Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Nov. 02, 2019 | Nov. 29, 2019 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Nov. 2, 2019 | |
Entity File Number | 001-35720 | |
Entity Registrant Name | RH | |
Entity Tax Identification Number | 45-3052669 | |
Entity Incorporation, State or Country Code | DE | |
Entity Address, Address Line One | 15 Koch Road, Suite K | |
Entity Address, City or Town | Corte Madera | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94925 | |
City Area Code | 415 | |
Local Phone Number | 924-1005 | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | RH | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 18,997,010 | |
Entity Central Index Key | 0001528849 | |
Current Fiscal Year End Date | --02-01 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 38,253 | $ 5,803 |
Accounts receivable-net | 45,312 | 40,224 |
Merchandise inventories | 429,189 | 531,947 |
Assets held for sale | 21,795 | |
Prepaid expense and other current assets | 46,725 | 104,198 |
Total current assets | 559,479 | 703,967 |
Property and equipment-net | 969,090 | 952,957 |
Operating lease right-of-use assets | 415,912 | 440,504 |
Goodwill | 124,376 | 124,379 |
Tradenames, trademarks and domain names | 86,022 | 86,022 |
Deferred tax assets | 36,506 | 35,603 |
Other non-current assets | 170,628 | 79,586 |
Total assets | 2,362,013 | 2,423,018 |
Current liabilities: | ||
Accounts payable and accrued expenses | 288,937 | 320,497 |
Deferred revenue and customer deposits | 167,014 | 152,595 |
Operating lease liabilities | 55,753 | 66,249 |
Other current liabilities | 106,432 | 109,456 |
Total current liabilities | 903,706 | 992,586 |
Asset based credit facility | 147,781 | 57,500 |
Non-current operating lease liabilities | 412,247 | 437,557 |
Non-current finance lease liabilities | 431,379 | 421,245 |
Other non-current obligations | 28,693 | 32,512 |
Total liabilities | 2,425,233 | 2,461,708 |
Commitments and contingencies (Note 15) | ||
Stockholders' deficit: | ||
Preferred stock, $0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of November 2, 2019 and February 2, 2019 | 0 | 0 |
Common stock-$0.0001 par value per share, 180,000,000 shares authorized, 18,928,309 shares issued and outstanding as of November 2, 2019; 20,480,613 shares issued and 20,477,813 shares outstanding as of February 2, 2019 | 2 | 2 |
Additional paid-in capital | 416,946 | 356,422 |
Accumulated other comprehensive loss | (2,481) | (2,334) |
Accumulated deficit | (477,687) | (392,537) |
Treasury stock-at cost, no shares as of November 2, 2019 and 2,800 shares as of February 2, 2019 | (243) | |
Total stockholders' deficit | (63,220) | (38,690) |
Total liabilities and stockholders' deficit | 2,362,013 | 2,423,018 |
Asset based credit facility | ||
Current liabilities: | ||
Asset based credit facility | 57,500 | |
Convertible senior notes due 2019 | ||
Current liabilities: | ||
Convertible senior notes due-net | 343,789 | |
FILO term loan | ||
Current liabilities: | ||
Term loan-net | 89,408 | |
Equipment promissory notes | ||
Current liabilities: | ||
Term loan-net | 36,613 | |
Convertible senior notes due 2020 | ||
Current liabilities: | ||
Convertible senior notes due-net | 285,570 | |
Term loan-net | 271,157 | |
Convertible senior notes due-net | 271,157 | |
Convertible senior notes due 2023 | ||
Current liabilities: | ||
Convertible senior notes due-net | 262,177 | $ 249,151 |
Convertible senior notes due 2024 | ||
Current liabilities: | ||
Convertible senior notes due-net | $ 261,010 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Nov. 02, 2019 | Feb. 02, 2019 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 18,928,309 | 20,480,613 |
Common stock, shares outstanding | 18,928,309 | 20,477,813 |
Treasury stock, shares | 0 | 2,800 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Income Statement [Abstract] | ||||
Net revenues | $ 677,526 | $ 636,558 | $ 1,982,461 | $ 1,834,762 |
Cost of goods sold | 393,360 | 386,537 | 1,170,523 | 1,107,064 |
Gross profit | 284,166 | 250,021 | 811,938 | 727,698 |
Selling, general and administrative expenses | 194,929 | 207,793 | 550,087 | 555,500 |
Income from operations | 89,237 | 42,228 | 261,851 | 172,198 |
Other expenses | ||||
Interest expense-net | 21,564 | 17,695 | 67,195 | 48,260 |
Loss on extinguishment of debt-net | 6,857 | 5,903 | 917 | |
Total other expenses | 28,421 | 17,695 | 73,098 | 49,177 |
Income before income taxes | 60,816 | 24,533 | 188,753 | 123,021 |
Income tax expense | 8,353 | 4,419 | 36,811 | 14,540 |
Net income | $ 52,463 | $ 20,114 | $ 151,942 | $ 108,481 |
Weighted-average shares used in computing basic net income per share | 18,765,769 | 22,082,141 | 19,069,501 | 21,850,955 |
Basic net income per share | $ 2.80 | $ 0.91 | $ 7.97 | $ 4.96 |
Weighted-average shares used in computing diluted net income per share | 24,170,172 | 27,703,319 | 23,809,425 | 26,810,035 |
Diluted net income per share | $ 2.17 | $ 0.73 | $ 6.38 | $ 4.05 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income | $ 52,463 | $ 20,114 | $ 151,942 | $ 108,481 |
Net gains (losses) from foreign currency translation | 299 | (383) | (148) | (2,129) |
Total comprehensive income | $ 52,762 | $ 19,731 | $ 151,794 | $ 106,352 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders Equity (Deficit) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total |
Balances at Feb. 03, 2018 | $ 2 | $ 840,765 | $ (171) | $ 151,575 | $ (1,000,326) | $ (8,155) |
Balances, shares at Feb. 03, 2018 | 21,517,338 | 20,220,132 | ||||
Stock-based compensation | 17,457 | 17,457 | ||||
Issuance of restricted stock, Shares | 6,405 | |||||
Vested and delivered restricted stock units | (8,947) | (8,947) | ||||
Vested and delivered restricted stock units, Shares | 114,847 | |||||
Exercise of stock options | 35,827 | 35,827 | ||||
Exercise of stock options, Shares | 735,029 | |||||
Repurchases of common stock | $ (145,425) | (145,425) | ||||
Repurchases of common stock, Shares | (1,163,679) | 1,163,679 | ||||
Equity component value of convertible note issuance-net | 89,933 | 89,933 | ||||
Sale of common stock warrant | 51,021 | 51,021 | ||||
Purchase of convertible note hedges | (91,857) | (91,857) | ||||
Impact of Topic 606 adoption | (21,036) | (21,036) | ||||
Net income | 108,481 | 108,481 | ||||
Net gains (losses) from foreign currency translation | (2,129) | (2,129) | ||||
Balances at Nov. 03, 2018 | $ 2 | 934,199 | (2,300) | 239,020 | $ (1,145,751) | 25,170 |
Balances, shares at Nov. 03, 2018 | 21,209,940 | 21,383,811 | ||||
Balances at Aug. 04, 2018 | $ 2 | 925,087 | (1,917) | 218,906 | $ (1,000,569) | 141,509 |
Balances, shares at Aug. 04, 2018 | 22,229,439 | 20,222,932 | ||||
Stock-based compensation | 3,578 | 3,578 | ||||
Vested and delivered restricted stock units | (1,084) | (1,084) | ||||
Vested and delivered restricted stock units, Shares | 11,831 | |||||
Exercise of stock options | 6,618 | 6,618 | ||||
Exercise of stock options, Shares | 129,549 | |||||
Repurchases of common stock | $ (145,182) | (145,182) | ||||
Repurchases of common stock, Shares | (1,160,879) | 1,160,879 | ||||
Net income | 20,114 | 20,114 | ||||
Net gains (losses) from foreign currency translation | (383) | (383) | ||||
Balances at Nov. 03, 2018 | $ 2 | 934,199 | (2,300) | 239,020 | $ (1,145,751) | 25,170 |
Balances, shares at Nov. 03, 2018 | 21,209,940 | 21,383,811 | ||||
Balances at Feb. 02, 2019 | $ 2 | 356,422 | (2,333) | (392,538) | $ (243) | $ (38,690) |
Balances, shares at Feb. 02, 2019 | 20,477,813 | 2,800 | 20,477,813 | |||
Stock-based compensation | 15,788 | $ 15,788 | ||||
Issuance of restricted stock, Shares | 7,014 | |||||
Vested and delivered restricted stock units | (6,538) | (6,538) | ||||
Vested and delivered restricted stock units, Shares | 104,608 | |||||
Exercise of stock options | 18,509 | 18,509 | ||||
Exercise of stock options, Shares | 452,219 | |||||
Repurchases of common stock | $ (250,032) | (250,032) | ||||
Repurchases of common stock, Shares | (2,167,396) | 2,167,396 | ||||
Retirement of treasury stock | (13,180) | (237,091) | $ 250,271 | |||
Retirement of treasury stock, Shares | (2,170,154) | |||||
Equity component value of convertible note issuance-net | 87,070 | 87,070 | ||||
Sale of common stock warrant | 50,225 | 50,225 | ||||
Purchase of convertible note hedges | (91,350) | (91,350) | ||||
Shares issued in connection with warrant agreements | 54,009 | |||||
Net income | 151,942 | 151,942 | ||||
Net gains (losses) from foreign currency translation | (148) | (148) | ||||
Conversion of convertible senior notes | $ 4 | 4 | ||||
Conversion of convertible senior notes, Shares | 42 | (42) | ||||
Balances at Nov. 02, 2019 | $ 2 | 416,946 | (2,481) | (477,687) | $ (63,220) | |
Balances, shares at Nov. 02, 2019 | 18,928,309 | 18,928,309 | ||||
Balances at Aug. 03, 2019 | $ 2 | 355,010 | (2,780) | (530,150) | $ (177,918) | |
Balances, shares at Aug. 03, 2019 | 18,591,763 | |||||
Stock-based compensation | 5,009 | 5,009 | ||||
Vested and delivered restricted stock units | (304) | (304) | ||||
Vested and delivered restricted stock units, Shares | 2,967 | |||||
Exercise of stock options | 11,286 | 11,286 | ||||
Exercise of stock options, Shares | 279,570 | |||||
Equity component value of convertible note issuance-net | 87,070 | 87,070 | ||||
Sale of common stock warrant | 50,225 | 50,225 | ||||
Purchase of convertible note hedges | (91,350) | (91,350) | ||||
Shares issued in connection with warrant agreements | 54,009 | |||||
Net income | 52,463 | 52,463 | ||||
Net gains (losses) from foreign currency translation | 299 | 299 | ||||
Balances at Nov. 02, 2019 | $ 2 | $ 416,946 | $ (2,481) | $ (477,687) | $ (63,220) | |
Balances, shares at Nov. 02, 2019 | 18,928,309 | 18,928,309 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | Feb. 02, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||||
Net income | $ 151,942 | $ 108,481 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||
Depreciation and amortization | $ 23,435 | $ 22,995 | 75,945 | 64,934 | |
Non-cash operating lease cost | 48,855 | 51,095 | |||
Asset impairments | 1,660 | 5,337 | |||
Asset held for sale gain | (1,529) | ||||
Amortization of debt discount | 33,528 | 29,669 | |||
Accretion of debt discount upon settlement of debt | (70,482) | ||||
Stock-based compensation expense | 5,100 | 3,700 | 16,109 | 17,777 | |
Non-cash finance lease interest expense | 5,678 | 4,843 | 16,864 | 11,254 | |
Product recalls | (3,516) | ||||
Net non-cash charges resulting from inventory step-up | 380 | ||||
Deferred income taxes | 667 | (670) | |||
Loss on extinguishment of debt-net | 6,857 | 5,903 | 917 | ||
Other non-cash interest expense | 3,306 | 2,648 | |||
Change in assets and liabilities: | |||||
Accounts receivable | (2,809) | (11,098) | |||
Merchandise inventories | 102,788 | (39,815) | |||
Prepaid expense and other assets | 42,178 | (51,614) | |||
Landlord assets under construction-net of tenant allowances | (49,387) | (39,605) | |||
Accounts payable and accrued expenses | (41,474) | (11,529) | |||
Deferred revenue and customer deposits | 14,406 | 20,893 | |||
Other current liabilities | (53,016) | 9,238 | |||
Current and non-current operating lease liability | (61,887) | (57,806) | |||
Other non-current obligations | (19,054) | (13,770) | |||
Net cash provided by operating activities | 210,997 | 96,716 | |||
CASH FLOWS FROM INVESTING ACTIVITIES | |||||
Capital expenditures | (64,614) | (73,278) | |||
Deposit on asset under construction | (30,000) | ||||
Proceeds from sale of assets | 24,078 | ||||
Net cash used in investing activities | (70,536) | (73,278) | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Borrowings under promissory and equipment security notes | 99,000 | ||||
Repayments under promissory and equipment security notes | (10,280) | (31,974) | |||
Debt issuance costs | (4,636) | ||||
Proceeds from issuance of convertible senior notes | 350,000 | 335,000 | |||
Purchase of convertible note hedges | (91,350) | (91,857) | |||
Principal payments under finance leases | (7,136) | (4,937) | |||
Repurchases of common stock-including commissions | (250,032) | (145,182) | |||
Proceeds from exercise of stock options | 18,509 | 35,827 | |||
Tax withholdings related to issuance of stock-based awards | (6,538) | (8,947) | |||
Payments under promissory notes related to share repurchases | (892) | ||||
Net cash used in financing activities | (108,008) | (39,868) | |||
Effects of foreign currency exchange rate translation | (3) | (136) | |||
Net increase (decrease) in cash and cash equivalents and restricted cash equivalents | 32,450 | (16,566) | |||
Cash and cash equivalents and restricted cash equivalents | |||||
Beginning of period-cash and cash equivalents | 5,803 | 17,907 | $ 17,907 | ||
Beginning of period-restricted cash equivalents (construction related deposits) | 7,407 | 7,407 | |||
Beginning of period-cash and cash equivalents and restricted cash equivalents | 5,803 | 25,314 | 25,314 | ||
End of period-cash and cash equivalents | 38,253 | 7,755 | 38,253 | 7,755 | 5,803 |
End of period-restricted cash equivalents (construction related deposits) | 993 | 993 | |||
End of period-cash and cash equivalents and restricted cash equivalents | $ 38,253 | $ 8,748 | 38,253 | 8,748 | $ 5,803 |
Non-cash transactions: | |||||
Property and equipment additions in accounts payable and accrued expenses at period-end | 11,859 | 11,591 | |||
Landlord asset additions in accounts payable and accrued expenses at period-end | 20,475 | 16,120 | |||
Landlord asset additions from unpaid construction related deposits | 195 | 809 | |||
Reclassification of assets from landlord assets under construction to finance lease right-of-use assets | 73,275 | ||||
Issuance of non-current notes payable related to share repurchases from former employees | 243 | ||||
Senior notes. | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Debt issuance costs | (4,818) | (6,349) | |||
Proceeds from issuance of warrants | 50,225 | 51,021 | |||
Repayments of convertible senior notes | (278,560) | ||||
Asset based credit facility | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Borrowings | 322,500 | 656,000 | |||
Repayments | (380,000) | (748,470) | |||
Term Loan | |||||
CASH FLOWS FROM FINANCING ACTIVITIES | |||||
Borrowings | 320,000 | ||||
Repayments | $ (234,000) | $ (80,000) |
The Company
The Company | 9 Months Ended |
Nov. 02, 2019 | |
Accounting Policies | |
The Company | NOTE 1—THE COMPANY Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites. As of November 2, 2019, the Company operated a total of 70 RH Galleries and 39 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 15 Waterworks showrooms throughout the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from the Company’s records and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, and revisions due to the adoption of the new lease accounting standard described in Note 2— Recently Issued Accounting Standards Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (the “2018 Form 10-K”). Certain prior year amounts have been adjusted to conform to the current period presentation due to the adoption of the new lease accounting standard. Refer to Note 2— Recently Issued Accounting Standards The results of operations for the three and nine months ended November 2, 2019 presented herein are not necessarily indicative of the results to be expected for the full fiscal year. Convertible Senior Notes In September 2019, the Company issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 (the “2024 Notes”). In connection with the issuance of these notes, the Company entered into convertible note hedge transactions for which it paid an aggregate amount of $91.4 million. In connection with the issuance of the 2024 Notes, the Company sold warrants to purchase shares of common stock of the Company, for which it received aggregate proceeds of approximately $50.2 million. Taken together, the Company received total cash proceeds of $304.1 million, net of discounts upon original issuance and offering costs of $4.8 million, from the issuance of the 2024 Notes and the related warrants. Refer to Note 8— Convertible Senior Notes . Revisions During the adoption process of the new lease accounting standard (refer to Note 2— Recently Issued Accounting Standards Exit or Disposal Cost Obligations February 3, 2018 and the nine months ended November 3, 2018, respectively. This error also resulted in an overstatement of retained earnings as of February 3, 2018 of $1.4 million, from $152.4 million as reported to $151.0 million as revised, and as of November 3, 2018 of $2.3 million, from $245.9 million as reported to $243.6 million as revised, prior to the impact of the modified retrospective application of the new lease accounting standard as further discussed in Note 2. In addition, as of February 2, 2019, this error resulted in an understatement of other non-current obligations of $3.3 million, an overstatement of other current liabilities of $1.0 million and understatement of accumulated deficit of $2.3 million, from $376.8 million as reported to $379.1 million as revised. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying unaudited interim financial statements to reflect the correction of these errors. In addition, during the adoption process of the new lease accounting standard, the Company identified an error in its previously reported consolidated statement of cash flows for the quarterly and annual periods in fiscal 2018. This error resulted in an understatement of $9.2 million of net cash provided by operating activities and an understatement of $9.2 million of net cash used in investing activities for each reporting period in fiscal 2018. There was no impact on the condensed consolidated balance sheets, condensed consolidated statements of income or the condensed consolidated statement of stockholders’ equity (deficit) related to this error. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying unaudited interim financial statements to reflect the correction of these errors. The following are selected line items from the Company’s condensed consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard ( in thousands Nine Months Ended November 3, 2018 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (23,601) $ 9,201 $ (14,400) Net cash provided by operating activities 127,592 9,201 136,793 Cash flows from investing activities: Capital expenditures (104,403) (9,201) (113,604) Net cash used in investing activities (104,403) (9,201) (113,604) Fiscal Year Ended February 2, 2019 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (452) $ 9,201 $ 8,749 Net cash provided by operating activities 300,556 9,201 309,757 Cash flows from investing activities: Capital expenditures (136,736) (9,201) (145,937) Net cash used in investing activities (136,736) (9,201) (145,937) |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
