Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Oct. 31, 2020 | Dec. 09, 2020 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Oct. 31, 2020 | |
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 | |
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 | 20,401,431 | |
Entity Central Index Key | 0001528849 | |
Current Fiscal Year End Date | --02-01 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 89,884 | $ 47,658 |
Accounts receivable-net | 59,065 | 48,979 |
Merchandise inventories | 497,076 | 438,696 |
Prepaid expense and other current assets | 88,875 | 61,619 |
Total current assets | 734,900 | 596,952 |
Property and equipment-net | 1,051,825 | 967,599 |
Operating lease right-of-use assets | 405,776 | 410,904 |
Goodwill | 135,306 | 124,367 |
Tradenames, trademarks and domain names | 71,663 | 86,022 |
Deferred tax assets | 38,839 | 45,005 |
Other non-current assets | 240,941 | 214,845 |
Total assets | 2,679,250 | 2,445,694 |
Current liabilities: | ||
Accounts payable and accrued expenses | 368,552 | 330,309 |
Deferred revenue and customer deposits | 274,958 | 162,433 |
Convertible senior notes due 2020-net | 290,532 | |
Operating lease liabilities | 64,879 | 58,924 |
Other current liabilities | 174,196 | 140,714 |
Total current liabilities | 882,585 | 982,912 |
Asset based credit facility | 42,852 | 53,062 |
Non-current operating lease liabilities | 405,432 | 409,930 |
Non-current finance lease liabilities | 488,660 | 442,988 |
Other non-current obligations | 3,144 | 3,695 |
Total liabilities | 2,382,381 | 2,427,043 |
Commitments and contingencies (Note 16) | ||
Stockholders' equity: | ||
Preferred stock-$0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of October 31, 2020 and February 1, 2020 | ||
Common stock-$0.0001 par value per share, 180,000,000 shares authorized, 19,844,455 shares issued and outstanding as of October 31, 2020; 19,236,681 shares issued and outstanding as of February 1, 2020 | 2 | 2 |
Additional paid-in capital | 566,436 | 430,662 |
Accumulated other comprehensive loss | (1,938) | (2,760) |
Accumulated deficit | (267,631) | (409,253) |
Total stockholders' equity | 296,869 | 18,651 |
Total liabilities and stockholders' equity | 2,679,250 | 2,445,694 |
Equipment promissory notes | ||
Current liabilities: | ||
Equipment promissory notes-net | 20,363 | 31,053 |
Convertible senior notes due 2020 | ||
Current liabilities: | ||
Operating lease liabilities | 64,879 | 58,924 |
Non-current operating lease liabilities | 405,432 | 409,930 |
Convertible senior notes due 2023 | ||
Current liabilities: | ||
Convertible senior notes due-net | 280,536 | 266,658 |
Non-current finance lease liabilities | 488,660 | 442,988 |
Convertible senior notes due 2024 | ||
Current liabilities: | ||
Convertible senior notes due-net | 277,247 | 264,982 |
Other non-current obligations | $ 27,558 | $ 28,520 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Oct. 31, 2020 | Feb. 01, 2020 |
Condensed Consolidated Balance Sheets (Unaudited) | ||
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 | 19,844,455 | 19,236,681 |
Common stock, shares outstanding | 19,844,455 | 19,236,681 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Condensed Consolidated Statements of Operations (Unaudited) | ||||
Net revenues | $ 844,013 | $ 677,526 | $ 2,036,190 | $ 1,982,461 |
Cost of goods sold | 435,683 | 393,360 | 1,095,787 | 1,170,523 |
Gross profit | 408,330 | 284,166 | 940,403 | 811,938 |
Selling, general and administrative expenses | 297,109 | 194,929 | 657,161 | 550,087 |
Income from operations | 111,221 | 89,237 | 283,242 | 261,851 |
Other expenses | ||||
Interest expense-net | 15,656 | 21,564 | 54,703 | 67,195 |
Tradename impairment | 20,459 | |||
(Gain) loss on extinguishment of debt-net | 6,857 | (152) | 5,903 | |
Total other expenses | 15,656 | 28,421 | 75,010 | 73,098 |
Income before income taxes | 95,565 | 60,816 | 208,232 | 188,753 |
Income tax expense | 49,154 | 8,353 | 66,610 | 36,811 |
Net income | $ 46,411 | $ 52,463 | $ 141,622 | $ 151,942 |
Weighted-average shares used in computing basic net income per share | 19,552,836 | 18,765,769 | 19,393,931 | 19,069,501 |
Basic net income per share | $ 2.37 | $ 2.80 | $ 7.30 | $ 7.97 |
Weighted-average shares used in computing diluted net income per share | 28,286,124 | 24,170,172 | 26,351,194 | 23,809,425 |
Diluted net income per share | $ 1.64 | $ 2.17 | $ 5.37 | $ 6.38 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Net income | $ 46,411 | $ 52,463 | $ 141,622 | $ 151,942 |
Net gains (losses) from foreign currency translation | (96) | 299 | 822 | (148) |
Total comprehensive income | $ 46,315 | $ 52,762 | $ 142,444 | $ 151,794 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total |
