lived on the edge of bankruptcy my first 10 years. This is nothing. Thank you for all the insight. I wish you all a very happy holiday season. Thank you. Great. Happy holidays to you, Michael. The next question comes from Simeon Gutman from Morgan Stanley. Hey, Gary. Hey, Jack. Maybe one question. Maybe let's talk furniture. Can you talk about the backdrop? I know it's been a tough overall market. Can you just talk about how the quarter, how the customer changed, the demand for furniture, how your current lines are resonating? And then barring anything in the backdrop getting worse, can we assume that free cash flow stays positive from here on out? Thank you. I don't know if this is the time to assume anything will be a certain way, right? We just had China and Russia fly bombers over Japan. Like, "Hello. Was anybody expecting that?" And then we rallied bombers with Japan or fighter jets or whatever. Who knows what's going to happen in this world right now? I mean, there's a lot of discord, and there's a lot of noise. And so I mean, we expect free cash flow to remain positive. But did we expect at any time early in the year that we were going to have all the tariff announcements in such an unpredictable chaotic way and have to delay our Interiors book by eight weeks? Did we think we were going to launch Estates this year? Yeah, we did. And I said the name. Oh, God. Okay. Sorry about that. But it's a really unusual time. And we're not trying to be flat or up three right now. If we're trying to be flat or up three, would we be more predictable? We might. I don't know. Would that be really good for the long term? I don't think so. I love what we're doing right now. I love the moves we're making right now. I think people are going to be shocked. I think competition's going to go, "Oh, now what?" I love our strategy in Europe, but is it more expensive than we thought? Yeah, it is. We built these things during and post-COVID, and they're way more expensive, and put pressure on short-term cash flow and things. Yeah, sure, but wait till you see what we invented, and again, necessity is a mother of invention. Put us into a corner, make things tough for us. We'll invent our way out of it. We've designed, I think, some of the most exciting retail concepts coming, like new versions of RH that I think are mind-blowing, and they cost half as much, and we have other ones that are equally creative that will take probably less than half the time and cost less, and we've got design ecosystems. We have design compounds. We have interior design offices. We've just got a lot of things, and they all make a ton of sense, and so I think we're pretty responsive strategically. We just don't like to get stuck in the weeds and not see the bigger picture, but we're really excited about where we are. We're super positive, but can you say things are going to be super predictable in what we've just seen in the last 6 to 12 months? I'd say it's going to be predictably unpredictable, just what we've all had to navigate and deal with. And I mean, there's still changes. Who knows? There could be a whole new round of tariffs. I mean, the Supreme Court could say, "Hey, this is illegal," and then all of a sudden, it's going to be if you read the news, there's going to be these things happen. Those things happen. Those things happen. This changes. Well, we'll improvise, adapt, and overcome. That's what we do. Simeon on the free cash flow, just so you know, talked about the $300 million of inventory coming down. So this year is kind of a $200 million figure we talked about. So there's still that element to come. We talked about reduction in capital spending last call a little bit here. So there's building blocks to maintain positive cash flow going forward. But obviously, there's a lot of unknowns and a lot of uncertainty. So we'll be talking a lot about that and try to drive that result as well. No exit over the way. Thank you. Thanks guys. Up next, we'll take a question from Jonathan Matuszewski from Jefferies. Oh, great. Good evening, and thanks for the time. I appreciate the color on market share, Gary. It's easy for us to track the public players you outlined in the table, but less easy for us to assess the health of the fragmented design showrooms, those regional high-end stores, some of the local independent boutiques. Curious if you could give us a sense of what you're seeing from a dislocation standpoint with the majority of your share gains coming from those channels. Thanks so much. Yeah. I mean, harder for any of us to measure, but yeah. I mean, the feedback we get from some of the people that we've acquired and people that we know that believe we've been the biggest disruptive force at the high end of the business over the last 10 years, if not more. And so especially with what we've done with the new galleries and with the assortment and moving up market and taking the quality up and the level of design up. And so I think you could I mean, we used to track how many independent high-end boutiques there were, right? There used to be 32 between Sausalito and Sonoma County in Healdsburg and Southern Napa. And we always said that they all exist because RH had a 6,000 sq ft gallery in Corte Madera. And most of those boutiques were, I don't know, 3,000-15,000 sq ft. Probably the majority of them kind of close to the size we are. And it wasn't obvious the assortment. If you didn't get our book, you didn't know how big our assortment was. If you didn't go to our website, you didn't know. And we always said, "When we have the assortment in physical marketplace, there will be a lot less." And you're making me want to go do the latest math. I mean, we know that it went from like 32 to about 18 or 20 over X number of years. And if you go do the math again. But I mean, I think we've went from $300 million to $3.5 billion. And some of it's hospitality and contract business, and we own Waterworks. But we believe most of the share came from the higher end and came from the showrooms, and they came from the independents, and they came from the regional furniture stores, and they came from the Ethan Allen of the world or people like that. I'm not to pick on Ethan Allen or anything, but I mean, Ethan Allen, when I was at RH in earlier days, they were like $1.2 billion or something. And then we looked up to them. And I think they (I don't know if they do today) $500 million or $600 million or $700 million. So there's always going to be those shifting dynamics. They're sometimes hard to measure. But we like how our business has been performing from a market share point of view. And there's enough data to say we're one of the leading share gainers right now at a certain size, especially furniture-based, right? Again, there's other people that have a big tabletop business, or they have a big accessories business, or they're in seasonal businesses like Halloween and Easter and this and Christmas. And we're not in any of those businesses anymore. So you got to compare us to the right kind of people. And so we don't have some of those other businesses that might make us a little less cyclical. There's some of the businesses I think we exited too far. We ought to probably have some more home accessories or some layer designers that would like to have more things to complete a home. And so we're considering those things. We used to have a book called The Objects of Curiosity, and we may relaunch that at some point. And you might see us, I don't know. I wouldn't even rule out would we be in the tabletop business, but just in our own way. And I don't think I want to be in the chase for holiday businesses. But it doesn't mean we can't have beautiful candles that are like our branded stuff. And we can't have our Hermès blanket or things like that that are really high-end and aspirational and can be great gifts and things you really want in your home that identify your status and where you are in life. So we think we build the brand correctly. There's going to be other opportunities like that. But yeah, it's that fragmented, right? It's not easy to exactly know. Helpful. Thank you, Gary. And that does conclude our question and answer session. I'll hand the conference back over to Mr. Gary Friedman for any additional or closing remarks. Great. Thank you, operator. Thank you, everyone, for your interest. I want to thank our teams that bring our brand to life each and every day throughout our galleries, our hospitality, our distribution centers, or every aspect of the company. Everybody in every location around the world and everybody who's all of our partners around the world that work so hard to bring these beautiful products to life. We appreciate everyone and your efforts and your collaboration. And we wish everyone a wonderful holiday. And we look forward to talking to you in the next year. Thank you. Once again, everyone, that does conclude today's conference. We would like to thank you all for your participation today. You may now disconnect.