Nov. 02, 2019 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS Accounting for Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-02— Leases Codification Improvements to Topic 842 (Leases) Leases (Topic 842)—Targeted Improvements standard, and (iii) provides lessors with a practical expedient for separating components of a contract. Accounting Standards Update 2016-02, Accounting Standards Update 2018-10 and Accounting Standards Update 2018-11 are collectively referred to as the “ASUs.” The Company adopted the ASUs as of February 3, 2019 using a modified retrospective approach. Under this adoption method, the results of prior comparative periods are presented with an adjustment to opening retained earnings of the earliest comparative period presented. In addition, the Company elected to adopt the package of transition practical expedients, which permitted the Company not to reassess its prior conclusions regarding lease identification, lease classification and initial direct costs. The Company adopted the policy election to not separate lease and non-lease components for certain asset classes (such as real estate leases), as well as the short-term lease policy election offered under the ASUs whereby the Company does not recognize right of use assets and lease liabilities for leases with terms of 12 months or less. The Company did not apply the hindsight practical expedient upon adoption. As a result of the adoption of the ASUs, the Company recorded an increase to the fiscal 2017 (earliest comparative period) opening retained earnings balance of $4.0 million, inclusive of the tax impact. The following table presents the impact of adopting the ASUs, as well as the correction of an immaterial error as discussed in Note 1— The Company in thousands February 2, 2019 As Reported Adjustments and Other (1) As Adjusted and Revised ASSETS Current assets: Cash and cash equivalents $ 5,803 $ — $ 5,803 Accounts receivable—net 40,224 — 40,224 Merchandise inventories 531,947 — 531,947 Asset held for sale — 21,795 (2) 21,795 Prepaid expense and other current assets 104,719 (521) (3) 104,198 Total current assets 682,693 21,274 703,967 Property and equipment—net 863,562 89,395 (4) 952,957 Operating lease right-of-use assets — 440,504 (5) 440,504 Goodwill 124,379 — 124,379 Tradenames, trademarks and domain names 86,022 — 86,022 Deferred tax assets 30,033 5,570 (6) 35,603 Other non-current assets 19,345 60,241 (7) 79,586 Total assets $ 1,806,034 $ 616,984 $ 2,423,018 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $ 320,441 $ 56 (8) $ 320,497 Deferred revenue and customer deposits 152,595 — 152,595 Convertible senior notes due 2019—net 343,789 — 343,789 Operating lease liabilities — 66,249 (5) 66,249 Other current liabilities 101,347 8,109 (1)(9) 109,456 Total current liabilities 918,172 74,414 992,586 Asset based credit facility 57,500 — 57,500 Convertible senior notes due 2020—net 271,157 — 271,157 Convertible senior notes due 2023—net 249,151 — 249,151 Financing obligations under build-to-suit lease transactions 228,928 (228,928) (10) — Deferred rent and lease incentives 53,742 (53,742) (10) — Non-current operating lease liabilities — 437,557 (5) 437,557 Non-current finance lease liabilities — 421,245 (9) 421,245 Other non-current obligations 50,346 (17,834) (1)(11) 32,512 Total liabilities 1,828,996 632,712 2,461,708 Stockholders’ deficit: Preferred stock — — — Common stock 2 — 2 Additional paid-in capital 356,422 — 356,422 Accumulated other comprehensive loss (2,333) (1) (2,334) Accumulated deficit (376,810) (15,727) (1)(12) (392,537) Treasury stock (243) — (243) Total stockholders’ deficit (22,962) (15,728) (38,690) Total liabilities and stockholders’ deficit $ 1,806,034 $ 616,984 $ 2,423,018 (1) During the adoption process of the ASUs, the Company identified a lease agreement that was incorrectly accounted for as an impaired lease under ASC 420— Exit or Disposal Cost Obligations in fiscal 2017 and the first quarter of fiscal 2018. Refer to “Revisions” within Note 1— The Company . (2) Represents recognition of asset held for sale under a sale-leaseback transaction. (3) Represents reclassification of prepaid rent to operating lease liabilities and other current liabilities (for finance leases). (4) Represents (i) recognition of finance lease right-of-use assets, partially offset by (ii) derecognition of non-Company owned properties that were capitalized under previously existing build-to-suit accounting policies, (iii) reclassification of construction in progress assets determined to be landlord assets to other non-current assets and (iv) reclassification of initial direct costs related to operating leases to operating lease right-of-use assets. (5) Represents recognition of operating lease right-of-use assets and corresponding current and non-current lease liabilities. The operating lease right-of-use asset also includes the reclassification of deferred rent and unamortized lease incentives related to operating leases and the reclassification of initial direct costs from property and equipment—net. (6) Represents recognition of net deferred tax assets related to the adoption of the ASUs. (7) Primarily represents reclassification from property and equipment—net of construction in progress assets determined to be landlord assets for which the lease has not yet commenced. (8) Represents a reclassification of an accrual for real estate taxes. (9) Represents recognition of the current and non-current finance lease liabilities. The other current liabilities line item also includes the reclassification of current obligations associated with leases previously reported as capital leases to finance lease liabilities. (10) Represents (i) derecognition of liabilities related to non-Company owned properties that were consolidated under previously existing build-to-suit accounting policies and (ii) reclassification of deferred rent and unamortized lease incentives to operating lease right-of-use assets upon adoption of the ASUs. (11) Represents (i) derecognition of the net lease loss liabilities as such balances were reclassified to operating lease right-of-use assets and operating current and non-current liabilities and (ii) the reclassification of non-current obligations associated with leases previously reported as capital leases to finance lease liabilities. (12) Represents a decrease to the consolidated net income for fiscal 2017 and fiscal 2018, as well as an increase of $4.0 million to beginning fiscal 2017 retained earnings related to the adoption of the ASUs. Refer to Note 7— Leases Cloud Computing In August 2018, the FASB issued Accounting Standards Update 2018-15—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract Accounting Standards Update 2015-05—Customers Accounting for Fees in a Cloud Computing Agreement. |
Prepaid Expense and Other Asset
Prepaid Expense and Other Assets | 9 Months Ended |
Nov. 02, 2019 | |
Prepaid Expense and Other Assets | |
Prepaid Expense and Other Assets | NOTE 3—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consist of the following ( in thousands November 2, February 2, 2019 2019 Vendor deposits $ 12,347 $ 11,836 Federal and state tax receivable 6,611 4,862 Capitalized catalog costs 5,956 16,178 Right of return asset for merchandise 5,779 5,883 Prepaid expense and other current assets 16,032 15,439 Insurance recovery receivable (1) — 50,000 Total prepaid expense and other current assets $ 46,725 $ 104,198 (1) Refer to Note 15— Commitments and Contingencies . Other non-current assets consist of the following ( in thousands November 2, February 2, 2019 2019 Landlord assets under construction $ 117,253 $ 63,159 Deposits on asset under construction 37,000 — Promissory note receivable, including interest 5,292 5,104 Other deposits 5,155 5,068 Deferred financing fees 2,871 3,415 Other non-current assets 3,057 2,840 Total other non-current assets $ 170,628 $ 79,586 |
Goodwill, Tradenames, Trademark
Goodwill, Tradenames, Trademarks and Domain Names | 9 Months Ended |
Nov. 02, 2019 | |
Goodwill, Tradenames, Trademarks and Domain Names | |
Goodwill, Tradenames, Trademarks and Domain Names | NOTE 4—GOODWILL, TRADENAMES, TRADEMARKS AND DOMAIN NAMES The following sets forth the goodwill, tradenames, trademarks and domain names activity for the Company’s two operating segments, RH Segment and Waterworks (See Note 16— Segment Reporting in thousands Foreign February 2, Currency November 2, 2019 Translation 2019 RH Segment Goodwill $ 124,379 $ (3) $ 124,376 Tradenames, trademarks and domain names 48,563 — 48,563 Waterworks (1) Tradename (2) 37,459 — 37,459 (1) Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively . (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018. |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Nov. 02, 2019 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | NOTE 5—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accounts payable and accrued expenses consist of the following ( in thousands November 2, February 2, 2019 2019 Accounts payable $ 138,034 $ 183,039 Accrued compensation 50,905 64,192 Accrued freight and duty 22,201 20,787 Accrued sales taxes 19,900 18,354 Accrued catalog costs 15,570 10,276 Accrued occupancy 12,525 10,839 Accrued professional fees 4,516 2,050 Other accrued expenses 25,286 10,960 Total accounts payable and accrued expenses $ 288,937 $ 320,497 Other current liabilities consist of the following ( in thousands November 2, February 2, 2019 2019 Promissory note on asset under construction $ 30,000 $ — Current portion of debt 21,760 892 Allowance for sales returns 19,807 19,821 Unredeemed gift card and merchandise credit liability 18,749 17,192 Finance lease liabilities 8,755 9,184 Product recall reserve 2,301 7,767 Other current liabilities 5,060 3,881 Provision for legal settlement (1) — 50,000 Federal tax payable — 719 Total other current liabilities $ 106,432 $ 109,456 (1) Refer to Note 15— Commitments and Contingencies. Contract Liabilities The Company defers revenue associated with merchandise delivered via the home-delivery channel. The Company expects that substantially all of the deferred revenue, customer deposits and deferred membership fees as of November 2, 2019 will be recognized within the next six months as the performance obligations are satisfied. In addition, the Company defers revenue when cash payments are received in advance of performance for unsatisfied obligations related to its gift cards and merchandise credits. During the three months ended , 2019 and , 2018, the Company recognized $5.1 million and $5.9 million, respectively, of revenue related to previous deferrals related to its gift cards and merchandise credits. During the nine months ended , 2019 and , 2018, the Company recognized $14.4 million and $15.6 million, respectively, of revenue related to previous deferrals related to its gift cards and merchandise credits. During the three months ended November 2, 2019 and November 3, 2018, the Company recorded gift card breakage of $0.5 million and $0.4 million, respectively. During the nine months ended November 2, 2019 and November 3, 2018, the Company recorded gift card breakage of $1.3 million and $1.2 million, respectively. The Company expects that approximately 70% of the remaining gift card and merchandise credit liabilities as of November 2, 2019 will be recognized within the next twelve months as the gift cards are redeemed by customers. |
Other Non-Current Obligations
Other Non-Current Obligations | 9 Months Ended |
Nov. 02, 2019 | |
Other Non-Current Obligations. | |
Other Non-Current Obligations | NOTE 6—OTHER NON-CURRENT OBLIGATIONS Other non-current obligations consist of the following ( in thousands November 2, February 2, 2019 2019 Notes payable for share repurchases $ 18,741 $ 18,741 Rollover units and profit interests (1) 2,957 2,637 Unrecognized tax benefits 2,741 2,992 Deferred contract incentive (2) 1,191 2,976 Other non-current obligations 3,063 5,166 Total other non-current obligations $ 28,693 $ 32,512 (1) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 14 — Stock-Based Compensation . (2) Represents the non-current portion of an incentive payment received in relation to a 5-year service agreement, which is amortized over the term of the agreement. . |
Leases
Leases | 9 Months Ended |
Nov. 02, 2019 | |
Leases | |
Leases | NOTE 7—LEASES Accounting Policy The Company leases nearly all of its retail and outlet store locations, corporate headquarters, distribution and home delivery facilities, as well as other storage and office space. The initial lease terms of the Company’s real estate leases generally range from ten to fifteen years , and certain leases contain renewal options for up to an additional 25 years , the exercise of which is at the Company’s sole discretion. In recognizing the lease right-of-use assets and lease liabilities, the Company utilizes the lease term for which it is reasonably certain to use the underlying asset, including consideration of options to extend or terminate the lease. The Company also leases certain equipment with lease terms generally ranging from three to seven years . The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictions or covenants. Leases, or lease extensions, with a term of twelve months or less are not recorded on the condensed consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. The Company accounts for lease and non-lease components as a single lease component for real estate leases, and for all other asset classes the Company accounts for the components separately. The Company determines the lease classification and begins to recognize lease and any related financing expenses upon the lease’s commencement, which for real estate leases is generally upon store opening or, to a lesser extent, when the Company takes possession or control of the asset. As most of the Company’s leases do not include an implicit interest rate, the Company determines the discount rate for each lease based upon the incremental borrowing rate (“IBR”) in order to calculate the present value of lease payments at the commencement date. The IBR is computed as the rate of interest that the Company would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) an amount equal to the total lease payments and (iv) in a similar economic environment. The Company utilizes its asset based credit facility as the basis for determining the applicable IBR for each lease. Certain of the Company’s lease agreements include rental payments based on a percentage of retail sales over contractual levels. Due to the variable and unpredictable nature of such payments, the Company does not recognize a lease right-of-use asset and lease liability related to such payments. Estimated variable rental payments are included in accounts payable and accrued expenses on the condensed consolidated balance sheets. The Company has a small group of leases that include rental payments periodically adjusted for inflation (e.g., based on the consumer price index). The Company includes these variable payments in the initial measurement of the lease right-of-use asset and lease liability if such increases have a minimum rent escalation (e.g., floor). However, the Company excludes these variable payments from the initial measurement of the lease right-of-use asset and lease liability in the case of lease arrangements that do not specify a minimum rent escalation. The Company rents or subleases certain real estate to third parties under operating leases and recognizes rental income received on a straight-line basis over the lease term, which is recorded as an offset to selling, general and administrative expenses on the condensed consolidated statements of income. Lease arrangements may require the landlord to provide tenant allowances directly to the Company. Standard tenant allowances received from landlords, typically those received under operating lease agreements, are recorded as cash and cash equivalents with an offset recorded in lease right-of-use assets on the condensed consolidated balance sheets. In certain instances tenant allowances are provided for the Company to design and build the leased asset. Tenant allowances received from landlords during the construction phase of a leased asset and prior to lease commencement are recorded as cash and cash equivalents with an offset recorded in other non-current assets (to the extent the Company has incurred related capital expenditure for construction costs) or in other current liabilities (to the extent that payments are received prior to capital construction expenditures by the Company) on the condensed consolidated balance sheets. After the leased asset is constructed and the lease commences, the Company reclassifies the tenant allowance from other non-current assets or other current liabilities to lease right-of-use assets on the condensed consolidated balance sheets. Lease Classification Certain of the Company’s real estate and property and equipment are held under finance leases. Lease related assets are included in finance lease right-of-use assets within property and equipment —net on the condensed consolidated balance sheets. Leases that do not meet the definition of a finance lease are considered operating leases. Lease related assets are included in operating lease right-of-use assets on the condensed consolidated balance sheets. Construction Related Activities The Company is sometimes involved in the construction of leased stores for certain of its newer Design Galleries. Prior to construction commencement, the Company evaluates whether or not it, as lessee, controls the asset being constructed and, depending on the extent to which it is involved, the Company may be the “deemed owner” of the leased asset for accounting purposes during the construction period. If the Company is not the “deemed owner” for accounting purposes during the construction period, such lease is classified as either an operating or finance lease upon lease commencement. During the construction period and prior to lease commencement, any capital amounts contributed by the Company toward the construction of the leased asset (excluding normal leasehold improvements, which are recorded within property and equipment—net) are recorded as “Landlord assets under construction” within other non-current assets on the condensed consolidated balance sheets (refer to Note 3— Prepaid Expense and Other Assets If the Company is the “deemed owner” for accounting purposes, upon commencement of the construction project, it is required to capitalize (i) costs incurred by the Company and (ii) the cash and non-cash assets contributed by the landlord for construction as property and equipment on its condensed consolidated balance sheets as build-to-suit assets, with an offsetting financing obligation under build-to-suit lease transactions. The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord to those responsible for construction, are included as property and equipment additions due to build-to-suit lease transactions within the non-cash section of the consolidated statements of cash flows. Over the lease term, these non-cash additions to property and equipment do not impact the Company’s cash outflows, nor do they impact net income within the consolidated statements of income. Upon completion of the construction project, the Company performs a sale-leaseback analysis to determine if it can derecognize the build-to-suit asset and corresponding financing obligation. If the asset and liability cannot be derecognized, the Company accounts for the agreement as a debt-like arrangement. If the Company is involved in a debt-like arrangement for a non-real estate asset under construction for which the Company plans to lease such asset upon construction completion and makes deposits during the construction period, the Company recognizes the related deposits as “Deposits on asset under construction” within other non-current assets on the condensed consolidated balance sheets (refer to Note 3— Prepaid Expense and Other Assets Accounts Payable, Accrued Expenses and Other Current Liabilities Lease Disclosures Lease costs—net consist of the following ( in thousands ): Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Operating lease cost (1)(2) $ 21,115 $ 21,912 $ 63,491 $ 66,001 Finance lease costs Amortization of leased assets (1) 9,471 7,911 27,558 20,251 Interest on lease liabilities (3) 5,678 4,843 16,864 11,254 Sublease income (4) (2,493) (2,262) (7,282) (5,533) Total lease costs—net $ 33,771 $ 32,404 $ 100,631 $ 91,973 (1) Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on the Company’s policy. Refer to Note 3— Significant Accounting Policies in the 2018 Form 10-K. (2) Includes short-term leases and variable lease costs. (3) Included in interest expense—net on the condensed consolidated statements of income. (4) Included in selling, general and administrative expenses on the condensed consolidated statements of income. Lease right-of-use assets and lease liabilities consist of the following ( in thousands ): November 2, February 2, 2019 2019 Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 415,912 $ 440,504 Finance leases (1)(2) Property and equipment—net 644,023 646,875 Total lease right-of-use assets 1,059,935 1,087,379 Liabilities Current Operating leases Operating lease liabilities $ 55,753 $ 66,249 Finance leases Other current liabilities 8,755 9,184 Total lease liabilities—current 64,508 75,433 Non-current Operating leases Non-current operating lease liabilities $ 412,247 $ 437,557 Finance leases Non-current finance lease liabilities 431,379 421,245 Total lease liabilities—non-current 843,626 858,802 Total lease liabilities $ 908,134 $ 934,235 (1) Finance lease right-of-use assets include capitalized amounts related to the Company’s construction activities to design and build leased assets, as well as rent payments made to landlords for which the respective Galleries are not yet opened. (2) Finance lease right-of-use assets are recorded net of accumulated amortization of $83.3 million and $55.5 million as of November 2, 2019 and February 2, 2019, respectively. The maturities of lease liabilities are as follows as of November 2, 2019 ( in thousands Fiscal year Operating Finance Total Remainder of fiscal 2019 $ 11,850 $ 5,782 $ 17,632 2020 79,843 33,837 113,680 2021 65,919 34,223 100,142 2022 58,076 34,650 92,726 2023 54,730 35,213 89,943 2024 50,927 35,692 86,619 Thereafter 239,696 548,348 788,044 Total lease payments (1) 561,041 727,745 1,288,786 Less—imputed interest (2) (93,041) (287,611) (380,652) Present value of lease liabilities (3) $ 468,000 $ 440,134 $ 908,134 (1) Total lease payments exclude $406.9 million of legally binding payments for leases signed but not yet commenced as of November 2, 2019. (2) Calculated using the incremental borrowing rate for each lease at lease commencement. (3) Excludes future commitments under short-term lease agreements of $1.0 million as of November 2, 2019. Supplemental information related to leases consists of the following: Nine Months Ended November 2, November 3, 2019 2018 Weighted-average remaining lease term (years) Operating leases 9.0 9.4 Finance leases 18.7 19.9 Weighted-average discount rate Operating leases 3.82% 3.76% Finance leases 5.25% 5.29% Nine Months Ended November 2, November 3, 2019 2018 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (75,011) $ (74,186) Operating cash flows from finance leases (16,864) (11,254) Financing cash flows from finance leases (7,136) (4,937) Total cash outflows from leases $ (99,011) $ (90,377) Lease right-of-use assets obtained in exchange for lease obligations (non-cash) Finance leases $ 18,892 $ 174,920 Operating leases 26,241 25,843 Assets Held for Sale and Sale-Leaseback Transaction During the fourth quarter of fiscal 2018, the Company committed to a plan to sell the Yountville Design Gallery, which resulted in a reclassification of such Gallery from property and equipment to asset held for sale on the condensed consolidated balance sheets as of February 2, 2019. The Company performed an assessment and determined that based on management’s best estimate of the fair value of such Gallery as of February 2, 2019, it had an impairment of $8.5 million in fiscal 2018 in the RH Segment. During the three months ended November 2, 2019, the Company executed a sale-leaseback transaction for the Yountville Design Gallery for sales proceeds of $23.5 million, which qualified for sale-leaseback accounting in accordance with ASC 842. Concurrently with the sale, the Company entered into an operating leaseback arrangement with an initial lease term of 15 years and renewal options for up to an additional 30 years. The Company recognized a gain related to the execution of the sale transaction of $1.2 million in the three months ended November 2, 2019, which was recorded in selling, general and administrative expenses on the condensed consolidated statements of income. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Nov. 02, 2019 | |
Debt Disclosure | |