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 | ||||
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) | |||||
Shares issued in connection with warrant agreements | 54,009 | |||||
Issuance of warrants | 50,225 | 50,225 | ||||
Purchase of convertible note hedge | (91,350) | (91,350) | ||||
Conversion of convertible senior notes | $ 4 | 4 | ||||
Conversion of convertible senior notes, Shares | 42 | (42) | ||||
Equity component value of convertible note issuance-net | 87,070 | 87,070 | ||||
Net income | 151,942 | 151,942 | ||||
Net gains (losses) from foreign currency translation | (148) | (148) | ||||
Balances at Nov. 02, 2019 | $ 2 | 416,946 | (2,481) | (477,687) | (63,220) | |
Balances, shares at Nov. 02, 2019 | 18,928,309 | |||||
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 | ||||
Balances at Feb. 01, 2020 | $ 2 | 430,662 | (2,760) | (409,253) | 18,651 | |
Balances, shares at Feb. 01, 2020 | 19,236,681 | |||||
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 | |||||
Shares issued in connection with warrant agreements | 54,009 | |||||
Issuance of warrants | 50,225 | 50,225 | ||||
Purchase of convertible note hedge | (91,350) | (91,350) | ||||
Equity component value of convertible note issuance-net | 87,070 | 87,070 | ||||
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 | |||||
Balances at Feb. 01, 2020 | $ 2 | 430,662 | (2,760) | (409,253) | 18,651 | |
Balances, shares at Feb. 01, 2020 | 19,236,681 | |||||
Stock-based compensation | 131,153 | 131,153 | ||||
Issuance of restricted stock, Shares | 3,192 | |||||
Vested and delivered restricted stock units | (7,428) | (7,428) | ||||
Vested and delivered restricted stock units, Shares | 73,106 | |||||
Exercise of stock options | 12,121 | 12,121 | ||||
Exercise of stock options, Shares | 241,126 | |||||
Repurchases of common stock | $ (72) | (72) | ||||
Repurchases of common stock, Shares | (600) | 600 | ||||
Retirement of treasury stock | (77) | $ 77 | $ (100) | |||
Retirement of treasury stock, Shares | (617) | (600) | ||||
Shares issued in connection with warrant agreements | 290,967 | |||||
Settlement of convertible senior notes | (315,708) | $ 315,708 | ||||
Settlement of convertible senior notes, Shares | 1,131,645 | (1,131,645) | ||||
Exercise of call option under bond hedge upon settlement of convertible senior notes | 315,713 | $ (315,713) | ||||
Exercise of call option under bond hedge upon settlement of convertible senior notes (in shares) | (1,131,662) | 1,131,662 | ||||
Net income | 141,622 | $ 141,622 | ||||
Net gains (losses) from foreign currency translation | 822 | 822 | ||||
Balances at Oct. 31, 2020 | $ 2 | 566,436 | (1,938) | (267,631) | 296,869 | |
Balances, shares at Oct. 31, 2020 | 19,844,455 | |||||
Balances at Aug. 01, 2020 | $ 2 | 444,378 | (1,842) | (314,042) | $ (5) | 128,491 |
Balances, shares at Aug. 01, 2020 | 19,485,826 | 17 | ||||
Stock-based compensation | 118,677 | 118,677 | ||||
Vested and delivered restricted stock units | (610) | (610) | ||||
Vested and delivered restricted stock units, Shares | 2,814 | |||||
Exercise of stock options | 3,996 | 3,996 | ||||
Exercise of stock options, Shares | 64,848 | |||||
Retirement of treasury stock | (5) | $ 5 | ||||
Retirement of treasury stock, Shares | (17) | |||||
Shares issued in connection with warrant agreements | 290,967 | |||||
Net income | 46,411 | 46,411 | ||||
Net gains (losses) from foreign currency translation | (96) | (96) | ||||
Balances at Oct. 31, 2020 | $ 2 | $ 566,436 | $ (1,938) | $ (267,631) | $ 296,869 | |
Balances, shares at Oct. 31, 2020 | 19,844,455 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2020 | Nov. 02, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 141,622 | $ 151,942 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 76,688 | 75,945 |
Non-cash operating lease cost | 47,069 | 48,855 |
Tradename impairment | 20,459 | |
Asset impairments | 4,783 | 1,660 |
(Gain) loss on sale leaseback transaction | 9,352 | (1,196) |
Amortization of debt discount | 33,810 | 33,528 |
Accretion of debt discount upon settlement of debt | (84,003) | (70,482) |
Stock-based compensation expense | 131,472 | 16,109 |
Non-cash finance lease interest expense | 17,887 | 16,864 |
Product recalls | 5,561 | (3,516) |
Deferred income taxes | 117 | 667 |
(Gain) loss on extinguishment of debt-net | (152) | 5,903 |
Other non-cash items | 3,274 | 2,973 |
Change in assets and liabilities: | ||
Accounts receivable | (6,070) | (2,809) |
Merchandise inventories | (57,781) | 102,788 |
Prepaid expense and other assets | (47,288) | 42,178 |
Landlord assets under construction-net of tenant allowances | (44,921) | (49,387) |
Accounts payable and accrued expenses | 10,844 | (41,474) |
