Name: Operating Profit Margin

Definition: Operating profit margin focuses on profits from the company’s core business — before interest payments and taxes. It reflects how well the business manages operating costs relative to sales. Strong operating margins show efficient day-to-day operations. Shrinking margins may reveal rising overhead, pricing weakness, or declining efficiency.

Interpretation:
• In '2022', RH's operating profit margin was 24.7%, highlighting profit earned from core business operations. Industry average for Other Specialty Stores in '2022' stood at -18.9%.
• In '2023', RH's operating profit margin was 20.1%, highlighting profit earned from core business operations. The decline from '2022' may indicate some operational or financial challenges. Industry average for Other Specialty Stores in '2023' stood at -15.7%. Industry average increased by 3.2% compared to previous year.
• In '2024', RH's operating profit margin was 12.1%, highlighting profit earned from core business operations. The decline from '2023' may indicate some operational or financial challenges. Industry average for Other Specialty Stores in '2024' stood at -5.6%. Industry average increased by 10.1% compared to previous year.
• In '2025', RH's operating profit margin was 10.1%, highlighting profit earned from core business operations. The decline from '2024' may indicate some operational or financial challenges. Industry average for Other Specialty Stores in '2025' stood at 1.8%. Industry average increased by 7.4% compared to previous year.
Overall, RH's operating profit margin has been volatile but showed a downward trend over the past 4 years.

Formula: Operating Profit Margin = Operating Income / Revenue

Good Range: Often 10%-30% depending on business model.