Convertible Senior Notes | NOTE 8—CONVERTIBLE SENIOR NOTES $350 million 0.00% Convertible Senior Notes due 2024 In September 2019, the Company issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 ( the “2024 Notes”). The 2024 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2024 Notes will mature on September 15, 2024, unless earlier purchased by the Company or converted. The 2024 Notes will not bear interest, except that the 2024 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2024 Notes. The 2024 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2024 Notes, which may result in the acceleration of the maturity of the 2024 Notes, as described in the indenture governing the 2024 Notes. The initial conversion rate applicable to the 2024 Notes is 4.7304 shares of common stock per $1,000 principal amount of 2024 Notes, or a total of approximately 1.656 million shares for the total $350 million principal amount. This initial conversion rate is equivalent to an initial conversion price of approximately $211.40 per share, which represents a 25% premium to the $169.12 closing share price on the day the 2024 Notes were priced. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2024 Notes, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2024 Notes in connection with such make-whole fundamental change. Prior to June 15, 2024, the 2024 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after December 31, 2019, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2024 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of November 2, 2019, none of these conditions have occurred and, as a result, the 2024 Notes were not convertible as of November 2, 2019. On and after June 15, 2024 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2024 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2024 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. The Company may not redeem the 2024 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 2024 Notes), holders may require the Company to purchase all or a portion of their 2024 Notes for cash at a price equal to 100% of the principal amount of the 2024 Notes to be purchased plus any accrued and unpaid special interest to, but excluding, the fundamental change purchase date. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2024 Notes, the Company separated the 2024 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2024 Notes and the fair value of the liability component of the 2024 Notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) will be amortized to interest expense using an effective interest rate of 5.74% over the expected life of the 2024 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Debt issuance costs related to the 2024 Notes were comprised of discounts upon original issuance of $3.5 million and third party offering costs of $1.3 million. In accounting for the debt issuance costs related to the issuance of the 2024 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2024 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity (deficit). Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2024 balance on the condensed consolidated balance sheets. During the three and nine months ended November 2, 2019 the Company recorded $0.1 million related to the amortization of debt issuance costs related to the 2024 Notes. The carrying value of the 2024 Notes, excluding the discounts upon original issuance and third party offering costs, is as follows ( in thousands November 2, 2019 Liability component Principal $ 350,000 Less: Debt discount (85,448) Net carrying amount $ 264,552 Equity component (1) $ 87,252 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. The Company recorded interest expense of $1.8 million for the amortization of the debt discount related to the 2024 Notes during the three and nine months ended November 2, 2019. 2024 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2024 Notes and exercise of the overallotment option in September 2019, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 1.656 million shares of its common stock at a price of approximately $211.40 per share. The total cost of the convertible note hedge transactions was approximately $91.4 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 1.656 million shares of the Company’s common stock at a price of $338.24 per share, which represents a 100% premium to the $169.12 closing share price on the day the 2024 Notes were priced. The warrants contain certain adjustment mechanisms whereby the total number of shares to be purchased under such warrants may be increased up to a cap of approximately 3.3 million shares of common stock (which cap may also be subject to adjustment). The Company received approximately $50.2 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2024 Notes until the Company’s common stock is above approximately $338.24 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The Company recorded a deferred tax liability of $21.7 million in connection with the debt discount associated with the 2024 Notes and recorded a deferred tax asset of $22.7 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the condensed consolidated balance sheets. $335 million 0.00% Convertible Senior Notes due 2023 In June 2018, the Company issued in a private offering $300 million principal amount of 0.00% convertible senior notes due 2023 and issued an additional $35 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering (collectively, the “2023 Notes”). The 2023 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2023 Notes will mature on June 15, 2023, unless earlier purchased by the Company or converted. The 2023 Notes will not bear interest, except that the 2023 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2023 Notes. The 2023 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2023 Notes, which may result in the acceleration of the maturity of the 2023 Notes, as described in the indenture governing the 2023 Notes. The initial conversion rate applicable to the 2023 Notes is 5.1640 shares of common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $193.65 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2023 Notes, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2023 Notes in connection with such make-whole fundamental change. Prior to March 15, 2023, the 2023 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2018, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2023 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of November 2, 2019, none of these conditions have occurred and, as a result, the 2023 Notes were not convertible as of November 2, 2019. On and after March 15, 2023 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2023 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2023 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. The Company may not redeem the 2023 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 2023 Notes), holders may require the Company to purchase all or a portion of their 2023 Notes for cash at a price equal to 100% of the principal amount of the 2023 Notes to be purchased plus any accrued and unpaid special interest to, but excluding, the fundamental change purchase date. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2023 Notes, the Company separated the 2023 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2023 Notes and the fair value of the liability component of the 2023 Notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) will be amortized to interest expense using an effective interest rate of 6.35% over the expected life of the 2023 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Debt issuance costs related to the 2023 Notes were comprised of discounts upon original issuance of $1.7 million and third party offering costs of $4.6 million. In accounting for the debt issuance costs related to the issuance of the 2023 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2023 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity (deficit). Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2023 balance on the condensed consolidated balance sheets. During both the three months ended November 2, 2019 and November 3, 2018, the Company recorded $0.2 million related to the amortization of debt issuance costs. During the nine months ended November 2, 2019 and November 3, 2018, the Company recorded $0.7 million and $0.3 million related to the amortization of debt issuance costs, respectively. The carrying values of the 2023 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands November 2, February 2, 2019 2019 Liability component Principal $ 335,000 $ 335,000 Less: Debt discount (68,974) (81,311) Net carrying amount $ 266,026 $ 253,689 Equity component (1) $ 90,990 $ 90,990 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. The Company recorded interest expense of $4.1 million and $3.9 million for the amortization of the debt discount related to the 2023 Notes during the three months ended November 2, 2019 and November 3, 2018, respectively. The Company recorded interest expense of $12.3 million and $5.7 million for the amortization of the debt discount related to the 2023 Notes during the nine months ended November 2, 2019 and November 3, 2018, respectively. 2023 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2023 Notes and exercise of the overallotment option in June 2018, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 1.730 million shares of its common stock at a price of approximately $193.65 per share. The total cost of the convertible note hedge transactions was approximately $91.9 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 1.730 million shares of the Company’s common stock at a price of $309.84 per share. The warrants contain certain adjustment mechanisms whereby the total number of shares to be purchased under such warrants may be increased up to a cap of approximately 3.5 million shares of common stock (which cap may also be subject to adjustment). The Company received approximately $51.0 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2023 Notes until the Company’s common stock is above approximately $309.84 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The Company recorded a deferred tax liability of $22.3 million in connection with the debt discount associated with the 2023 Notes and recorded a deferred tax asset of $22.5 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the condensed consolidated balance sheets. $300 million 0.00% Convertible Senior Notes due 2020 In June 2015, the Company issued in a private offering $250 million principal amount of 0.00% convertible senior notes due 2020 and, in July 2015, the Company issued an additional $50 million principal amount pursuant to the exercise of the overallotment option granted to the initial purchasers as part of its June 2015 offering (collectively, the “2020 Notes”). The 2020 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2020 Notes will mature on July 15, 2020 , unless earlier purchased by the Company or converted. The 2020 Notes will not bear interest, except that the 2020 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2020 Notes. The 2020 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2020 Notes, which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the 2020 Notes. The 2020 Notes are guaranteed by the Company’s primary operating subsidiary, Restoration Hardware, Inc., as Guarantor. The guarantee is the unsecured obligation of the Guarantor and is subordinated to the Guarantor’s obligations from time to time with respect to its credit agreement and ranks equal in right of payment with respect to Guarantor’s other obligations. The initial conversion rate applicable to the 2020 Notes is 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $118.13 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2020 Notes, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2020 Notes in connection with such make-whole fundamental change. Prior to March 15, 2020, the 2020 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2015, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2020 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of November 2, 2019, none of these conditions have occurred and, as a result, the 2020 Notes were not convertible as of November 2, 2019. On and after March 15, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2020 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2020 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. The Company may not redeem the 2020 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 2020 Notes), holders may require the Company to purchase all or a portion of their 2020 Notes for cash at a price equal to 100% of the principal amount of the 2020 Notes to be purchased plus any accrued and unpaid special interest to, but excluding, the fundamental change purchase date. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2020 Notes, the Company separated the 2020 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2020 Notes and the fair value of the liability component of the 2020 Notes. The debt discount will be amortized to interest expense using an effective interest rate of 6.47% over the expected life of the 2020 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Debt issuance costs related to the 2020 Notes were comprised of discounts upon original issuance of $3.8 million and third party offering costs of $2.3 million. In accounting for the debt issuance costs related to the issuance of the 2020 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2020 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity (deficit). Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2020 balance on the condensed consolidated balance sheets. During both the three months ended November 2, 2019 and November 3, 2018, the Company recorded $0.3 million related to the amortization of debt issuance costs. During the nine months ended November 2, 2019 and November 3, 2018, the Company recorded $0.9 million and $0.8 million related to the amortization of debt issuance costs, respectively. The carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands November 2, February 2, 2019 2019 Liability component Principal $ 300,000 $ 300,000 Less: Debt discount (13,548) (27,081) Net carrying amount $ 286,452 $ 272,919 Equity component (1) $ 84,003 $ 84,003 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. The Company recorded interest expense of $4.6 million and $4.3 million for the amortization of the debt discount related to the 2020 Notes during the three months ended November 2, 2019 and November 3, 2018, respectively. The Company recorded interest expense of $13.5 million and $12.7 million for the amortization of the debt discount related to the 2020 Notes during the nine months ended November 2, 2019 and November 3, 2018, respectively. 2020 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2020 Notes in June 2015 and the exercise in full of the overallotment option in July 2015, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 2.540 million shares of its common stock at a price of approximately $118.13 per share. The total cost of the convertible note hedge transactions was approximately $68.3 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 2.540 million shares of the Company’s common stock at a price of $189.00 per share. The warrants contain certain adjustment mechanisms whereby the total number of shares to be purchased under such warrants may be increased up to a cap of approximately 5.1 million shares of common stock (which cap may also be subject to adjustment). The Company received approximately $30.4 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2020 Notes until the Company’s common stock is above approximately $189.00 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The Company recorded a deferred tax liability of $32.8 million in connection with the debt discount associated with the 2020 Notes and recorded a deferred tax asset of $26.6 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the condensed consolidated balance sheets. $350 million 0.00% Convertible Senior Notes due 2019 In June 2014, the Company issued $350 million principal amount of 0.00% convertible senior notes due 2019 (the “2019 Notes”) in a private offering. The 2019 Notes were governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2019 Notes did not bear interest, except that the 2019 Notes were subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2019 Notes. The 2019 Notes were unsecured obligations and did not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events were also considered “events of default” under the 2019 Notes, which could result in the acceleration of the maturity of the 2019 Notes, as described in the indenture governing the 2019 Notes. The 2019 Notes matured on June 15, 2019 . The initial conversion rate applicable to the 2019 Notes was 8.6143 shares of common stock per $1,000 principal amount of 2019 Notes, which was equivalent to an initial conversion price of approximately $116.09 per share. The conversion rate was subject to adjustment upon the occurrence of certain specified events, but was not adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2019 Notes, the Company would, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elected to convert its 2019 Notes in connection with such make-whole fundamental change. Prior to March 15, 2019, the 2019 Notes were convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2014, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2019 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. On and after March 15, 2019, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders could have converted all or a portion of their 2019 Notes at any time, regardless of the foregoing circumstances. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2019 Notes, the Company separated the 2019 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2019 Notes and the fair value of the liability comp |
Credit Facilities
Credit Facilities | 9 Months Ended |
Nov. 02, 2019 | |
Debt Disclosure | |
Credit Facilities | NOTE 9—CREDIT FACILITIES The outstanding balances under the Company’s credit facilities were as follows ( in thousands November 2, February 2, 2019 2019 Outstanding Unamortized Debt Net Carrying Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Amount Issuance Costs Amount Asset based credit facility (1) $ — $ — $ — $ 57,500 $ — $ 57,500 FILO term loan 90,000 (592) 89,408 — — — Equipment promissory notes (2) 58,720 (347) 58,373 — — — Total credit facilities $ 148,720 $ (939) $ 147,781 $ 57,500 $ — $ 57,500 (1) Deferred financing fees associated with the asset based credit facility as of November 2, 2019 and February 2, 2019 were $2.9 million and $3.4 million, respectively, and are included in other current assets on the condensed consolidated balance sheets. (2) Represents total equipment security notes secured by certain of the Company’s property and equipment, of which $21.7 million outstanding was included in other current liabilities and $37.0 million outstanding was included in other non-current obligations on the condensed consolidated balance sheets. Asset Based Credit Facility & FILO Term Loan In August 2011, Restoration Hardware, Inc., along with its Canadian subsidiary, Restoration Hardware Canada, Inc., entered into a credit agreement with Bank of America, N.A., as administrative agent, and certain other lenders (the “Original Credit Agreement”). On June 28, 2017, Restoration Hardware, Inc. entered into an eleventh amended and restated credit agreement (the “Credit Agreement”) among Restoration Hardware, Inc., Restoration Hardware Canada, Inc., various subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “First Lien Administrative Agent”), which amended and restated the Original Credit Agreement. The Credit Agreement has a revolving line of credit with initial availability of up to $600.0 million, of which $10.0 million is available to Restoration Hardware Canada, Inc., and includes a $200.0 million accordion feature under which the revolving line of credit may be expanded by agreement of the parties from $600.0 million to up to $800.0 million if and to the extent the lenders, whether existing lenders or new lenders, agree to increase their credit commitments. In addition, the Credit Agreement established an $80.0 million last in, last out (“LILO”) term loan facility, which was repaid in full in June 2018. The Credit Agreement has a maturity date of June 28, 2022. Borrowings under the revolving line of credit are subject to interest, at the borrowers’ option, at either the bank’s reference rate or London Inter-bank Offered Rate (“LIBOR”) (or, in the case of the revolving line of credit, the Bank of America “BA” Rate or the Canadian Prime Rate, as such terms are defined in the Credit Agreement, for Canadian borrowings denominated in Canadian dollars or the United States Index Rate or LIBOR for Canadian borrowings denominated in United States dollars) plus an applicable margin rate, in each case. On April 4, 2019, Restoration Hardware, Inc., entered into a third amendment to the Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, (a) established a $120.0 million first in, last out (“FILO”) term loan facility, which amount was fully borrowed as of April 4, 2019 and which incurs interest at a rate that is 1.25% greater than the interest rate applicable to the revolving loans provided for under the Credit Agreement at any time, (b) provided for additional permitted indebtedness, as defined in the Credit Agreement, that the loan parties can incur, and (c) modified the borrowing availability under the Credit Agreement in certain circumstances. In October 2019, the Company repaid $30.0 million under the FILO term loan. As a result, $0.2 million of accelerated debt issuance costs were recorded within loss on extinguishment of debt—net in the three months ended November 2, 2019. As of November 2, 2019, the Company had $90.0 million of borrowings outstanding under the FILO term loan facility, which has a maturity date of June 28, 2022. In addition, under the Credit Agreement, the Company is required to meet specified financial ratios in order to undertake certain actions, and the Company may be required to maintain certain levels of excess availability or meet a specified consolidated