Deferred revenue and customer deposits | 111,436 | 14,406 |
Other current liabilities | 29,153 | (53,016) |
Current and non-current operating lease liabilities | (36,810) | (61,887) |
Other non-current obligations | (19,239) | (19,054) |
Net cash provided by operating activities | 347,263 | 210,997 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (71,755) | (64,614) |
Proceeds from sale of assets | 25,006 | 24,078 |
Acquisition of business | (13,052) | |
Investments in joint ventures | (7,500) | |
Deposits on asset under construction | (30,000) | |
Net cash used in investing activities | (67,301) | (70,536) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings under promissory and equipment security notes | 99,000 | |
Repayments under promissory and equipment security notes | (10,872) | (10,280) |
Debt issuance costs | (4,636) | |
Proceeds from issuance of convertible senior notes | 350,000 | |
Proceeds from issuance of warrants | 50,225 | |
Purchase of convertible note hedges | (91,350) | |
Repayments of convertible senior notes | (215,846) | (278,560) |
Principal payments under finance leases | (8,801) | (7,136) |
Repurchases of common stock-including commissions | (250,032) | |
Proceeds from exercise of stock options | 12,121 | 18,509 |
Tax withholdings related to issuance of stock-based awards | (7,428) | (6,538) |
Payments under promissory notes related to share repurchases | (892) | |
Net cash used in financing activities | (230,826) | (108,008) |
Effects of foreign currency exchange rate translation | (10) | (3) |
Net increase in cash and cash equivalents and restricted cash equivalents | 49,126 | 32,450 |
Cash and cash equivalents and restricted cash equivalents | ||
Beginning of period-cash and cash equivalents | 47,658 | |
Beginning of period-cash and cash equivalents and restricted cash equivalents | 47,658 | 5,803 |
End of period-cash and cash equivalents | 89,884 | 38,253 |
End of period-restricted cash equivalents (acquisition related escrow deposits) | 6,900 | |
End of period-cash and cash equivalents and restricted cash equivalents | 96,784 | 38,253 |
Non-cash transactions: | ||
Property and equipment additions in accounts payable and accrued expenses at period-end | 23,277 | 11,859 |
Landlord asset additions in accounts payable and accrued expenses at period-end | 20,296 | 20,475 |
Reclassification of assets from landlord assets under construction to finance lease right-of-use assets | 68,459 | |
Shares issued on settlement of convertible senior notes | (315,708) | |
Shares received on exercise of call option under bond hedge upon settlement of convertible senior notes | 315,713 | |
Convertible senior notes | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Debt issuance costs | (4,818) | |
Asset based credit facility | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings | 359,400 | 322,500 |
Repayments | $ (359,400) | (380,000) |
Term Loan | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowings | 320,000 | |
Repayments | $ (234,000) |
The Company
The Company | 9 Months Ended |
Oct. 31, 2020 | |
The Company | |
The Company | NOTE 1—THE COMPANY Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” or 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 our stores, catalogs and websites. As of October 31, 2020, we operated a total of 68 RH Galleries and 38 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 14 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 our records and, in our opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of October 31, 2020, and the results of operations for the three and nine months ended October 31, 2020 and November 2, 2019. Our current fiscal year, which consists of 52 weeks, ends on January 30, 2021 (“fiscal 2020”). 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. The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the condensed consolidated financial statements. We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of the novel coronavirus disease (“COVID-19”) using information that is reasonably available to us at this time. The accounting estimates and other matters we have assessed include, but were not limited to, sales return reserve, inventory reserve, allowance for doubtful accounts, goodwill, intangible and other long-lived assets. Our current assessment of these estimates are included in our condensed consolidated financial statements as of and for the three and nine months ended October 31, 2020 and November 2, 2019. As additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our condensed consolidated financial statements in future reporting periods. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020 (the “2019 Form 10-K”). The results of operations for the three and nine months ended October 31, 2020 and November 2, 2019 presented herein are not necessarily indicative of the results to be expected for the full fiscal year or future time periods. Our business, like the businesses of retailers generally, is subject to uncertainty surrounding the financial impact of the novel coronavirus disease as discussed in Recent Developments—COVID-19 Recent Developments—COVID-19 The initial wave of the COVID-19 outbreak starting in March 2020 caused disruption to our business operations as we temporarily closed all of our retail locations on March 17, 2020. While our retail locations were substantially closed at the end of the first fiscal quarter on May 2, 2020, during the second fiscal quarter we had reopened substantially all of our retail locations. As of the end of the third fiscal quarter on October 31, 2020 we had reopened all of our Galleries and Outlets, and 8 out of 10 of our restaurants. Our business substantially recovered during the second and third fiscal quarters as a result of both the reopening of most of our physical locations and also due to strong consumer demand for our products. During the time period of October through early December of 2020, there has been a spike in reported COVID-19 cases in various parts of both the U.S. and Canada. The recent surge in cases has led to the imposition of increasing levels of restriction on our physical operations with respect to Galleries, Outlets and restaurants. These limitations include restrictions on the level of occupancy that is permitted in some locations as well as full closure requirements for other locations. Although we have experienced strong demand for our products in connection with prior closure requirements earlier in this year, our overall demand in specific markets correlates favorably with our customers’ ability to access our Galleries and Outlets. Accordingly, we do anticipate some negative impact to overall demand in connection the restrictions on our physical locations and the duration and extent of these operational limits cannot be predicted with certainty. While our business strengthened during the second and third fiscal quarters, the lag in inventory receipts together with dislocations in our supply chain has resulted in some delays in our ability to convert business demand into revenues. Our global supply chain has not fully recovered from the impact of the COVID-19 dislocation. In light of the recent increase of virus infections and shelter in place orders which continue to negatively impact our manufacturing partners, we anticipate that our supply chain may not catch up to demand until the second half of 2021. Despite the strong growth in consumer demand in our business during the second and third fiscal quarters, revenue growth has lagged the increase in customer orders. As manufacturing and inventory receipts catch up with this backlog, we expect this demand will convert into revenue in the next several quarters. While we have continued to serve our customers and operate our business through the ongoing COVID-19 health crisis, there can be no assurance that future events will not have an impact on our business, results of operations or financial condition since the extent and duration of the health crisis remains uncertain. Future adverse developments in connection with the COVID-19 crisis, including additional waves or resurgences of COVID-19 outbreaks, evolving international, federal, state and local restrictions and safety regulations in response to COVID-19 risks, changes in consumer behavior and health concerns, the pace of economic activity in the wake of the COVID-19 crisis, or other similar issues could adversely affect our business, results of operations or financial condition in the future, or our financial results and business performance for the fiscal year ending January 30, 2021 and future time periods. Although the availability of vaccines and various treatments with respect to COVID-19 can be expected to have an overall positive impact on business conditions in the aggregate over time, the exact timing of these positive developments is uncertain and in the meantime reported cases of COVID-19 have surged in the U.S. and Canada from October through December 2020 resulting in various adverse operating restrictions on our physical locations. In our initial response to the COVID-19 health crisis we undertook immediate adjustments to our business operations including temporarily closing retail locations and restaurants, curtailing expenses and delaying investments including scaling back some inventory orders while we assessed the status