fixed-charge coverage ratio (“FCCR”). Subject to certain exceptions, the trigger for the FCCR occurs if the domestic availability under the revolving line of credit is less than the greater of (i) $40.0 million and (ii) 10% of the sum of (a) the lesser of (x) the aggregate revolving commitments under the Credit Agreement and (y) the aggregate revolving borrowing base, plus (b) the lesser of (x) the then outstanding amount of the FILO term loan or (y) the FILO term loan borrowing base. If the availability under the Credit Agreement is less than the foregoing amount, then Restoration Hardware, Inc. is required subject to certain exceptions to maintain an FCCR of at least one to one. On May 31, 2019, Restoration Hardware, Inc. entered into a fourth amendment to the Credit Agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, amends the Credit Agreement to (a) extend the time to deliver monthly financial statements to the lenders for the fiscal months ending February 2019 and March 2019 until June 19, 2019, (b) remove the requirement to deliver monthly financial statements to the lenders for the last fiscal month of any fiscal quarter, and (c) waive any default or event of default under the Credit Agreement relating to the delivery of monthly financial statements or other information to lenders for the fiscal months ending February 2019 and March 2019. As of November 2, 2019, the Company had no outstanding borrowings under the revolving credit facility portion of the Credit Agreement and had $90.0 million of borrowings outstanding under the FILO term loan facility. The availability of credit at any given time under the Credit Agreement is limited by reference to a borrowing base formula based upon numerous factors, including the value of eligible inventory and eligible accounts receivable. As a result of the borrowing base formula, actual borrowing availability under the revolving line of credit could be less than the stated amount of the revolving line of credit (as reduced by the actual borrowings and outstanding letters of credit under the revolving line of credit). Under the terms of such provisions, the amount under the revolving line of credit borrowing base that could be available pursuant to the Credit Agreement as of November 2, 2019 was $345.5 million, net of $13.2 million in outstanding letters of credit. The Credit Agreement contains various restrictive and affirmative covenants, including, among others, required financial reporting, limitations on the ability to incur liens, make loans or other investments, incur additional debt, issue additional equity, merge or consolidate with or into another person, sell assets, pay dividends or make other distributions, or enter into transactions with affiliates, along with other restrictions and limitations typical to credit agreements of this type and size. As of November 2, 2019, Restoration Hardware, Inc. was in compliance with all applicable covenants of the Credit Agreement. Second Lien Credit Agreement On April 10, 2019, Restoration Hardware, Inc., entered into a credit agreement, dated as of April 9, 2019 and effective as of April 10, 2019 (the “Second Lien Credit Agreement”), among (i) Restoration Hardware, Inc., as lead borrower, (ii) the guarantors party thereto, (iii) the lenders party thereto, each of whom are funds and accounts managed or advised by either Benefit Street Partners L.L.C. and its affiliated investment managers or Apollo Capital Management, L.P. and its affiliated investment managers, as applicable, and (iv) BSP Agency, LLC, as administrative agent and collateral agent (the “Second Lien Administrative Agent”) with respect to a second lien term loan in an aggregate principal amount equal to $200.0 million with a maturity date of April 9, 2024 (the “Second Lien Term Loan”). The Second Lien Term Loan of The Second Lien Term Loan bore interest at an annual rate generally based on the London Inter-bank Offered Rate (“LIBOR”) plus 6.50%. This rate is a floating rate that resets periodically based upon changes in LIBOR rates during the life of the Second Lien Term Loan. At the date of the initial borrowing, the rate was set at one-month LIBOR plus 6.50%. Intercreditor Agreement On April 10, 2019, in connection with the Second Lien Credit Agreement, Restoration Hardware, Inc. entered into an Intercreditor Agreement (the “Intercreditor Agreement”), dated as of April 9, 2019 and effective as of April 10, 2019, with the First Lien Administrative Agent and the Second Lien Administrative Agent. The Intercreditor Agreement established various customary inter-lender terms, including, without limitation, with respect to priority of liens, permitted actions by each party, application of proceeds, exercise of remedies in case of default, releases of liens and certain limitations on the amendment of the Credit Agreement and the Second Lien Credit Agreement without the consent of the other party. The Intercreditor Agreement was terminated upon repayment of the Second Lien Term Loan on September 20, 2019. Equipment Loan Facility On September 5, 2017, Restoration Hardware, Inc. entered into a Master Loan and Security Agreement with Banc of America Leasing & Capital, LLC (“BAL”) pursuant to which BAL and the Company agreed that BAL would finance certain equipment of the Company from time to time, with each such equipment financing to be evidenced by an equipment security note setting forth the terms for each particular equipment loan. Each equipment loan is secured by a purchase money security interest in the financed equipment. As of November 2, 2019, the Company had $58.7 million in aggregate amounts outstanding under the equipment security notes. The maturity dates of the equipment security notes vary, but generally have a maturity of three or four years. The Company is required to make monthly installment payments under the equipment security notes. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Nov. 02, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 10—FAIR VALUE MEASUREMENTS Certain financial assets and liabilities are required to be carried at fair value. Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining the fair value, the Company utilizes market data or assumptions that it believes market participants would use in pricing the asset or liability, which would maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, including assumptions about risk and the risks inherent in the inputs of the valuation technique. The degree of judgment used in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Pricing observability is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction. Financial instruments with readily available active quoted prices for which fair value can be measured generally will have a higher degree of pricing observability and a lesser degree of judgment used in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have less, or no, pricing observability and a higher degree of judgment used in measuring fair value. The Company’s financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: ● Level 1—Quoted prices are available in active markets for identical investments as of the reporting date. ● Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. ● Level 3—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of fair value require significant management judgment or estimation. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Fair Value Measurements Recurring Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value due to the short-term nature of activity within these accounts. The estimated fair value and carrying value of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes were as follows ( in thousands November 2, February 2, 2019 2019 Fair Carrying Fair Carrying Value Value (1) Value Value (1) Convertible senior notes due 2019 (2) $ — $ — $ 334,756 $ 344,146 Convertible senior notes due 2020 287,992 286,452 260,258 272,919 Convertible senior notes due 2023 271,208 266,026 230,684 253,689 Convertible senior notes due 2024 263,368 264,552 — — (1) Carrying value represents the principal amount less the equity component of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes classified in stockholders’ equity (deficit), and does not exclude the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third party offering costs, as applicable. (2) The 2019 Notes matured on June 15, 2019. The fair value of each of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of the Company’s convertible notes, when available, the Company’s stock price and interest rates based on similar debt issued by parties with credit ratings similar to the Company (Level 2). Fair Value Measurements Non-Recurring The fair value of the Waterworks reporting unit as of February 2, 2019 was determined based on unobservable (Level 3) inputs and valuation techniques, as discussed in “Impairment” within Note 3— Significant Accounting Policies |
Income Taxes
Income Taxes | 9 Months Ended |
Nov. 02, 2019 | |
Income Taxes | |
Income Taxes | NOTE 11—INCOME TAXES The Company recorded income tax expense of $8.4 million and $4.4 million in the three months ended November 2, 2019 and November 3, 2018, respectively. The Company recorded income tax expense of $36.8 million and $14.5 million in the nine months ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate was 13.7% and 18.0% for the three months ended November 2, 2019 and November 3, 2018, respectively. The effective tax rate was 19.5% and 11.8% for the nine months ended November 2, 2019 and November 3, 2018, respectively. The decrease in the effective tax rate for the three months ended November 2, 2019 as compared to the three months November 3, 2018 is primarily due to higher discrete tax benefits related to net excess tax windfalls from stock-based compensation, whereas the increase in the effective tax rate for the nine months ended November 2, 2019 as compared to the nine months November 3, 2018 is primarily due to lower discrete tax benefits related to net excess tax windfalls from stock-based compensation. As of November 2, 2019, the Company had $8.3 million of unrecognized tax benefits, of which $7.6 million would reduce income tax expense and the effective tax rate, if recognized. As of February 2, 2019, the Company had $8.5 million of unrecognized tax benefits, of which $7.3 million would reduce income tax expense and the effective tax rate, if recognized. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized. As of November 2, 2019, the Company had $0.6 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Nov. 02, 2019 | |
Net Income Per Share | |
Net Income Per Share | NOTE 12—NET INCOME PER SHARE The weighted-average shares used for net income per share are as follows: Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Weighted-average shares—basic 18,765,769 22,082,141 19,069,501 21,850,955 Effect of dilutive stock-based awards 4,712,355 4,966,376 4,347,713 4,603,390 Effect of dilutive convertible senior notes (1) 692,048 654,802 392,211 355,690 Weighted-average shares—diluted 24,170,172 27,703,319 23,809,425 26,810,035 (1) The 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share, $193.65 per share and $211.40 per share, respectively . The 2019 Notes matured on June 15, 2019 and did not have an impact of the Company’s dilutive share count post-maturity, other than the exercise of warrants as discussed within Note 8— Convertible Senior Notes . The following number of options and restricted stock units were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive: Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Options 190,766 348,423 457,300 348,127 Restricted stock units — — — 3,500 Total anti-dilutive stock-based awards 190,766 348,423 457,300 351,627 |
Share Repurchases
Share Repurchases | 9 Months Ended |
Nov. 02, 2019 | |
Share Repurchases | |
Share Repurchases | NOTE 13—SHARE REPURCHASES Share Repurchase Program On October 10, 2018, the Company’s Board of Directors authorized a share repurchase program of up to $700.0 million, of which $250.0 million in share repurchases were completed in fiscal 2018. The $700.0 million authorization amount was replenished by the Board of Directors on March 25, 2019. The Company repurchased approximately 2.2 million shares of its common stock at an average price of $115.36 per share, for an aggregate repurchase amount of approximately $250.0 million, during the first quarter of fiscal 2019 under this share repurchase program. The Company did not make any repurchases under this program during the three months ended August 3, 2019 or the three months ended November 2, 2019. As of November 2, 2019, there was $450.0 million remaining for future share repurchases under this program. Share Repurchases Under Equity Plans As of November 2, 2019 and February 2, 2019, the aggregate unpaid principal amount of the notes payable for share repurchases was $18.7 million and $19.6 million, respectively, of which, as of November 2, 2019, $18.7 million were included in other non-current obligations on the condensed consolidated balance sheets and, as of February 2, 2019, $0.9 million were included in other current liabilities and $18.7 million were included in other non-current obligations on the condensed consolidated balance sheets. During both the three months ended November 2, 2019 and November 3, 2018, the Company recorded interest expense on the outstanding notes of $0.2 million. During both the nine months ended November 2, 2019 and November 3, 2018, the Company recorded interest expense on the outstanding notes of $0.7 million. Of the $18.7 million and $19.6 million notes payable for share repurchases outstanding as of November 2, 2019 and February 2, 2019, respectively, $15.5 million was due to a current board member of the Company. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Nov. 02, 2019 | |
Stock-Based Compensation. | |
Stock-Based Compensation | NOTE 14—STOCK-BASED COMPENSATION The Company estimates the value of equity grants based upon an option-pricing model (“OPM”) and recognizes this estimated value as compensation expense over the vesting periods. The Company recognizes expense associated with performance-based awards when it becomes probable that the performance condition will be met. Once it becomes probable that an award will vest, the Company recognizes compensation expense equal to the number of shares which are probable to vest multiplied by the fair value of the related shares measured at the grant date. Stock-based compensation expense is included in selling, general and administrative expenses on the condensed consolidated statements of income. The Company recorded stock-based compensation expense of $5.1 million and $3.7 million during the three months ended November 2, 2019 and November 3, 2018, respectively. The Company recorded stock-based compensation expense of $16.1 million and $17.8 million during the nine months ended November 2, 2019 and November 3, 2018, respectively. No stock-based compensation cost has been capitalized in the accompanying condensed consolidated financial statements. 2012 Stock Incentive Plan and 2012 Stock Option Plan As of November 2, 2019, 7,309,386 options were outstanding with a weighted-average exercise price of $57.54 per share and 5,919,789 options were vested with a weighted-average exercise price of $53.00 per share. The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of November 2, 2019 was $864.7 million, $831.9 million, and $727.2 million, respectively. Stock options exercisable as of November 2, 2019 had a weighted-average remaining contractual life of 4.38 years. As of November 2, 2019, the total unrecognized compensation expense related to unvested options was $36.3 As of November 2, 2019, the Company had 227,094 restricted stock units outstanding with a weighted-average grant date fair value of $49.09 per share. During the three months ended November 2, 2019, 4,720 restricted stock units vested with a weighted-average grant date and vest date fair value of $62.01 per share. During the nine months ended November 2, 2019, 162,595 restricted stock units vested with a weighted-average grant date and vest date fair value of $56.91 per share. As of November 2, 2019, there was $6.7 million of total unrecognized compensation expense related to unvested restricted stock and restricted stock units which is expected to be recognized over a weighted-average period of 1.71 years. Rollover Units In connection with the acquisition of Waterworks in May 2016, $1.5 million rollover units in the Waterworks subsidiary (the “Rollover Units”) were recorded as part of the transaction. The Rollover Units are subject to the terms of the Waterworks LLC agreement, including redemption rights at an amount equal to the greater of (i) the $1.5 million remitted as consideration in the business combination or (ii) an amount based on the percentage interest represented in the overall valuation of the Waterworks subsidiary (the “Appreciation Rights”). The Appreciation Rights are measured at fair value and are subject to fair value measurements during the expected life of the Rollover Units, with changes to fair value recorded in the condensed consolidated statements of income. The fair value of the Appreciation Rights is determined based on an OPM. The Company did not record any expense related to the Appreciation Rights during both the three and nine months ended November 2, 2019 and November 3, 2018. As of both November 2, 2019 and February 2, 2019, the liability associated with the Rollover Units and related Appreciation Rights was $1.5 million, which is included in other non-current obligations on the condensed consolidated balance sheets. Profit Interests In connection with the acquisition of Waterworks in May 2016, profit interests units in the Waterworks subsidiary (the “Profit Interests”) were issued to certain Waterworks associates. The Profit Interests are measured at their grant date fair value and expensed on a straight-line basis over their expected life, or five years. The Profit Interests are subject to fair value measurements during their expected life, with changes to fair value recorded in the condensed consolidated statements of income. The fair value of the Profit Interests is determined based on an OPM. For both the three months ended November 2, 2019 and November 3, 2018, the Company recorded $0.1 million related to the Profit Interests, which is included in selling, general and administrative expenses on the condensed consolidated statements of income. For both the nine months ended November 2, 2019 and November 3, 2018, the Company recorded $0.3 million related to the Profit Interests. As of November 2, 2019 and February 2, 2019, the liability associated with the Profit Interests was $1.5 million and $1.1 million, respectively, which is included in other non-current obligations on the condensed consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Nov. 02, 2019 | |
Commitments and Contingencies. | |
Commitments and Contingencies | NOTE 15—COMMITMENTS AND CONTINGENCIES Commitments The Company had no material off balance sheet commitments as of November 2, 2019. Contingencies The Company is involved in lawsuits, claims and proceedings incident to the ordinary course of its business. These disputes are increasing in number as the business expands and the Company grows larger. Litigation is inherently unpredictable. As a result, the outcome of matters in which the Company is involved could result in unexpected expenses and liability that could adversely affect the Company’s operations. In addition, any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The Company reviews the need for any loss contingency reserves and establishes reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters, particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that the Company does establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what the Company accrues from time to time. The Company believes that the ultimate resolution of its current matters will not have a material adverse effect on its condensed consolidated financial statements. Securities Class Action On February 2, 2017, City of Miami General Employees’ & Sanitation Employees’ Retirement Trust filed a class action complaint in the United States District Court, Northern District of California, against the Company, Gary Friedman, and Karen Boone. On March 16, 2017, Peter J. Errichiello, Jr. filed a similar class action complaint in the same forum and against the same parties. On April 26, 2017, the court consolidated the two actions. The consolidated action is captioned In re RH, Inc. Securities Litigation. An amended consolidated complaint was filed in June 2017 asserting claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The complaint asserts claims purportedly on behalf of a class of purchasers of Company common stock from March 26, 2015 to June 8, 2016. The alleged misstatements relate to statements regarding the roll out of the RH Modern product line and the Company’s inventory levels. The complaint seeks class certification, monetary damages, and other appropriate relief, including an award of costs and attorneys’ fees. On March 21, 2019, the Company and the individual defendants in the case entered into a binding memorandum of understanding to settle the case. The settlement amount is $50 million, which was funded entirely by the Company’s insurance carriers. On May 6, 2019, the plaintiffs filed a motion for preliminary approval of the proposed settlement together with a settlement agreement executed by both parties. The settlement agreement was subject to customary conditions including court approval following notice to the Company's shareholders, and a hearing at which time the court will consider the fairness, reasonableness and adequacy of the settlement. On June 21, 2019, the court issued an order preliminarily approving the settlement. The court granted final approval of the settlement on October 25, 2019. As a result of the court approval and adjudication of the claims, as well as the Company’s insurance carriers funding the settlement amount, the Company has derecognized the provision for legal settlement and unpaid legal fees within other current liabilities and the associated litigation insurance recovery receivable on the condensed consolidated balance sheets as of November 2, 2019, which settlement resolved all of the claims that were or could have been brought in the action. Shareholder Derivative Lawsuit On April 24, 2018, purported Company shareholder David Magnani filed a purported shareholder derivative suit in the United States District Court, Northern District of California, captioned Magnani v. Friedman et al. (No. 18-cv-02452). On June 29, 2018, Hosrof Izmirliyan filed a similar purported shareholder derivative complaint in the same forum, captioned Izmirliyan v. Friedman et al. (No. 18-cv-03930). On July 29, 2018, the court consolidated both derivative actions, and the consolidated action is captioned In re RH Shareholder Derivative Litigation. On August 24, 2018, plaintiffs filed an amended complaint that names RH as a nominal defendant and Gary Friedman, Karen Boone, Carlos Alberini, Keith Belling, Eri Chaya, Mark Demilio, Katie Mitic, Ali Rowghani and Leonard Schlesinger as defendants. The allegations substantially track those in the securities class action described above. Plaintiffs bring claims against all individual defendants under Section 14(a) of the Exchange Act, as well as claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets. The plaintiffs also allege insider trading and misappropriation of information claims against two of the individual defendants. The amended complaint seeks monetary damages, corporate governance changes, restitution, and an award of costs and attorneys’ fees. The Company believes that plaintiffs lack standing to bring this derivative action. On September 28, 2018, the Company filed a motion to stay proceedings and a motion to dismiss the consolidated complaint. On January 23, 2019, the court granted the motion to stay the case. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Nov. 02, 2019 | |
Segment Reporting | |
Segment Reporting | NOTE 16—SEGMENT REPORTING The Company defines reportable and operating segments on the same basis that it uses to evaluate performance internally by the Chief Operating Decision Maker (the “CODM”). The Company has determined that the Chief Executive Officer is its CODM. As of November 2, 2019, the Company had two operating segments: RH Segment and Waterworks. The two operating segments include all sales channels accessed by the Company’s customers, including sales through catalogs, sales through the Company’s websites, sales through stores, and sales through the commercial channel. The Company’s two operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared management team and customer base, the Company has determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors. The Company uses operating income to evaluate segment profitability. Operating income is defined as net income before interest expense—net, (gain) loss on extinguishment of debt and income tax expense. Segment Information The following tables presents the statements of income metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting in thousands Three Months Ended November 2, November 3, 2019 2018 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 645,378 $ 32,148 $ 677,526 $ 604,322 $ 32,236 $ 636,558 Gross profit 270,721 13,445 284,166 236,432 13,589 250,021 Depreciation and amortization 22,316 1,119 23,435 21,739 1,256 22,995 Nine Months Ended November 2, November 3, 2019 2018 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 1,881,412 $ 101,049 $ 1,982,461 $ 1,737,933 $ 96,829 $ 1,834,762 Gross profit 769,133 42,805 811,938 687,643 40,055 727,698 Depreciation and amortization 72,490 3,455 75,945 61,448 3,486 64,934 The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting in thousands November 2, February 2, 2019 2019 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 124,376 $ — $ 124,376 $ 124,379 $ — $ 124,379 Tradenames, trademarks and domain names (2) 48,563 37,459 86,022 48,563 37,459 86,022 Total assets 2,218,772 143,241 2,362,013 2,273,951 149,067 2,423,018 (1) The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018. The Company uses segment operating income to evaluate segment performance and allocate resources. Segment operating income excludes (i) asset impairments and change in useful lives, (ii) severance costs associated with reorganizations, (iii) product recall accruals and adjustments, (iv) asset held for sale gain, (v) legal settlements, net of legal expenses, (vi) non-cash amortization of the inventory fair value adjustment recorded in connection with the acquisition of Waterworks and (vii) costs associated with distribution center closures. These items are excluded from segment operating income in order to provide better transparency of segment operating results. Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that management reviews. The following table presents segment operating income and income before income taxes ( in thousands Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Operating income: RH Segment $ 86,936 $ 60,853 $ 260,429 $ 185,705 Waterworks 825 222 2,839 (6) Asset impairments and change in useful lives (1,031) (3,411) (7,052) (3,411) Reorganization related costs (1,075) (7,564) (1,075) (9,285) Recall accrual 2,053 (3,986) 3,988 (2,668) Asset held for sale gain 1,529 — 1,529 — Legal settlements — — 1,193 5,289 Impact of inventory step-up — — — (380) Distribution center closures — (3,886) — (3,046) Income from operations 89,237 42,228 261,851 172,198 Interest expense—net 21,564 17,695 67,195 48,260 Loss on extinguishment of debt—net 6,857 — 5,903 917 Income before income taxes $ 60,816 $ 24,533 $ 188,753 $ 123,021 The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor furniture. Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor. Net revenues in each category were as follows ( in thousands Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Furniture $ 467,524 $ 418,895 $ 1,349,861 $ 1,201,737 Non-furniture 210,002 217,663 632,600 633,025 Total net revenues $ 677,526 $ 636,558 $ 1,982,461 $ 1,834,762 The Company is domiciled in the United States and primarily operates its retail and outlet stores in the United States. As of November 2, 2019, the Company operates 4 retail and 2 outlet stores in Canada and 1 retail store in the U.K. Revenues from Canadian and U.K. operations, and the long-lived assets in Canada and the U.K., are not material to the Company. Canada and U.K. geographic revenues are based upon revenues recognized at the retail store locations in the respective country. No single customer accounted for more than 10% of the Company’s revenues in the three and nine months ended November 2, 2019 or November 3, 2018. |
The Company (Policies)
The Company (Policies) | 9 Months Ended |
Nov. 02, 2019 | |
Accounting Policies | |
Nature of Business | Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites. As of November 2, 2019, the Company operated a total of 70 RH Galleries and 39 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 15 Waterworks showrooms throughout the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from the Company’s records and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, and revisions due to the adoption of the new lease accounting standard described in Note 2— Recently Issued Accounting Standards Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019 (the “2018 Form 10-K”). Certain prior year amounts have been adjusted to conform to the current period presentation due to the adoption of the new lease accounting standard. Refer to Note 2— Recently Issued Accounting Standards The results of operations for the three and nine months ended November 2, 2019 presented herein are not necessarily indicative of the results to be expected for the full fiscal year. |
Convertible Senior Notes | Convertible Senior Notes In September 2019, the Company issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 (the “2024 Notes”). In connection with the issuance of these notes, the Company entered into convertible note hedge transactions for which it paid an aggregate amount of $91.4 million. In connection with the issuance of the 2024 Notes, the Company sold warrants to purchase shares of common stock of the Company, for which it received aggregate proceeds of approximately $50.2 million. Taken together, the Company received total cash proceeds of $304.1 million, net of discounts upon original issuance and offering costs of $4.8 million, from the issuance of the 2024 Notes and the related warrants. Refer to Note 8— Convertible Senior Notes . |
Revision | Revisions During the adoption process of the new lease accounting standard (refer to Note 2— Recently Issued Accounting Standards Exit or Disposal Cost Obligations February 3, 2018 and the nine months ended November 3, 2018, respectively. This error also resulted in an overstatement of retained earnings as of February 3, 2018 of $1.4 million, from $152.4 million as reported to $151.0 million as revised, and as of November 3, 2018 of $2.3 million, from $245.9 million as reported to $243.6 million as revised, prior to the impact of the modified retrospective application of the new lease accounting standard as further discussed in Note 2. In addition, as of February 2, 2019, this error resulted in an understatement of other non-current obligations of $3.3 million, an overstatement of other current liabilities of $1.0 million and understatement of accumulated deficit of $2.3 million, from $376.8 million as reported to $379.1 million as revised. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying unaudited interim financial statements to reflect the correction of these errors. In addition, during the adoption process of the new lease accounting standard, the Company identified an error in its previously reported consolidated statement of cash flows for the quarterly and annual periods in fiscal 2018. This error resulted in an understatement of $9.2 million of net cash provided by operating activities and an understatement of $9.2 million of net cash used in investing activities for each reporting period in fiscal 2018. There was no impact on the condensed consolidated balance sheets, condensed consolidated statements of income or the condensed consolidated statement of stockholders’ equity (deficit) related to this error. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying unaudited interim financial statements to reflect the correction of these errors. The following are selected line items from the Company’s condensed consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard ( in thousands Nine Months Ended November 3, 2018 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (23,601) $ 9,201 $ (14,400) Net cash provided by operating activities 127,592 9,201 136,793 Cash flows from investing activities: Capital expenditures (104,403) (9,201) (113,604) Net cash used in investing activities (104,403) (9,201) (113,604) Fiscal Year Ended February 2, 2019 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (452) $ 9,201 $ 8,749 Net cash provided by operating activities 300,556 9,201 309,757 Cash flows from investing activities: Capital expenditures (136,736) (9,201) (145,937) Net cash used in investing activities (136,736) (9,201) (145,937) |
Commitments and Contingencies | The Company reviews the need for any loss contingency reserves and establishes reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters, particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that the Company does establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what the Company accrues from time to time. The Company believes that the ultimate resolution of its current matters will not have a material adverse effect on its condensed consolidated financial statements. |
The Company (Tables)
The Company (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Accounting Policies | |
Summary of Condensed Consolidated Statements of Cash Flows Illustrating Effect of Corrections | The following are selected line items from the Company’s condensed consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard ( in thousands Nine Months Ended November 3, 2018 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (23,601) $ 9,201 $ (14,400) Net cash provided by operating activities 127,592 9,201 136,793 Cash flows from investing activities: Capital expenditures (104,403) (9,201) (113,604) Net cash used in investing activities (104,403) (9,201) (113,604) Fiscal Year Ended February 2, 2019 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (452) $ 9,201 $ 8,749 Net cash provided by operating activities 300,556 9,201 309,757 Cash flows from investing activities: Capital expenditures (136,736) (9,201) (145,937) Net cash used in investing activities (136,736) (9,201) (145,937) |
Recently Issued Accounting St_2
Recently Issued Accounting Standards (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Recently Issued Accounting Standards | |
Summary of Impact of Adopting ASUs on Consolidated Statements of Balance Sheet | The following table presents the impact of adopting the ASUs, as well as the correction of an immaterial error as discussed in Note 1— The Company in thousands February 2, 2019 As Reported Adjustments and Other (1) As Adjusted and Revised ASSETS Current assets: Cash and cash equivalents $ 5,803 $ — $ 5,803 Accounts receivable—net 40,224 — 40,224 Merchandise inventories 531,947 — 531,947 Asset held for sale — 21,795 (2) 21,795 Prepaid expense and other current assets 104,719 (521) (3) 104,198 Total current assets 682,693 21,274 703,967 Property and equipment—net 863,562 89,395 (4) 952,957 Operating lease right-of-use assets — 440,504 (5) 440,504 Goodwill 124,379 — 124,379 Tradenames, trademarks and domain names 86,022 — 86,022 Deferred tax assets 30,033 5,570 (6) 35,603 Other non-current assets 19,345 60,241 (7) 79,586 Total assets $ 1,806,034 $ 616,984 $ 2,423,018 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $ 320,441 $ 56 (8) $ 320,497 Deferred revenue and customer deposits 152,595 — 152,595 Convertible senior notes due 2019—net 343,789 — 343,789 Operating lease liabilities — 66,249 (5) 66,249 Other current liabilities 101,347 8,109 (1)(9) 109,456 Total current liabilities 918,172 74,414 992,586 Asset based credit facility 57,500 — 57,500 Convertible senior notes due 2020—net 271,157 — 271,157 Convertible senior notes due 2023—net 249,151 — 249,151 Financing obligations under build-to-suit lease transactions 228,928 (228,928) (10) — Deferred rent and lease incentives 53,742 (53,742) (10) — Non-current operating lease liabilities — 437,557 (5) 437,557 Non-current finance lease liabilities — 421,245 (9) 421,245 Other non-current obligations 50,346 (17,834) (1)(11) 32,512 Total liabilities 1,828,996 632,712 2,461,708 Stockholders’ deficit: Preferred stock — — — Common stock 2 — 2 Additional paid-in capital 356,422 — 356,422 Accumulated other comprehensive loss (2,333) (1) (2,334) Accumulated deficit (376,810) (15,727) (1)(12) (392,537) Treasury stock (243) — (243) Total stockholders’ deficit (22,962) (15,728) (38,690) Total liabilities and stockholders’ deficit $ 1,806,034 $ 616,984 $ 2,423,018 (1) During the adoption process of the ASUs, the Company identified a lease agreement that was incorrectly accounted for as an impaired lease under ASC 420— Exit or Disposal Cost Obligations in fiscal 2017 and the first quarter of fiscal 2018. Refer to “Revisions” within Note 1— The Company . (2) Represents recognition of asset held for sale under a sale-leaseback transaction. (3) Represents reclassification of prepaid rent to operating lease liabilities and other current liabilities (for finance leases). (4) Represents (i) recognition of finance lease right-of-use assets, partially offset by (ii) derecognition of non-Company owned properties that were capitalized under previously existing build-to-suit accounting policies, (iii) reclassification of construction in progress assets determined to be landlord assets to other non-current assets and (iv) reclassification of initial direct costs related to operating leases to operating lease right-of-use assets. (5) Represents recognition of operating lease right-of-use assets and corresponding current and non-current lease liabilities. The operating lease right-of-use asset also includes the reclassification of deferred rent and unamortized lease incentives related to operating leases and the reclassification of initial direct costs from property and equipment—net. (6) Represents recognition of net deferred tax assets related to the adoption of the ASUs. (7) Primarily represents reclassification from property and equipment—net of construction in progress assets determined to be landlord assets for which the lease has not yet commenced. (8) Represents a reclassification of an accrual for real estate taxes. (9) Represents recognition of the current and non-current finance lease liabilities. The other current liabilities line item also includes the reclassification of current obligations associated with leases previously reported as capital leases to finance lease liabilities. (10) Represents (i) derecognition of liabilities related to non-Company owned properties that were consolidated under previously existing build-to-suit accounting policies and (ii) reclassification of deferred rent and unamortized lease incentives to operating lease right-of-use assets upon adoption of the ASUs. (11) Represents (i) derecognition of the net lease loss liabilities as such balances were reclassified to operating lease right-of-use assets and operating current and non-current liabilities and (ii) the reclassification of non-current obligations associated with leases previously reported as capital leases to finance lease liabilities. (12) Represents a decrease to the consolidated net income for fiscal 2017 and fiscal 2018, as well as an increase of $4.0 million to beginning fiscal 2017 retained earnings related to the adoption of the ASUs. |
Prepaid Expense and Other Ass_2
Prepaid Expense and Other Assets (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Prepaid Expense and Other Assets | |
Prepaid Expense and Other Current Assets | Prepaid expense and other current assets consist of the following ( in thousands November 2, February 2, 2019 2019 Vendor deposits $ 12,347 $ 11,836 Federal and state tax receivable 6,611 4,862 Capitalized catalog costs 5,956 16,178 Right of return asset for merchandise 5,779 5,883 Prepaid expense and other current assets 16,032 15,439 Insurance recovery receivable (1) — 50,000 Total prepaid expense and other current assets $ 46,725 $ 104,198 (1) Refer to Note 15— Commitments and Contingencies . |
Schedule of Other Non-Current Assets | Other non-current assets consist of the following ( in thousands November 2, February 2, 2019 2019 Landlord assets under construction $ 117,253 $ 63,159 Deposits on asset under construction 37,000 — Promissory note receivable, including interest 5,292 5,104 Other deposits 5,155 5,068 Deferred financing fees 2,871 3,415 Other non-current assets 3,057 2,840 Total other non-current assets $ 170,628 $ 79,586 |
Goodwill, Tradenames, Tradema_2
Goodwill, Tradenames, Trademarks and Domain Names (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Goodwill, Tradenames, Trademarks and Domain Names | |
Goodwill, Tradenames, Trademarks and Domain Names Activity | The following sets forth the goodwill, tradenames, trademarks and domain names activity for the Company’s two operating segments, RH Segment and Waterworks (See Note 16— Segment Reporting in thousands Foreign February 2, Currency November 2, 2019 Translation 2019 RH Segment Goodwill $ 124,379 $ (3) $ 124,376 Tradenames, trademarks and domain names 48,563 — 48,563 Waterworks (1) Tradename (2) 37,459 — 37,459 (1) Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively . (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018. |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following ( in thousands November 2, February 2, 2019 2019 Accounts payable $ 138,034 $ 183,039 Accrued compensation 50,905 64,192 Accrued freight and duty 22,201 20,787 Accrued sales taxes 19,900 18,354 Accrued catalog costs 15,570 10,276 Accrued occupancy 12,525 10,839 Accrued professional fees 4,516 2,050 Other accrued expenses 25,286 10,960 Total accounts payable and accrued expenses $ 288,937 $ 320,497 |
Schedule of Other Current Liabilities | Other current liabilities consist of the following ( in thousands November 2, February 2, 2019 2019 Promissory note on asset under construction $ 30,000 $ — Current portion of debt 21,760 892 Allowance for sales returns 19,807 19,821 Unredeemed gift card and merchandise credit liability 18,749 17,192 Finance lease liabilities 8,755 9,184 Product recall reserve 2,301 7,767 Other current liabilities 5,060 3,881 Provision for legal settlement (1) — 50,000 Federal tax payable — 719 Total other current liabilities $ 106,432 $ 109,456 (1) Refer to Note 15— Commitments and Contingencies. |
Other Non-Current Obligations (
Other Non-Current Obligations (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Other Non-Current Obligations. | |
Schedule of Other Non-Current Obligations | Other non-current obligations consist of the following ( in thousands November 2, February 2, 2019 2019 Notes payable for share repurchases $ 18,741 $ 18,741 Rollover units and profit interests (1) 2,957 2,637 Unrecognized tax benefits 2,741 2,992 Deferred contract incentive (2) 1,191 2,976 Other non-current obligations 3,063 5,166 Total other non-current obligations $ 28,693 $ 32,512 (1) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 14 — Stock-Based Compensation . (2) Represents the non-current portion of an incentive payment received in relation to a 5-year service agreement, which is amortized over the term of the agreement. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Leases | |