of our business. Our approach to the crisis evolved quickly as our business trends substantially improved during the second and third fiscal quarters. We will continue to closely manage our expenses and investments while considering both the overall economic environment as well as the needs of our business operations. In addition, our near term decisions regarding the sources and uses of capital in our business will continue to reflect and adapt to changes in market conditions and our business related to the impact of COVID-19. During the second and third fiscal quarters of 2020 we have resumed many investments and previously deferred expenditures, but we anticipate that our decisions regarding these matters will continue to evolve in response to changing business circumstances including further development with respect to COVID-19. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 9 Months Ended |
Oct. 31, 2020 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS Cloud Computing In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 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, ASU 2015-05—Customers Accounting for Fees in a Cloud Computing Agreement We adopted one Prepaid Expense and Other Assets Current Expected Credit Losses In June 2016, the FASB issued ASU 2016-13—Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments Accounts receivable consist primarily of receivables from our credit card processors for sales transactions, receivables related to our contract business and other miscellaneous receivables. Accounts receivable is presented net of allowance for doubtful accounts as a result of the assessment of the collectability of customer accounts, which is recorded by considering factors such as historical experience, credit quality, the age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. The allowance for doubtful accounts was $3.3 million and $2.2 million as of October 31, 2020 and February 1, 2020, respectively. We adopted Income Taxes In December 2019, the FASB issued ASU 2019-12—Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes Convertible Instruments and Contracts in an Entity’s Own Equity In August 2020, the FASB issued ASU 2020-06—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity |
Prepaid Expense and Other Asset
Prepaid Expense and Other Assets | 9 Months Ended |
Oct. 31, 2020 | |
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 October 31, February 1, 2020 2020 Prepaid expense and other current assets $ 30,661 $ 30,875 Promissory note receivable, including interest 22,499 — Capitalized catalog costs 13,878 13,740 Vendor deposits 11,180 11,258 Acquisition related escrow deposits 4,400 — Right of return asset for merchandise 6,257 5,746 Total prepaid expense and other current assets $ 88,875 $ 61,619 in thousands October 31, February 1, 2020 2020 Landlord assets under construction $ 144,792 $ 138,315 Deposits on asset under construction 60,000 60,000 Investments in joint ventures (Note 5) 7,500 — Promissory note receivable, including interest 5,500 5,354 Capitalized cloud computing costs—net 5,444 — Other deposits 5,264 5,157 Acquisition related escrow deposits 2,500 — Deferred financing fees 1,794 2,602 Other non-current assets 8,147 3,417 Total other non-current assets $ 240,941 $ 214,845 |
Goodwill, Tradenames, Trademark
Goodwill, Tradenames, Trademarks and Domain Names | 9 Months Ended |
Oct. 31, 2020 | |
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 RH Segment and Waterworks (See Note 17— Segment Reporting in thousands Foreign February 1, Currency October 31, 2020 Acquisition Impairment (1) Translation 2020 RH Segment Goodwill $ 124,367 $ 10,948 $ — $ (9) $ 135,306 Tradenames, trademarks and domain names 48,563 6,100 — — 54,663 Waterworks (1) Tradename (2) 37,459 — (20,459) — 17,000 (1) Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018, with $17.4 million and $33.7 million of impairment recorded in fiscal 2018 and fiscal 2017, respectively. (2) Presented net of an impairment charge of $35.1 million, with $20.5 million recorded in the first quarter of fiscal 2020 and $14.6 million recorded in fiscal 2018. Acquisition of Goodwill and Tradename On August 28, 2020, we acquired a furniture business in North America, for total consideration of $15.0 million, of which $4.8 million was allocated to tradename and $10.9 million was allocated to goodwill as a part of the purchase price allocation. Refer to Note 18— Business Combination Waterworks Tradename Impairment During the first quarter of fiscal 2020, as a result of the COVID-19 health crisis and related Showroom closures and slowdown in construction activity, management updated the long-term financial projections