Summary of Lease Costs | Lease costs—net consist of the following ( in thousands ): Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Operating lease cost (1)(2) $ 21,115 $ 21,912 $ 63,491 $ 66,001 Finance lease costs Amortization of leased assets (1) 9,471 7,911 27,558 20,251 Interest on lease liabilities (3) 5,678 4,843 16,864 11,254 Sublease income (4) (2,493) (2,262) (7,282) (5,533) Total lease costs—net $ 33,771 $ 32,404 $ 100,631 $ 91,973 (1) Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on the Company’s policy. Refer to Note 3— Significant Accounting Policies in the 2018 Form 10-K. (2) Includes short-term leases and variable lease costs. (3) Included in interest expense—net on the condensed consolidated statements of income. (4) Included in selling, general and administrative expenses on the condensed consolidated statements of income. |
Summary of Lease Right-of-use Assets and Lease Liabilities | Lease right-of-use assets and lease liabilities consist of the following ( in thousands ): November 2, February 2, 2019 2019 Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 415,912 $ 440,504 Finance leases (1)(2) Property and equipment—net 644,023 646,875 Total lease right-of-use assets 1,059,935 1,087,379 Liabilities Current Operating leases Operating lease liabilities $ 55,753 $ 66,249 Finance leases Other current liabilities 8,755 9,184 Total lease liabilities—current 64,508 75,433 Non-current Operating leases Non-current operating lease liabilities $ 412,247 $ 437,557 Finance leases Non-current finance lease liabilities 431,379 421,245 Total lease liabilities—non-current 843,626 858,802 Total lease liabilities $ 908,134 $ 934,235 (1) Finance lease right-of-use assets include capitalized amounts related to the Company’s construction activities to design and build leased assets, as well as rent payments made to landlords for which the respective Galleries are not yet opened. (2) Finance lease right-of-use assets are recorded net of accumulated amortization of $83.3 million and $55.5 million as of November 2, 2019 and February 2, 2019, respectively. |
Summary of Maturities of Lease Liabilities | The maturities of lease liabilities are as follows as of November 2, 2019 ( in thousands Fiscal year Operating Finance Total Remainder of fiscal 2019 $ 11,850 $ 5,782 $ 17,632 2020 79,843 33,837 113,680 2021 65,919 34,223 100,142 2022 58,076 34,650 92,726 2023 54,730 35,213 89,943 2024 50,927 35,692 86,619 Thereafter 239,696 548,348 788,044 Total lease payments (1) 561,041 727,745 1,288,786 Less—imputed interest (2) (93,041) (287,611) (380,652) Present value of lease liabilities (3) $ 468,000 $ 440,134 $ 908,134 (1) Total lease payments exclude $406.9 million of legally binding payments for leases signed but not yet commenced as of November 2, 2019. (2) Calculated using the incremental borrowing rate for each lease at lease commencement. (3) Excludes future commitments under short-term lease agreements of $1.0 million as of November 2, 2019. |
Summary of Supplemental Information Related to Leases | Nine Months Ended November 2, November 3, 2019 2018 Weighted-average remaining lease term (years) Operating leases 9.0 9.4 Finance leases 18.7 19.9 Weighted-average discount rate Operating leases 3.82% 3.76% Finance leases 5.25% 5.29% Nine Months Ended November 2, November 3, 2019 2018 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (75,011) $ (74,186) Operating cash flows from finance leases (16,864) (11,254) Financing cash flows from finance leases (7,136) (4,937) Total cash outflows from leases $ (99,011) $ (90,377) Lease right-of-use assets obtained in exchange for lease obligations (non-cash) Finance leases $ 18,892 $ 174,920 Operating leases 26,241 25,843 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Convertible senior notes due 2024 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying value of the 2024 Notes, excluding the discounts upon original issuance and third party offering costs, is as follows ( in thousands November 2, 2019 Liability component Principal $ 350,000 Less: Debt discount (85,448) Net carrying amount $ 264,552 Equity component (1) $ 87,252 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Convertible senior notes due 2023 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying values of the 2023 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands November 2, February 2, 2019 2019 Liability component Principal $ 335,000 $ 335,000 Less: Debt discount (68,974) (81,311) Net carrying amount $ 266,026 $ 253,689 Equity component (1) $ 90,990 $ 90,990 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Convertible senior notes due 2020 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands November 2, February 2, 2019 2019 Liability component Principal $ 300,000 $ 300,000 Less: Debt discount (13,548) (27,081) Net carrying amount $ 286,452 $ 272,919 Equity component (1) $ 84,003 $ 84,003 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Convertible senior notes due 2019 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | As of November 2, 2019, the 2019 Notes are no longer outstanding. As of February 2, 2019, the carrying value of the 2019 Notes, excluding the discounts and commissions payable to the initial purchasers and third party offering costs, was as follows ( in thousands February 2, 2019 Liability component Principal $ 350,000 Less: Debt discount (5,854) Net carrying amount $ 344,146 Equity component (1) $ 70,482 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Credit Facilities (Tables)
Credit Facilities (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Debt Disclosure | |
Schedule of Credit Facilities | The outstanding balances under the Company’s credit facilities were as follows ( in thousands November 2, February 2, 2019 2019 Outstanding Unamortized Debt Net Carrying Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Amount Issuance Costs Amount Asset based credit facility (1) $ — $ — $ — $ 57,500 $ — $ 57,500 FILO term loan 90,000 (592) 89,408 — — — Equipment promissory notes (2) 58,720 (347) 58,373 — — — Total credit facilities $ 148,720 $ (939) $ 147,781 $ 57,500 $ — $ 57,500 (1) Deferred financing fees associated with the asset based credit facility as of November 2, 2019 and February 2, 2019 were $2.9 million and $3.4 million, respectively, and are included in other current assets on the condensed consolidated balance sheets. (2) Represents total equipment security notes secured by certain of the Company’s property and equipment, of which $21.7 million outstanding was included in other current liabilities and $37.0 million outstanding was included in other non-current obligations on the condensed consolidated balance sheets. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Fair Value Measurements | |
Estimated Fair Value and Carrying Value of Notes | Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value due to the short-term nature of activity within these accounts. The estimated fair value and carrying value of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes were as follows ( in thousands November 2, February 2, 2019 2019 Fair Carrying Fair Carrying Value Value (1) Value Value (1) Convertible senior notes due 2019 (2) $ — $ — $ 334,756 $ 344,146 Convertible senior notes due 2020 287,992 286,452 260,258 272,919 Convertible senior notes due 2023 271,208 266,026 230,684 253,689 Convertible senior notes due 2024 263,368 264,552 — — (1) Carrying value represents the principal amount less the equity component of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes classified in stockholders’ equity (deficit), and does not exclude the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third party offering costs, as applicable. (2) The 2019 Notes matured on June 15, 2019. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Net Income Per Share | |
Schedule of Weighted Average Shares Used for Net Income per Share | Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Weighted-average shares—basic 18,765,769 22,082,141 19,069,501 21,850,955 Effect of dilutive stock-based awards 4,712,355 4,966,376 4,347,713 4,603,390 Effect of dilutive convertible senior notes (1) 692,048 654,802 392,211 355,690 Weighted-average shares—diluted 24,170,172 27,703,319 23,809,425 26,810,035 (1) The 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share, $193.65 per share and $211.40 per share, respectively . The 2019 Notes matured on June 15, 2019 and did not have an impact of the Company’s dilutive share count post-maturity, other than the exercise of warrants as discussed within Note 8— Convertible Senior Notes . |
Anti-Dilutive Securities Excluded from Diluted Net Income per Share | Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Options 190,766 348,423 457,300 348,127 Restricted stock units — — — 3,500 Total anti-dilutive stock-based awards 190,766 348,423 457,300 351,627 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Nov. 02, 2019 | |
Segment Reporting | |
Summary of Statements of Income Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting | The following tables presents the statements of income metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting in thousands Three Months Ended November 2, November 3, 2019 2018 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 645,378 $ 32,148 $ 677,526 $ 604,322 $ 32,236 $ 636,558 Gross profit 270,721 13,445 284,166 236,432 13,589 250,021 Depreciation and amortization 22,316 1,119 23,435 21,739 1,256 22,995 Nine Months Ended November 2, November 3, 2019 2018 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 1,881,412 $ 101,049 $ 1,982,461 $ 1,737,933 $ 96,829 $ 1,834,762 Gross profit 769,133 42,805 811,938 687,643 40,055 727,698 Depreciation and amortization 72,490 3,455 75,945 61,448 3,486 64,934 |
Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting | The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting in thousands November 2, February 2, 2019 2019 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 124,376 $ — $ 124,376 $ 124,379 $ — $ 124,379 Tradenames, trademarks and domain names (2) 48,563 37,459 86,022 48,563 37,459 86,022 Total assets 2,218,772 143,241 2,362,013 2,273,951 149,067 2,423,018 (1) The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018. |
Schedule of Segment Operating Income and Income Before Income Taxes | The following table presents segment operating income and income before income taxes ( in thousands Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Operating income: RH Segment $ 86,936 $ 60,853 $ 260,429 $ 185,705 Waterworks 825 222 2,839 (6) Asset impairments and change in useful lives (1,031) (3,411) (7,052) (3,411) Reorganization related costs (1,075) (7,564) (1,075) (9,285) Recall accrual 2,053 (3,986) 3,988 (2,668) Asset held for sale gain 1,529 — 1,529 — Legal settlements — — 1,193 5,289 Impact of inventory step-up — — — (380) Distribution center closures — (3,886) — (3,046) Income from operations 89,237 42,228 261,851 172,198 Interest expense—net 21,564 17,695 67,195 48,260 Loss on extinguishment of debt—net 6,857 — 5,903 917 Income before income taxes $ 60,816 $ 24,533 $ 188,753 $ 123,021 |
Net Revenues | The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor furniture. Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor. Net revenues in each category were as follows ( in thousands Three Months Ended Nine Months Ended November 2, November 3, November 2, November 3, 2019 2018 2019 2018 Furniture $ 467,524 $ 418,895 $ 1,349,861 $ 1,201,737 Non-furniture 210,002 217,663 632,600 633,025 Total net revenues $ 677,526 $ 636,558 $ 1,982,461 $ 1,834,762 |
The Company - Additional Inform
The Company - Additional Information (Detail) $ in Thousands | Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | Nov. 02, 2019USD ($)statestoreitem | Nov. 03, 2018USD ($) | Feb. 02, 2019USD ($) | Feb. 03, 2018USD ($) |
Organization Consolidation and Presentation of Financial Statements | ||||||
Number of galleries | item | 70 | |||||
Number of outlet stores | store | 39 | |||||
Number of states | state | 31 | |||||
Number of waterworks showrooms | item | 15 | |||||
Purchase of convertible note hedges | $ 91,350 | $ 91,857 | ||||
Original issuance and offering costs | 4,636 | |||||
Stockholders' deficit: | ||||||
Accumulated deficit | (477,687) | $ (392,537) | ||||
Overstatement of net income | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 900 | $ 1,400 | ||||
Overstatement of retained earnings | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 2,300 | 1,400 | ||||
Understatement of accumulated deficit | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 2,300 | |||||
Understatement of other non-current obligations | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 3,300 | |||||
Overstatement of other current liabilities | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 1,000 | |||||
Understatement of net cash provided by operating activities | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 9,200 | |||||
Understatement of net cash used in investing activities | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Revision due to prior year misstatement in current year financial statements, amount | 9,200 | |||||
Convertible senior notes due 2024 | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Debt instrument, principal amount | $ 350,000 | |||||
Proceeds from issuance of warrants | $ 304,100 | |||||
Original issuance and offering costs | 4,800 | |||||
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Purchase of convertible note hedges | 91,400 | |||||
Proceeds from issuance of warrants | $ 50,200 | 50,200 | ||||
Convertible senior notes due 2024 | Private Placement | ||||||
Organization Consolidation and Presentation of Financial Statements | ||||||
Debt instrument, principal amount | $ 350,000 | $ 350,000 | ||||
Debt instrument, interest rate | 0.00% | 0.00% | ||||
As Reported | ||||||
Stockholders' deficit: | ||||||
Accumulated deficit | 245,900 | (376,800) | 152,400 | |||
As Revised | ||||||
Stockholders' deficit: | ||||||
Accumulated deficit | $ 243,600 | $ (379,100) | $ 151,000 |
The Company - Summary of Conden
The Company - Summary of Condensed Consolidated Cash Flows Illustrating Effect of Corrections (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | |
Nov. 02, 2019 | Nov. 03, 2018 | Feb. 02, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Change in accounts payable and accrued expenses | $ (41,474) | $ (11,529) | |
Net cash provided by operating activities | 210,997 | 96,716 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (64,614) | (73,278) | |
Net cash used in investing activities | $ (70,536) | (73,278) | |
As Reported | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Change in accounts payable and accrued expenses | (23,601) | $ (452) | |
Net cash provided by operating activities | 127,592 | 300,556 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (104,403) | (136,736) | |
Net cash used in investing activities | (104,403) | (136,736) | |
Adjustment | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Change in accounts payable and accrued expenses | 9,201 | 9,201 | |
Net cash provided by operating activities | 9,201 | 9,201 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (9,201) | (9,201) | |
Net cash used in investing activities | (9,201) | (9,201) | |
As Revised | |||
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Change in accounts payable and accrued expenses | (14,400) | 8,749 | |
Net cash provided by operating activities | 136,793 | 309,757 | |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (113,604) | (145,937) | |
Net cash used in investing activities | $ (113,604) | $ (145,937) |
Recently Issued Accounting St_3
Recently Issued Accounting Standards - Additional Information - (Detail) $ in Millions | 12 Months Ended |
Feb. 03, 2018USD ($) | |
Accounting Standards Update 2016-02 | |
New Accounting Pronouncements or Change in Accounting Principle | |
Opening retained earnings balance, inclusive of tax impact | $ 4 |
Recently Issued Accounting St_4
Recently Issued Accounting Standards - Summary of Impact of Adopting ASU Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Aug. 03, 2019 | Feb. 02, 2019 | Nov. 03, 2018 | Aug. 04, 2018 | Feb. 03, 2018 |
Current assets: | ||||||
Cash and cash equivalents | $ 38,253 | $ 5,803 | $ 7,755 | $ 17,907 | ||
Accounts receivable-net | 45,312 | 40,224 | ||||
Merchandise inventories | 429,189 | 531,947 | ||||
Assets held for sale | 21,795 | |||||
Prepaid expense and other current assets | 46,725 | 104,198 | ||||
Total current assets | 559,479 | 703,967 | ||||
Property and equipment-net | 969,090 | 952,957 | ||||
Operating lease right-of-use assets | 415,912 | 440,504 | ||||
Goodwill | 124,376 | 124,379 | ||||
Tradenames, trademarks and domain names | 86,022 | 86,022 | ||||
Deferred tax assets | 36,506 | 35,603 | ||||
Other non-current assets | 170,628 | 79,586 | ||||
Total assets | 2,362,013 | 2,423,018 | ||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | 288,937 | 320,497 | ||||
Deferred revenue and customer deposits | 167,014 | 152,595 | ||||
Operating lease liabilities | 55,753 | 66,249 | ||||
Other current liabilities | 106,432 | 109,456 | ||||
Total current liabilities | 903,706 | 992,586 | ||||
Asset based credit facility | 147,781 | 57,500 | ||||
Non-current operating lease liabilities | 412,247 | 437,557 | ||||
Non-current finance lease liabilities | 431,379 | 421,245 | ||||
Other non-current obligations | 28,693 | 32,512 | ||||
Total liabilities | 2,425,233 | 2,461,708 | ||||
Stockholders' deficit: | ||||||
Preferred stock | 0 | 0 | ||||
Common stock | 2 | 2 | ||||
Additional paid-in capital | 416,946 | 356,422 | ||||
Accumulated other comprehensive loss | (2,481) | (2,334) | ||||
Accumulated deficit | (477,687) | (392,537) | ||||
Treasury stock | (243) | |||||
Total stockholders' deficit | (63,220) | $ (177,918) | (38,690) | 25,170 | $ 141,509 | (8,155) |
Total liabilities and stockholders' deficit | 2,362,013 | 2,423,018 | ||||
Convertible senior notes due 2019 | ||||||
Current liabilities: | ||||||
Convertible senior notes due-net | 343,789 | |||||
Convertible senior notes due 2020 | ||||||
Current liabilities: | ||||||
Convertible senior notes due-net | 285,570 | |||||
Term loan-net | 271,157 | |||||
Convertible senior notes due-net | 271,157 | |||||
Convertible senior notes due 2023 | ||||||
Current liabilities: | ||||||
Convertible senior notes due-net | $ 262,177 | 249,151 | ||||
As Reported | ||||||
Stockholders' deficit: | ||||||
Accumulated deficit | (376,800) | $ 245,900 | $ 152,400 | |||
Accounting Standards Update 2016-02 | As Reported | ||||||
Current assets: | ||||||
Cash and cash equivalents | 5,803 | |||||
Accounts receivable-net | 40,224 | |||||
Merchandise inventories | 531,947 | |||||
Prepaid expense and other current assets | 104,719 | |||||
Total current assets | 682,693 | |||||
Property and equipment-net | 863,562 | |||||
Goodwill | 124,379 | |||||
Tradenames, trademarks and domain names | 86,022 | |||||
Deferred tax assets | 30,033 | |||||
Other non-current assets | 19,345 | |||||
Total assets | 1,806,034 | |||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | 320,441 | |||||
Deferred revenue and customer deposits | 152,595 | |||||
Other current liabilities | 101,347 | |||||
Total current liabilities | 918,172 | |||||
Asset based credit facility | 57,500 | |||||
Financing obligations under build-to-suit lease transactions | 228,928 | |||||
Deferred rent and lease incentives | 53,742 | |||||
Other non-current obligations | 50,346 | |||||
Total liabilities | 1,828,996 | |||||
Stockholders' deficit: | ||||||
Preferred stock | 0 | |||||
Common stock | 2 | |||||
Additional paid-in capital | 356,422 | |||||
Accumulated other comprehensive loss | (2,333) | |||||
Accumulated deficit | (376,810) | |||||
Treasury stock | (243) | |||||
Total stockholders' deficit | (22,962) | |||||
Total liabilities and stockholders' deficit | 1,806,034 | |||||
Accounting Standards Update 2016-02 | As Reported | Convertible senior notes due 2019 | ||||||
Current liabilities: | ||||||
Convertible senior notes due-net | 343,789 | |||||
Accounting Standards Update 2016-02 | As Reported | Convertible senior notes due 2020 | ||||||
Current liabilities: | ||||||
Convertible senior notes due-net | 271,157 | |||||
Accounting Standards Update 2016-02 | As Reported | Convertible senior notes due 2023 | ||||||
Current liabilities: | ||||||
Convertible senior notes due-net | 249,151 | |||||
Accounting Standards Update 2016-02 | Adjustment | ||||||
Current assets: | ||||||
Assets held for sale | 21,795 | |||||
Prepaid expense and other current assets | (521) | |||||
Total current assets | 21,274 | |||||
Property and equipment-net | 89,395 | |||||
Operating lease right-of-use assets | 440,504 | |||||
Deferred tax assets | 5,570 | |||||
Other non-current assets | 60,241 | |||||
Total assets | 616,984 | |||||
Current liabilities: | ||||||
Accounts payable and accrued expenses | 56 | |||||
Operating lease liabilities | 66,249 | |||||
Other current liabilities | 8,109 | |||||
Total current liabilities | 74,414 | |||||
Financing obligations under build-to-suit lease transactions | (228,928) | |||||
Deferred rent and lease incentives | (53,742) | |||||
Non-current operating lease liabilities | 437,557 | |||||
Non-current finance lease liabilities | 421,245 | |||||
Other non-current obligations | (17,834) | |||||
Total liabilities | 632,712 | |||||
Stockholders' deficit: | ||||||
Preferred stock | 0 | |||||
Accumulated other comprehensive loss | (1) | |||||
Accumulated deficit | (15,727) | |||||
Total stockholders' deficit | (15,728) | |||||
Total liabilities and stockholders' deficit | $ 616,984 |
Recently Issued Accounting St_5
Recently Issued Accounting Standards - Summary of Impact of Adopting ASU Condensed Consolidated Balance Sheets Footnotes (Detail) - Accounting Standards Update 2016-02 $ in Millions | 12 Months Ended |
Feb. 03, 2018USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle | |
Increase to retained earnings | $ 4 |
Adjustment | |
New Accounting Pronouncements or Change in Accounting Principle | |
Increase to retained earnings | $ 4 |
Prepaid Expense and Other Ass_3
Prepaid Expense and Other Assets - Prepaid Expense and Other Current Assets (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Prepaid Expense And Other Assets Current [Abstract] | ||
Vendor deposits | $ 12,347 | $ 11,836 |
Federal and state tax receivable | 6,611 | 4,862 |
Capitalized catalog costs | 5,956 | 16,178 |
Right of return asset for merchandise | 5,779 | 5,883 |
Prepaid expense and other current assets | 16,032 | 15,439 |
Insurance recovery receivable | 50,000 | |
Total prepaid expense and other current assets | $ 46,725 | $ 104,198 |
Prepaid Expense and Other Ass_4
Prepaid Expense and Other Assets - Schedule of Other Non-Current Assets (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Other Assets Noncurrent [Abstract] | ||
Landlord assets under construction | $ 117,253 | $ 63,159 |
Deposits on asset under construction | 37,000 | |
Promissory note receivable, including interest | 5,292 | 5,104 |
Other deposits | 5,155 | 5,068 |
Deferred financing fees | 2,871 | 3,415 |
Other non-current assets | 3,057 | 2,840 |
Total other non-current assets | $ 170,628 | $ 79,586 |
Goodwill, Tradenames, Tradema_3
Goodwill, Tradenames, Trademarks and Domain Names - Goodwill and Trademarks and Domain Names Activity (Detail) $ in Thousands | 9 Months Ended | 18 Months Ended |
Nov. 02, 2019USD ($)segment | Nov. 02, 2019USD ($)segment | |
Indefinite Lived Intangible Assets by Major Class | ||
Number of operating segments | segment | 2 | 2 |
Beginning Balance | $ 124,379 | |
Ending Balance | 124,376 | $ 124,376 |
Beginning Balance | 86,022 | |
Ending Balance | 86,022 | 86,022 |
RH Segment | ||
Indefinite Lived Intangible Assets by Major Class | ||
Beginning Balance | 124,379 | |
Foreign Currency Translation | (3) | |
Ending Balance | 124,376 | 124,376 |
Beginning Balance | 48,563 | |
Ending Balance | 48,563 | 48,563 |
Waterworks | ||
Indefinite Lived Intangible Assets by Major Class | ||
Beginning Balance | 37,459 | |
Ending Balance | $ 37,459 | $ 37,459 |
Goodwill, Tradenames, Tradema_4
Goodwill, Tradenames, Trademarks and Domain Names - Goodwill and Trademarks and Domain Names Activity Footnotes (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Finite Lived Intangible Assets | ||
Goodwill impairment charge | $ 51.1 | |
Waterworks | ||
Finite Lived Intangible Assets | ||
Goodwill impairment charge | 17.4 | $ 33.7 |
Tradename impairment charge | $ 14.6 |
Accounts Payable, Accrued Exp_3
Accounts Payable, Accrued Expenses and Other Current Liabilities - Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Accounts payable | $ 138,034 | $ 183,039 |
Accrued compensation | 50,905 | 64,192 |
Accrued freight and duty | 22,201 | 20,787 |
Accrued sales taxes | 19,900 | 18,354 |
Accrued catalog costs | 15,570 | 10,276 |
Accrued occupancy | 12,525 | 10,839 |
Accrued professional fees | 4,516 | 2,050 |
Other accrued expenses | 25,286 | 10,960 |
Total accounts payable and accrued expenses | $ 288,937 | $ 320,497 |
Accounts Payable, Accrued Exp_4
Accounts Payable, Accrued Expenses and Other Current Liabilities - Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Promissory note on asset under construction | $ 30,000 | |
Current portion of debt | 21,760 | $ 892 |
Allowance for sales returns | 19,807 | 19,821 |
Unredeemed gift card and merchandise credit liability | 18,749 | 17,192 |
Finance lease liabilities | 8,755 | 9,184 |
Product recall reserves | 2,301 | 7,767 |
Other current liabilities | 5,060 | 3,881 |
Provision for legal settlement | 50,000 | |
Federal tax payable | 719 | |
Total other current liabilities | $ 106,432 | $ 109,456 |
Accounts Payable, Accrued Exp_5
Accounts Payable, Accrued Expenses and Other Current Liabilities - Contract Liabilities (Detail) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019USD ($) | Nov. 03, 2018USD ($) | Nov. 02, 2019USD ($) | Nov. 03, 2018USD ($) | |
Contract Liabilities | ||||
Revenue recognized from gift cards and merchandise credits | $ 5.1 | $ 5.9 | $ 14.4 | $ 15.6 |
Gift card breakage recorded | $ 0.5 | $ 0.4 | $ 1.3 | $ 1.2 |
Gift card and merchandise credit liabilities expected to be recognized when gift cards are redeemed, percent | 70 |
Other Non-Current Obligations -
Other Non-Current Obligations - Schedule of Other Non-Current Obligations (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Other Non-Current Obligations. | ||
Notes payable for share repurchases | $ 18,741 | $ 18,741 |
Rollover units and profit interests | 2,957 | 2,637 |
Unrecognized tax benefits | 2,741 | 2,992 |
Deferred contract incentive | 1,191 | 2,976 |
Other non-current obligations | 3,063 | 5,166 |
Total other non-current obligations | $ 28,693 | $ 32,512 |
Other Non-Current Obligations_2
Other Non-Current Obligations - Schedule of Other Non-Current Obligations Footnotes (Detail) | 9 Months Ended |
Nov. 02, 2019 | |
Other Non-Current Obligations. | |
Incentive payment service agreement period | 5 years |
Leases - Additional Information
Leases - Additional Information (Detail) | 9 Months Ended |
Nov. 02, 2019 | |
Lessee, Lease, Description | |
Renewal options, operating lease | true |
Renewal options, finance lease | true |
Renewal term, operating lease | 25 years |
Renewal term, finance lease | 25 years |
Minimum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 10 years |
Initial lease terms, finance lease | 10 years |
Maximum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 15 years |
Initial lease terms, finance lease | 15 years |
Finance leased Equipment | Minimum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 3 years |
Initial lease terms, finance lease | 3 years |
Finance leased Equipment | Maximum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 7 years |
Initial lease terms, finance lease | 7 years |
Leases - Lease Costs (Detail)
Leases - Lease Costs (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Lease, Cost [Abstract] | ||||
Operating lease cost | $ 21,115 | $ 21,912 | $ 63,491 | $ 66,001 |
Finance lease costs, Amortization of leased assets | 9,471 | 7,911 | 27,558 | 20,251 |
Finance lease costs, Interest on lease liabilities | 5,678 | 4,843 | 16,864 | 11,254 |
Sublease income | (2,493) | (2,262) | (7,282) | (5,533) |
Total lease cost-net | $ 33,771 | $ 32,404 | $ 100,631 | $ 91,973 |
Leases - Lease Right-of-Use Ass
Leases - Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating leases | $ 415,912 | $ 440,504 |
Classification of operating leases right of use asset | us-gaap:OperatingLeaseRightOfUseAsset | us-gaap:OperatingLeaseRightOfUseAsset |
Finance leases | $ 644,023 | $ 646,875 |
Classification of finance leases | us-gaap:PropertyPlantAndEquipmentNet | us-gaap:PropertyPlantAndEquipmentNet |
Total lease right-of-use assets | $ 1,059,935 | $ 1,087,379 |
Operating leases, current | $ 55,753 | $ 66,249 |
Classification of operating leases current | us-gaap:OperatingLeaseLiabilityCurrent | us-gaap:OperatingLeaseLiabilityCurrent |
Finance leases, current | $ 8,755 | $ 9,184 |
Classification of finance leases, current | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Total lease liabilities-current | $ 64,508 | $ 75,433 |
Operating leases, noncurrent | $ 412,247 | $ 437,557 |
Classification of operating leases noncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent |
Finance leases, noncurrent | $ 431,379 | $ 421,245 |
Classification of finance leases, noncurrent | us-gaap:FinanceLeaseLiabilityNoncurrent | us-gaap:FinanceLeaseLiabilityNoncurrent |
Total lease liabilities-non-current | $ 843,626 | $ 858,802 |
Total lease liabilities | 908,134 | 934,235 |
Finance lease right-of-use assets, accumulated amortization | $ 83,300 | $ 55,500 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Nov. 02, 2019 | Feb. 02, 2019 | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
Remainder of fiscal 2019 | $ 11,850 | |
2020 | 79,843 | |
2021 | 65,919 | |
2022 | 58,076 | |
2023 | 54,730 | |
2024 | 50,927 | |
Thereafter | 239,696 | |
Total lease payments | 561,041 | |
Less-imputed interest | (93,041) | |
Present value of lease liabilities | 468,000 | |
Finance Lease, Liability, Payment, Due [Abstract] | ||
Remainder of fiscal 2019 | 5,782 | |
2020 | 33,837 | |
2021 | 34,223 | |
2022 | 34,650 | |
2023 | 35,213 | |
2024 | 35,692 | |
Thereafter | 548,348 | |
Total lease payments | 727,745 | |
Less-imputed interest | (287,611) | |
Present value of lease liabilities | 440,134 | |
Operating And Finance Lease Liabilities, Payments, Due [Abstract] | ||
Remainder of fiscal 2019 | 17,632 | |
2020 | 113,680 | |
2021 | 100,142 | |
2022 | 92,726 | |
2023 | 89,943 | |
2024 | 86,619 | |
Thereafter | 788,044 | |
Total lease payments | 1,288,786 | |
Less-imputed interest | (380,652) | |
Present value of lease liabilities | 908,134 | $ 934,235 |
Legally binding payments for leases signed but not yet commenced | 406,900 | |
Future commitments under short-term lease agreements | $ 1,000 | |
Short-term lease agreements, commitments | true |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Detail) | Nov. 02, 2019 | Nov. 03, 2018 |
Leases | ||
Operating leases, Weighted-average remaining lease term (years) | 9 years | 9 years 4 months 24 days |
Finance leases, Weighted-average remaining lease term (years) | 18 years 8 months 12 days | 19 years 10 months 24 days |
Operating leases, Weighted-average discount rate | 3.82% | 3.76% |
Finance leases, Weighted-average discount rate | 5.25% | 5.29% |
Leases - Other Information Rela
Leases - Other Information Related to Leases (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Nov. 02, 2019 | Nov. 03, 2018 | |
Leases | ||
Operating Lease, Payments | $ (75,011) | $ (74,186) |
Operating cash flows from finance leases | (16,864) | (11,254) |
Principal payments under finance leases | (7,136) | (4,937) |
Total cash outflows from leases | (99,011) | (90,377) |
Finance leases, Lease right-of-use assets obtained in exchange for lease obligations (non-cash) | 18,892 | 174,920 |
Operating leases, Lease right-of-use assets obtained in exchange for lease obligations (non-cash) | $ 26,241 | $ 25,843 |
Leases - Assets Held for Sale a
Leases - Assets Held for Sale and Sale-Leaseback Transaction (Detail) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Nov. 02, 2019 | Feb. 02, 2019 | |
Sale Leaseback Transaction [Line Items] | ||
Renewal term, operating lease | 25 years | |
Sale-leaseback Transaction | Yountville Design Gallery | ||
Sale Leaseback Transaction [Line Items] | ||
Net gain (loss) related to the sale-leaseback transaction | $ 23.5 | |
Operating Leaseback Arrangement | Yountville Design Gallery | ||
Sale Leaseback Transaction [Line Items] | ||
Initial lease terms, operating lease | 15 years | |
Renewal term, operating lease | 30 years | |
Selling, General and Administrative Expenses | Operating Leaseback Arrangement | Yountville Design Gallery | ||
Sale Leaseback Transaction [Line Items] | ||
Net gain (loss) related to the sale-leaseback transaction | $ 1.2 | |
RH Segment | Yountville Design Gallery | ||
Sale Leaseback Transaction [Line Items] | ||
Impairment charges | $ 8.5 |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Detail) derivative in Thousands | Sep. 30, 2019USD ($)$ / shares$ / derivativeshares | Mar. 14, 2019USD ($) | Jun. 30, 2015USD ($)$ / shares$ / derivativeshares | Sep. 30, 2019USD ($)item$ / shares$ / derivativeshares | Jun. 30, 2019USD ($)shares | Jun. 30, 2018USD ($)$ / shares$ / derivativeshares | Jun. 30, 2015USD ($)$ / shares$ / derivativeshares | Jun. 30, 2014USD ($)derivative$ / shares$ / derivativeshares | Dec. 28, 2019shares | Nov. 02, 2019USD ($)$ / sharesshares | Nov. 03, 2018USD ($) | Nov. 02, 2019USD ($)$ / shares | Nov. 03, 2018USD ($) | Feb. 02, 2019USD ($) | Jul. 31, 2015USD ($) |
Debt Instrument | |||||||||||||||
Amortization of debt discount | $ 33,528,000 | $ 29,669,000 | |||||||||||||
(Gain) Loss on extinguishment of debt | $ (6,857,000) | (5,903,000) | (917,000) | ||||||||||||
Total cost of convertible note hedge transactions | 91,350,000 | 91,857,000 | |||||||||||||
Convertible senior notes due 2024 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | 350,000,000 | 350,000,000 | |||||||||||||
Debt instrument, maturity date | Sep. 15, 2024 | ||||||||||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | $ 1,000 | |||||||||||||
Debt instrument, effective interest rate | 5.74% | 5.74% | |||||||||||||
Discounts and commissions payable | $ 3,500,000 | $ 3,500,000 | 85,448,000 | 85,448,000 | |||||||||||
Third party offering costs | $ 1,300,000 | 1,300,000 | |||||||||||||
Amortization of debt issuance costs | 100,000 | $ 200,000 | 100,000 | ||||||||||||
Amortization of debt discount | 1,800,000 | 1,800,000 | |||||||||||||
Aggregate principal amount | 350,000,000 | ||||||||||||||
Cash proceeds from sale of warrants | $ 304,100,000 | ||||||||||||||
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | |||||||||||||||
Debt Instrument | |||||||||||||||
Conversion price per share | $ / shares | $ 211.40 | $ 211.40 | |||||||||||||
Premium on stock trigger price | 100.00% | ||||||||||||||
Shares issued upon conversion | shares | 1,656,000 | ||||||||||||||
Convertible note hedge, number of shares | 1,656,000 | 1,656,000 | |||||||||||||
Convertible note hedge, price per share | $ / derivative | 169.12 | 169.12 | |||||||||||||
Total cost of convertible note hedge transactions | $ 91,400,000 | ||||||||||||||
Cash proceeds from sale of warrants | $ 50,200,000 | $ 50,200,000 | |||||||||||||
Warrants price per share | $ / shares | $ 338.24 | $ 338.24 | |||||||||||||
Deferred tax liability | 21,700,000 | 21,700,000 | |||||||||||||
Deferred tax asset | $ 22,700,000 | $ 22,700,000 | |||||||||||||
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Warrants sold to purchase common stock | shares | 3,300,000 | 3,300,000 | |||||||||||||
Convertible senior notes due 2024 | Convertible debt instrument conversion period one | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | item | 20 | ||||||||||||||
Debt instrument, convertible consecutive trading days | item | 30 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||||||||
Convertible senior notes due 2024 | Convertible debt instrument conversion period two | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | item | 5 | ||||||||||||||
Debt instrument, convertible consecutive trading days | item | 10 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||||||||
Convertible senior notes due 2024 | Convertible debt instrument conversion period three | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible earliest date | Jun. 15, 2024 | ||||||||||||||
Convertible senior notes due 2024 | Common Stock | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, initial conversion rate | 4.7304 | ||||||||||||||
Debt instrument, conversion principal amount | $ 1,000 | $ 1,000 | |||||||||||||
Conversion price per share | $ / shares | $ 211.40 | $ 211.40 | $ 211.40 | $ 211.40 | |||||||||||
Premium on stock trigger price | 25.00% | ||||||||||||||
Debt instrument, convertible, stock price trigger | $ / shares | $ 169.12 | ||||||||||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2024 Notes is 4.7304 shares of common stock per $1,000 principal amount of 2024 Notes, or a total of approximately 1.656 million shares for the total $350 million principal amount. This initial conversion rate is equivalent to an initial conversion price of approximately $211.40 per share | ||||||||||||||
Shares issued upon conversion | shares | 1,656,000 | ||||||||||||||
Convertible senior notes due 2023 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 335,000,000 | $ 335,000,000 | $ 335,000,000 | ||||||||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | ||||||||||||||
Debt instrument, effective interest rate | 6.35% | ||||||||||||||
Discounts and commissions payable | $ 1,700,000 | 68,974,000 | 68,974,000 | 81,311,000 | |||||||||||
Third party offering costs | $ 4,600,000 | ||||||||||||||
Amortization of debt issuance costs | 200,000 | 200,000 | 700,000 | 300,000 | |||||||||||
Amortization of debt discount | 4,100,000 | 3,900,000 | $ 12,300,000 | 5,700,000 | |||||||||||
Warrants sold to purchase common stock | shares | 1,730,000 | ||||||||||||||
Cash proceeds from sale of warrants | $ 51,000,000 | ||||||||||||||
Warrants price per share | $ / shares | $ 309.84 | ||||||||||||||
Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | |||||||||||||||
Debt Instrument | |||||||||||||||
Convertible note hedge, number of shares | 1,730,000 | ||||||||||||||
Convertible note hedge, price per share | $ / derivative | 193.65 | ||||||||||||||
Convertible note hedge, description | the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 1.730 million shares of its common stock at a price of approximately $193.65 per share. | ||||||||||||||
Total cost of convertible note hedge transactions | $ 91,900,000 | ||||||||||||||
Warrants price per share | $ / shares | $ 309.84 | ||||||||||||||
Deferred tax liability | 22,300,000 | $ 22,300,000 | |||||||||||||
Deferred tax asset | $ 22,500,000 | $ 22,500,000 | |||||||||||||
Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | Warrants Subject to Certain Adjustment Mechanisms | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Warrants sold to purchase common stock | shares | 3,500,000 | ||||||||||||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period one | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | 20 | ||||||||||||||
Debt instrument, convertible consecutive trading days | 30 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||||||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period two | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | 5 | ||||||||||||||
Debt instrument, convertible consecutive trading days | 10 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||||||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period three | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible earliest date | Mar. 15, 2023 | ||||||||||||||
Convertible senior notes due 2023 | Common Stock | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, initial conversion rate | 5.1640 | ||||||||||||||
Debt instrument, conversion principal amount | $ 1,000 | ||||||||||||||
Conversion price per share | $ / shares | $ 193.65 | $ 193.65 | $ 193.65 | ||||||||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2023 Notes is 5.1640 shares of common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $193.65 per share. | ||||||||||||||
Convertible senior notes due 2020 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 300,000,000 | $ 300,000,000 | 300,000,000 | ||||||||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | $ 1,000 | |||||||||||||
Debt instrument, effective interest rate | 6.47% | 6.47% | |||||||||||||
Discounts and commissions payable | $ 3,800,000 | $ 3,800,000 | 13,548,000 | 13,548,000 | 27,081,000 | ||||||||||
Third party offering costs | $ 2,300,000 | $ 2,300,000 | |||||||||||||
Amortization of debt issuance costs | 300,000 | 300,000 | 900,000 | 800,000 | |||||||||||
Amortization of debt discount | 4,600,000 | 4,300,000 | $ 13,500,000 | 12,700,000 | |||||||||||
Warrants sold to purchase common stock | shares | 2,540,000 | 2,540,000 | |||||||||||||
Cash proceeds from sale of warrants | $ 30,400,000 | ||||||||||||||
Warrants price per share | $ / shares | $ 189 | $ 189 | |||||||||||||
Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | |||||||||||||||
Debt Instrument | |||||||||||||||
Conversion price per share | $ / shares | $ 189 | $ 189 | |||||||||||||
Convertible note hedge, price per share | $ / derivative | 118.13 | 118.13 | |||||||||||||
Convertible note hedge, description | the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 2.540 million shares of its common stock at a price of approximately $118.13 per share. | ||||||||||||||
Total cost of convertible note hedge transactions | $ 68,300,000 | ||||||||||||||
Deferred tax liability | 32,800,000 | $ 32,800,000 | |||||||||||||
Deferred tax asset | $ 26,600,000 | $ 26,600,000 | |||||||||||||
Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | Warrants Subject to Certain Adjustment Mechanisms | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Warrants sold to purchase common stock | shares | 5,100,000 | 5,100,000 | |||||||||||||
Convertible senior notes due 2020 | Convertible debt instrument conversion period one | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | 20 | ||||||||||||||
Debt instrument, convertible consecutive trading days | 30 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||||||||
Convertible senior notes due 2020 | Convertible debt instrument conversion period two | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | 5 | ||||||||||||||
Debt instrument, convertible consecutive trading days | 10 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||||||||
Convertible senior notes due 2020 | Common Stock | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 1,000 | $ 1,000 | |||||||||||||
Debt instrument, initial conversion rate | 8.4656 | ||||||||||||||
Conversion price per share | $ / shares | $ 118.13 | $ 118.13 | $ 118.13 | $ 118.13 | |||||||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2020 Notes is 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $118.13 per share. | ||||||||||||||
Convertible senior notes due 2019 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | 350,000,000 | ||||||||||||||
Debt instrument, convertible earliest date | Mar. 15, 2019 | ||||||||||||||
Debt instrument, effective interest rate | 4.51% | ||||||||||||||
Discounts and commissions payable | $ 4,400,000 | $ 5,854,000 | |||||||||||||
Third party offering costs | $ 1,000,000 | ||||||||||||||
Amortization of debt issuance costs | $ 0 | $ 400,000 | 700,000 | ||||||||||||
Amortization of debt discount | $ 3,800,000 | 5,900,000 | $ 11,300,000 | ||||||||||||
Aggregate principal amount | $ 350,000,000 | ||||||||||||||
Debt amount settled in cash | $ 349,000,000 | ||||||||||||||
Shares issued upon conversion | shares | 42 | ||||||||||||||
(Gain) Loss on extinguishment of debt | $ 1,000,000 | ||||||||||||||
Deferred tax liability | 0 | 0 | |||||||||||||
Deferred tax asset | $ 0 | 0 | |||||||||||||