for the Waterworks reporting unit, which resulted in a significant decrease in forecasted revenues and profitability. We performed an interim impairment test on the Waterworks tradename and the estimated future cash flows of the Waterworks reporting unit indicated the fair value of the tradename asset was below its carrying amount. We determined fair value utilizing a discounted cash flow methodology under the relief-from-royalty method. Significant assumptions under this method include forecasted net revenues and the estimated royalty rate, expressed as a percentage of revenues, in addition to the discount rate based on the weighted-average cost of capital. Based on the impairment test performed, we concluded that the Waterworks reporting unit tradename was impaired as of the first quarter of fiscal 2020. As a result, we recognized a $20.5 million non-cash impairment charge for the Waterworks reporting unit tradename during the first quarter of fiscal 2020, and the carrying value of the Waterworks indefinite-lived tradename asset after the impairment charge was $17.0 million. |
Investment in Joint Ventures
Investment in Joint Ventures | 9 Months Ended |
Oct. 31, 2020 | |
Investment in Joint Ventures | |
Investments in Joint Ventures | NOTE 5—INVESTMENTS IN JOINT VENTURES During the second quarter of fiscal 2020, we entered into transactions whereby we became a 50 percent member of two privately held limited liability companies (the “JVs”) that each have the purpose of acquiring, constructing, developing and ultimately selling certain specified real estate projects. The JVs are financed by capital contributions from the members on an as-needed basis, as well as via third-party debt secured by the underlying real estate projects and guaranteed by a member other than us. The JVs are considered variable interest entities because the equity investment at risk is not sufficient to permit the JVs to finance their activities without additional financial support. A variable interest entity is consolidated by its primary beneficiary, which is defined as the party who has a controlling financial interest in the variable interest entity. As we do not have a controlling financial interest in the JVs but have the ability to exercise significant influence over the operating and financial policies of the JVs, we recognized these investments using the equity method. As of October 31, 2020, we had $7.5 million of investments in the JVs, which is included in other non-current assets on the condensed consolidated balance sheets. Our proportional share of the JVs operations for the three and nine months ended October 31, 2020 was not material. |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Oct. 31, 2020 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | NOTE 6—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accounts payable and accrued expenses consist of the following ( in thousands October 31, February 1, 2020 2020 Accounts payable $ 187,381 $ 180,714 Accrued compensation 66,628 64,659 Accrued freight and duty 28,675 25,170 Accrued sales taxes 24,685 19,618 Accrued occupancy 18,472 12,067 Deferred consideration for asset purchase 13,598 — Accrued professional fees 5,506 4,381 Accrued catalog costs 4,013 8,267 Other accrued expenses 19,594 15,433 Total accounts payable and accrued expenses $ 368,552 $ 330,309 Other current liabilities consist of the following ( in thousands October 31, February 1, 2020 2020 Promissory notes on asset under construction $ 53,000 $ 53,000 Federal and state taxes payable 36,148 13,591 Current portion of equipment promissory notes 22,489 22,009 Allowance for sales returns 21,797 19,206 Unredeemed gift card and merchandise credit liability 14,929 16,625 Finance lease liabilities 14,314 9,188 Product recall reserve 6,619 2,055 Other current liabilities 4,900 5,040 Total other current liabilities $ 174,196 $ 140,714 Contract Liabilities We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue, customer deposits and deferred membership fees as of October 31, 2020 will be recognized within the next six months (with the exception of cancelled orders) as the performance obligations are satisfied. In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards and merchandise credits. During the three months ended October 31, 2020 and November 2, 2019, we recognized $5.6 million and $5.1 million, respectively, of revenue related to previous deferrals related to our gift cards and merchandise credits. During the nine months ended October 31, 2020 and November 2, 2019, we recognized $16.2 million and $14.4 million, respectively, of revenue related to previous deferrals related to our gift cards and merchandise credits. During the three months ended October 31, 2020 and November 2, 2019, we recorded gift card breakage of $0.2 million and $0.5 million, respectively. During the nine months ended October 31, 2020 and November 2, 2019, we recorded gift card breakage of $1.0 million and $1.3 million, respectively. We expect that approximately 70% of the remaining gift card and merchandise credit liabilities as of October 31, 2020 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 |