Convertible senior notes due 2019 | Convertible bond hedge and warrant transactions | |||||||||||||||
Debt Instrument | |||||||||||||||
Convertible note hedge, number of shares | 3,015 | ||||||||||||||
Convertible note hedge, price per share | $ / derivative | 116.09 | ||||||||||||||
Total cost of convertible note hedge transactions | $ 73,300,000 | ||||||||||||||
Cash proceeds from sale of warrants | $ 40,400,000 | ||||||||||||||
Warrants price per share | $ / shares | $ 171.98 | ||||||||||||||
Shares issued upon exercise of warrants | shares | 65,200 | 54,000 | |||||||||||||
Deferred tax liability | $ 27,500,000 | 27,500,000 | |||||||||||||
Deferred tax asset | $ 28,600,000 | $ 28,600,000 | |||||||||||||
Conversion price per share, two | $ / shares | $ 171.98 | ||||||||||||||
Convertible senior notes due 2019 | Convertible bond hedge and warrant transactions | Maximum | |||||||||||||||
Debt Instrument | |||||||||||||||
Warrants sold to purchase common stock | shares | 6,000,000 | ||||||||||||||
Convertible senior notes due 2019 | Convertible debt instrument conversion period one | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | 20 | ||||||||||||||
Debt instrument, convertible consecutive trading days | 30 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||||||||
Convertible senior notes due 2019 | Convertible debt instrument conversion period two | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, convertible trading days | 5 | ||||||||||||||
Debt instrument, convertible consecutive trading days | 10 | ||||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||||||||
Convertible senior notes due 2019 | Common Stock | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, initial conversion rate | 8.6143 | ||||||||||||||
Debt instrument, conversion principal amount | $ 1,000 | ||||||||||||||
Conversion price per share | $ / shares | $ 116.09 | $ 116.09 | $ 116.09 | ||||||||||||
Private Placement | Convertible senior notes due 2024 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 350,000,000 | $ 350,000,000 | |||||||||||||
Debt instrument, interest rate | 0.00% | 0.00% | |||||||||||||
Private Placement | Convertible senior notes due 2023 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 300,000,000 | ||||||||||||||
Debt instrument, interest rate | 0.00% | ||||||||||||||
Debt instrument, maturity date | Jun. 15, 2023 | ||||||||||||||
Private Placement | Convertible senior notes due 2020 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 250,000,000 | $ 250,000,000 | |||||||||||||
Debt instrument, interest rate | 0.00% | 0.00% | |||||||||||||
Debt instrument, maturity date | Jul. 15, 2020 | ||||||||||||||
Private Placement | Convertible senior notes due 2019 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 350,000,000 | ||||||||||||||
Debt instrument, interest rate | 0.00% | ||||||||||||||
Debt instrument, maturity date | Jun. 15, 2019 | ||||||||||||||
Over Allotment Option in Private Placement | Convertible senior notes due 2023 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 35,000,000 | ||||||||||||||
Exercise of Over Allotment Option in Private Placement | Convertible senior notes due 2020 | |||||||||||||||
Debt Instrument | |||||||||||||||
Debt instrument, principal amount | $ 50,000,000 |
Convertible Senior Notes - Carr
Convertible Senior Notes - Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Sep. 30, 2019 | Feb. 02, 2019 | Jun. 30, 2018 | Jun. 30, 2015 |
Convertible senior notes due 2024 | |||||
Liability component | |||||
Principal | $ 350,000 | ||||
Less: Debt discount | (85,448) | $ (3,500) | |||
Net carrying amount | 264,552 | ||||
Equity component | 87,252 | ||||
Convertible senior notes due 2023 | |||||
Liability component | |||||
Principal | 335,000 | $ 335,000 | |||
Less: Debt discount | (68,974) | (81,311) | $ (1,700) | ||
Net carrying amount | 266,026 | 253,689 | |||
Equity component | 90,990 | 90,990 | |||
Convertible senior notes due 2020 | |||||
Liability component | |||||
Principal | 300,000 | 300,000 | |||
Less: Debt discount | (13,548) | (27,081) | $ (3,800) | ||
Net carrying amount | 286,452 | 272,919 | |||
Equity component | $ 84,003 | $ 84,003 |
Convertible Senior Notes - Ca_2
Convertible Senior Notes - Carrying Value of Notes Excluding the Discounts and Commissions Payable to the Initial Purchasers and Third Party Offering Costs (Detail) - Convertible senior notes due 2019 - USD ($) $ in Thousands | Feb. 02, 2019 | Jun. 30, 2014 |
Liability component | ||
Principal | $ 350,000 | |
Less: Debt discount | (5,854) | $ (4,400) |
Net carrying amount | 344,146 | |
Equity component | $ 70,482 |
Credit Facilities - Schedule of
Credit Facilities - Schedule of Credit Facilities (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Apr. 04, 2019 | Feb. 02, 2019 |
Line of Credit Facility | |||
Credit facilities, Outstanding Amount | $ 148,720 | $ 57,500 | |
Credit facilities, Unamortized Debt Issuance Costs | (939) | ||
Credit facilities, Net Carrying Amount | 147,781 | 57,500 | |
Asset based credit facility | |||
Line of Credit Facility | |||
Credit facilities, Outstanding Amount | 57,500 | ||
Credit facilities, Net Carrying Amount | $ 57,500 | ||
FILO term loan | |||
Line of Credit Facility | |||
Credit facilities, Outstanding Amount | 90,000 | $ 120,000 | |
Credit facilities, Unamortized Debt Issuance Costs | (592) | ||
Credit facilities, Net Carrying Amount | 89,408 | ||
Equipment promissory notes | |||
Line of Credit Facility | |||
Credit facilities, Outstanding Amount | 58,720 | ||
Credit facilities, Unamortized Debt Issuance Costs | (347) | ||
Credit facilities, Net Carrying Amount | $ 58,373 |
Credit Facilities - Additional
Credit Facilities - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 20, 2019 | Apr. 10, 2019 | Apr. 04, 2019 | Jun. 28, 2017 | Oct. 31, 2019 | Nov. 02, 2019 | Nov. 02, 2019 | Nov. 03, 2018 | Feb. 02, 2019 |
Line of Credit Facility | |||||||||
Outstanding amount | $ 148,720 | $ 148,720 | $ 57,500 | ||||||
Revolving line of credit borrowing base, net of reserved amount for upcoming repayment, 2019 notes | $ 40,000 | ||||||||
Minimum percentage of aggregate revolving commitments | 10.00% | ||||||||
Minimum fixed charge coverage ratio | 1 | ||||||||
Loss on extinguishment of debt-net | 6,857 | 5,903 | $ 917 | ||||||
Outstanding revolving line of credit | 147,781 | 147,781 | 57,500 | ||||||
Equipment Loan Facility | |||||||||
Line of Credit Facility | |||||||||
Aggregate amounts outstanding | 58,700 | $ 58,700 | |||||||
Equipment Loan Facility | Maximum | |||||||||
Line of Credit Facility | |||||||||
Maturity term | 4 years | ||||||||
Equipment Loan Facility | Minimum | |||||||||
Line of Credit Facility | |||||||||
Maturity term | 3 years | ||||||||
Equipment Loan Facility | Other current liabilities | |||||||||
Line of Credit Facility | |||||||||
Aggregate amounts outstanding | 21,700 | $ 21,700 | |||||||
Equipment Loan Facility | Other non-current obligations | |||||||||
Line of Credit Facility | |||||||||
Aggregate amounts outstanding | 37,000 | 37,000 | |||||||
Equipment Loan Facility | Other current assets | |||||||||
Line of Credit Facility | |||||||||
Deferred financing fees | 2,900 | 2,900 | $ 3,400 | ||||||
Revolving Credit Facility | |||||||||
Line of Credit Facility | |||||||||
Line of credit | 13,200 | 13,200 | |||||||
Revolving line of credit borrowing base, net of reserved amount for upcoming repayment, 2019 notes | 345,500 | 345,500 | |||||||
Revolving Credit Facility | Credit Agreement | Scenario, Plan Subject to Satisfaction of Conditions | |||||||||
Line of Credit Facility | |||||||||
Increase in revolving line of credit | $ 200,000 | ||||||||
Revolving Credit Facility | Credit Agreement | Maximum | Scenario, Plan Subject to Satisfaction of Conditions | |||||||||
Line of Credit Facility | |||||||||
Line of credit | 800,000 | ||||||||
Revolving Credit Facility | Credit Agreement | Minimum | |||||||||
Line of Credit Facility | |||||||||
Availability under the revolving line of credit | 600,000 | ||||||||
Line of credit | 600,000 | ||||||||
Revolving Credit Facility | Credit Agreement | Restoration Hardware Canada, Inc. | |||||||||
Line of Credit Facility | |||||||||
Availability under the revolving line of credit | 10,000 | ||||||||
FILO term loan | |||||||||
Line of Credit Facility | |||||||||
Outstanding amount | $ 120,000 | 90,000 | 90,000 | ||||||
Interest rate greater than interest rate under the revolving credit facility | 1.25% | ||||||||
Repaid amount of loan | $ 30,000 | ||||||||
Amortization of debt issuance costs | 200 | ||||||||
Outstanding revolving line of credit | $ 89,408 | $ 89,408 | |||||||
LILO Term Loan Facility | Credit Agreement | |||||||||
Line of Credit Facility | |||||||||
Line of credit facility, maximum borrowing capacity | $ 80,000 | ||||||||
Second lien term loan | |||||||||
Line of Credit Facility | |||||||||
Line of credit facility, maximum borrowing capacity | $ 200,000 | ||||||||
Line of credit facility, maturity date | Apr. 9, 2024 | ||||||||
Repaid amount of loan | $ 200,000 | ||||||||
Loss on extinguishment of debt-net | 6,700 | ||||||||
Prepayment penalty | 4,000 | ||||||||
Amortization of debt issuance costs | $ 2,700 | ||||||||
Interest rate description | annual rate generally based on the London Inter-bank Offered Rate (“LIBOR”) plus 6.50% | ||||||||
Debt instrument, basis spread on variable rate | 6.50% | ||||||||
Variable interest rate description | one-month LIBOR plus 6.50% |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value and Carrying Value of 2019, 2020 and 2023 Notes (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Convertible senior notes due 2019 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | $ 334,756 | |
Convertible senior notes, Carrying Value | 344,146 | |
Convertible senior notes due 2020 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | $ 287,992 | 260,258 |
Convertible senior notes, Carrying Value | 286,452 | 272,919 |
Convertible senior notes due 2023 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | 271,208 | 230,684 |
Convertible senior notes, Carrying Value | 266,026 | $ 253,689 |
Convertible senior notes due 2024 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | 263,368 | |
Convertible senior notes, Carrying Value | $ 264,552 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | Feb. 02, 2019 | |
Income Taxes | |||||
Income tax expense | $ 8,353 | $ 4,419 | $ 36,811 | $ 14,540 | |
Effective income tax rate | 13.70% | 18.00% | 19.50% | 11.80% | |
Unrecognized tax benefits | $ 8,300 | $ 8,300 | $ 8,500 | ||
Tax expense and the effective tax rate, if recognized | 7,600 | 7,600 | $ 7,300 | ||
Exposures related to unrecognized tax benefits | $ 600 | $ 600 | |||
Period of unrecognized tax benefits change | 12 months |
Net Income Per Share - Schedule
Net Income Per Share - Schedule of Weighted-Average Shares Used for Net Income per Share (Detail) - shares | 3 Months Ended | 9 Months Ended | |||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | ||
Net Income Per Share | |||||
Weighted-average shares-basic | 18,765,769 | 22,082,141 | 19,069,501 | 21,850,955 | |
Effect of dilutive stock-based awards | 4,712,355 | 4,966,376 | 4,347,713 | 4,603,390 | |
Effect of dilutive convertible senior notes | [1] | 692,048 | 654,802 | 392,211 | 355,690 |
Weighted-average shares-diluted | 24,170,172 | 27,703,319 | 23,809,425 | 26,810,035 | |
[1] | The 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share, $193.65 per share and $211.40 per share, respectively |
Net Income Per Share - Schedu_2
Net Income Per Share - Schedule of Weighted-Average Shares Used for Net Income per Share Footnotes (Detail) - Common Stock - $ / shares | Nov. 02, 2019 | Sep. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2015 | Jun. 30, 2014 |
Convertible senior notes due 2019 | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | $ 116.09 | $ 116.09 | |||
Convertible senior notes due 2020 | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | 118.13 | $ 118.13 | |||
Convertible senior notes due 2023 | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | 193.65 | $ 193.65 | |||
Convertible senior notes due 2024 | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | $ 211.40 | $ 211.40 |
Net Income Per Share - Anti-Dil
Net Income Per Share - Anti-Dilutive Securities Excluded from Diluted Net Income per Share (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 190,766 | 348,423 | 457,300 | 351,627 |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 190,766 | 348,423 | 457,300 | 348,127 |
Restricted Stock Units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 3,500 |
Share Repurchases - Additional
Share Repurchases - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Nov. 02, 2019 | May 04, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | Feb. 02, 2019 | Oct. 10, 2018 | |
Share Repurchase Program and Equity Plans | |||||||
Shares of common stock purchased under repurchase program | $ 145,182 | $ 250,032 | $ 145,425 | ||||
Aggregate unpaid principal amount of notes payable for share repurchases | $ 18,741 | 18,741 | $ 18,741 | ||||
Fiscal 2018 $700 million repurchase program | |||||||
Share Repurchase Program and Equity Plans | |||||||
Shares of common stock purchased under repurchase program, shares | 2.2 | ||||||
Shares of common stock purchased at an average price per share under repurchase program | $ 115.36 | ||||||
Shares of common stock purchased under repurchase program | $ 250,000 | ||||||
Amount of shares available under repurchase program | 450,000 | 450,000 | |||||
Share repurchases under equity plans | |||||||
Share Repurchase Program and Equity Plans | |||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,700 | 18,700 | 19,600 | ||||
Interest expense related to notes payable for share repurchases | 200 | $ 200 | 700 | $ 700 | |||
Share repurchases under equity plans | Other current liabilities | |||||||
Share Repurchase Program and Equity Plans | |||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,700 | 18,700 | 900 | ||||
Share repurchases under equity plans | Other non-current obligations | |||||||
Share Repurchase Program and Equity Plans | |||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,700 | ||||||
Board of Directors (CEO) | Fiscal 2018 $700 million repurchase program | |||||||
Share Repurchase Program and Equity Plans | |||||||
Share repurchase | 250,000 | ||||||
Board of Directors (CEO) | Maximum | Fiscal 2018 $700 million repurchase program | |||||||
Share Repurchase Program and Equity Plans | |||||||
Share repurchase program authorized amount | $ 700,000 | ||||||
Director | Share repurchases under equity plans | |||||||
Share Repurchase Program and Equity Plans | |||||||
Aggregate unpaid principal amount of notes payable for share repurchases | $ 15,500 | $ 15,500 | $ 15,500 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | Feb. 02, 2019 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Stock-based compensation expense | $ 5,100,000 | $ 3,700,000 | $ 16,109,000 | $ 17,777,000 | |
Stock-based compensation cost capitalized | 0 | 0 | |||
Rollover units and profit interests | 2,957,000 | 2,957,000 | $ 2,637,000 | ||
Selling, general and administrative expenses | 194,929,000 | 207,793,000 | $ 550,087,000 | 555,500,000 | |
Design Investors WW Acquisition Company, LLC | Profit interests | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Profit interest expected life | 5 years | ||||
Selling, general and administrative expenses | 100,000 | $ 100,000 | $ 300,000 | $ 300,000 | |
Design Investors WW Acquisition Company, LLC | Profit interests | Other non-current obligations | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Liability associated with the profit interests | 1,500,000 | 1,500,000 | 1,100,000 | ||
Appreciation rights | Design Investors WW Acquisition Company, LLC | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Rollover units and profit interests | $ 1,500,000 | $ 1,500,000 | $ 1,500,000 | ||
2012 Stock Incentive Plan and 2012 Stock Option Plan [Member] | Stock Options | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Outstanding shares | 7,309,386 | 7,309,386 | |||
Options outstanding, weighted-average exercise price per share | $ 57.54 | $ 57.54 | |||
Numbers of options vested | 5,919,789 | ||||
Vested weighted-average exercise price per share | $ 53 | ||||
Aggregate intrinsic value of options outstanding | $ 864,700,000 | $ 864,700,000 | |||
Aggregate intrinsic value of options vested or expected to vest | 831,900,000 | 831,900,000 | |||
Aggregate intrinsic value of options exercisable | 727,200,000 | $ 727,200,000 | |||
Weighted-average remaining contractual life of options exercisable | 4 years 4 months 17 days | ||||
Unrecognized compensation expense related to unvested options | $ 36,300,000 | $ 36,300,000 | |||
Unrecognized compensation expense with weighted-average period | 3 years 4 months 2 days | ||||
2012 Stock Incentive Plan and 2012 Stock Option Plan [Member] | Restricted stock and restricted stock unit | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Unrecognized compensation expense with weighted-average period | 1 year 8 months 15 days | ||||
Outstanding shares | 227,094 | 227,094 | |||
Restricted stock awards outstanding with weighted-average grant date fair value per share | $ 49.09 | $ 49.09 | |||
Vested restricted stock unit | 4,720 | 162,595 | |||
Vested weighted-average grant date fair value | $ 62.01 | $ 56.91 | |||
Unrecognized compensation expense related to unvested options | $ 6,700,000 | $ 6,700,000 |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) - USD ($) | Mar. 21, 2019 | Nov. 02, 2019 |
Commitments and Contingencies. | ||
Material off balance sheet commitments | $ 0 | |
Aggregate settlement amount | $ 50,000,000 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | 18 Months Ended | ||
Nov. 02, 2019storecustomer | Nov. 03, 2018customer | Nov. 02, 2019segmentstorecustomer | Nov. 03, 2018customer | Nov. 02, 2019storesegment | |
Segment Reporting Information | |||||
Number of operating segments | segment | 2 | 2 | |||
Number of outlet stores | 39 | 39 | 39 | ||
Number of customers accounted for more than 10% of Company's revenues | customer | 0 | 0 | 0 | 0 | |
Sales | Customer concentration risk | |||||
Segment Reporting Information | |||||
Portion of specified customers portion in total revenues | 10.00% | 10.00% | 10.00% | 10.00% | |
Canada | |||||
Segment Reporting Information | |||||
Number of retail stores | 4 | 4 | 4 | ||
Number of outlet stores | 2 | 2 | 2 | ||
U.K | |||||
Segment Reporting Information | |||||
Number of retail stores | 1 | 1 | 1 |
Segment Reporting - Summary of
Segment Reporting - Summary of Statements of Operations Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Segment Reporting Information | ||||
Net revenues | $ 677,526 | $ 636,558 | $ 1,982,461 | $ 1,834,762 |
Gross profit | 284,166 | 250,021 | 811,938 | 727,698 |
Depreciation and amortization | 23,435 | 22,995 | 75,945 | 64,934 |
RH Segment | ||||
Segment Reporting Information | ||||
Net revenues | 645,378 | 604,322 | 1,881,412 | 1,737,933 |
Gross profit | 270,721 | 236,432 | 769,133 | 687,643 |
Depreciation and amortization | 22,316 | 21,739 | 72,490 | 61,448 |
Waterworks | ||||
Segment Reporting Information | ||||
Net revenues | 32,148 | 32,236 | 101,049 | 96,829 |
Gross profit | 13,445 | 13,589 | 42,805 | 40,055 |
Depreciation and amortization | $ 1,119 | $ 1,256 | $ 3,455 | $ 3,486 |
Segment Reporting - Summary o_2
Segment Reporting - Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting (Detail) - USD ($) $ in Thousands | Nov. 02, 2019 | Feb. 02, 2019 |
Segment Reporting Information | ||
Goodwill | $ 124,376 | $ 124,379 |
Trademarks and domain names | 86,022 | 86,022 |
Total assets | 2,362,013 | 2,423,018 |
RH Segment | ||
Segment Reporting Information | ||
Goodwill | 124,376 | 124,379 |
Trademarks and domain names | 48,563 | 48,563 |
Total assets | 2,218,772 | 2,273,951 |
Waterworks | ||
Segment Reporting Information | ||
Trademarks and domain names | 37,459 | 37,459 |
Total assets | $ 143,241 | $ 149,067 |
Segment Reporting - Summary o_3
Segment Reporting - Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting Footnotes (Detail) - USD ($) $ in Millions | 12 Months Ended | |
Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information | ||
Goodwill impairment | $ 51.1 | |
Waterworks | ||
Segment Reporting Information | ||
Goodwill impairment | 17.4 | $ 33.7 |
Tradename impairment charge | $ 14.6 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Operating Income and Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Segment Reporting Information | ||||
Income from operations | $ 89,237 | $ 42,228 | $ 261,851 | $ 172,198 |
Asset held for sale impairment-net | 1,529 | 1,529 | ||
Asset impairments and change in useful lives | (1,031) | (3,411) | (7,052) | (3,411) |
Recall accrual | 2,053 | (3,986) | 3,988 | (2,668) |
Legal settlements | 1,193 | 5,289 | ||
Reorganization related costs | (1,075) | (7,564) | (1,075) | (9,285) |
Impact of inventory step-up | (380) | |||
Reversal of loss on asset disposal | (3,886) | (3,046) | ||
Interest expense-net | 21,564 | 17,695 | 67,195 | 48,260 |
Loss on extinguishment of debt-net | 6,857 | 5,903 | 917 | |
Income before income taxes | 60,816 | 24,533 | 188,753 | 123,021 |
Operating segments | RH Segment | ||||
Segment Reporting Information | ||||
Income from operations | 86,936 | 60,853 | 260,429 | 185,705 |
Operating segments | Waterworks | ||||
Segment Reporting Information | ||||
Income from operations | $ 825 | $ 222 | $ 2,839 | $ (6) |
Segment Reporting - Net Revenue
Segment Reporting - Net Revenues (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Nov. 02, 2019 | Nov. 03, 2018 | Nov. 02, 2019 | Nov. 03, 2018 | |
Segment Reporting Information | ||||
Total net revenues | $ 677,526 | $ 636,558 | $ 1,982,461 | $ 1,834,762 |
Furniture | ||||
Segment Reporting Information | ||||
Total net revenues | 467,524 | 418,895 | 1,349,861 | 1,201,737 |
Non-furniture | ||||
Segment Reporting Information | ||||
Total net revenues | $ 210,002 | $ 217,663 | $ 632,600 | $ 633,025 |