Oct. 31, 2020 | |
Other Non-Current Obligations. | |
Other Non-Current Obligations | NOTE 7—OTHER NON-CURRENT OBLIGATIONS Other non-current obligations consist of the following ( in thousands October 31, February 1, 2020 2020 Notes payable for share repurchases $ 18,813 $ 18,741 Rollover units and profit interests (1) 3,384 3,064 Unrecognized tax benefits 2,217 3,020 Other non-current obligations 3,144 3,695 Total other non-current obligations $ 27,558 $ 28,520 (1) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 15 — Stock-Based Compensation . |
Leases
Leases | 9 Months Ended |
Oct. 31, 2020 | |
Leases | |
Leases | NOTE 8—LEASES Lease costs—net consist of the following ( in thousands ): Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Operating lease cost (1) $ 21,111 $ 21,115 $ 62,018 $ 63,491 Finance lease costs Amortization of leased assets (1) 10,841 9,471 30,554 27,558 Interest on lease liabilities (2) 6,158 5,678 17,887 16,864 Variable lease costs (3) 5,930 6,219 13,410 17,617 Sublease income (4) (1,519) (2,493) (6,213) (7,282) Total lease costs—net $ 42,521 $ 39,990 $ 117,656 $ 118,248 (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 our accounting policy. Refer to Note 3— Significant Accounting Policies in the 2019 Form 10-K. (2) Included in interest expense—net on the condensed consolidated statements of income. (3) Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $4.0 million for both the three months ended October 31, 2020 and November 2, 2019, respectively, and $8.3 million and $10.8 million for the nine months ended October 31, 2020 and November 2, 2019, respectively. Other variable costs include single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset were not material for the periods reported. (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 October 31, February 1, 2020 2020 Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 405,776 $ 410,904 Finance leases (1)(2) Property and equipment—net 721,772 642,117 Total lease right-of-use assets $ 1,127,548 $ 1,053,021 Liabilities Current (3) Operating leases Operating lease liabilities $ 64,879 $ 58,924 Finance leases Other current liabilities 14,314 9,188 Total lease liabilities—current 79,193 68,112 Non-current Operating leases Non-current operating lease liabilities 405,432 409,930 Finance leases Non-current finance lease liabilities 488,660 442,988 Total lease liabilities—non-current 894,092 852,918 Total lease liabilities $ 973,285 $ 921,030 (1) Finance lease right-of-use assets include capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement. (2) Finance lease right-of-use assets are recorded net of accumulated amortization of $122.5 million and $92.3 million as of October 31, 2020 and February 1, 2020, respectively. (3) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months. The maturities of lease liabilities are as follows as of October 31, 2020 ( in thousands Fiscal year Operating Finance Total Remainder of fiscal 2020 $ 20,600 $ 9,634 $ 30,234 2021 79,709 38,626 118,335 2022 67,896 39,044 106,940 2023 60,862 39,458 100,320 2024 56,550 39,945 96,495 2025 56,345 41,152 97,497 Thereafter 222,579 594,102 816,681 Total lease payments (1)(2) 564,541 801,961 1,366,502 Less—imputed interest (3) (94,230) (298,987) (393,217) Present value of lease liabilities $ 470,311 $ 502,974 $ 973,285 (1) Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Total lease payments exclude $651.8 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced as of October 31, 2020. (2) Excludes future commitments under short-term lease agreements of $1.4 million as of October 31, 2020. (3) Calculated using the incremental borrowing rate for each lease at lease commencement. Supplemental information related to leases consists of the following: Nine Months Ended October 31, November 2, 2020 2019 Weighted-average remaining lease term (years) Operating leases 8.8 9.0 Finance leases 18.6 18.7 Weighted-average discount rate Operating leases 3.86% 3.82% Finance leases 5.04% 5.25% (in thousands) Nine Months Ended October 31, November 2, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (49,251) $ (75,011) Operating cash flows from finance leases (14,170) (16,864) Financing cash flows from finance leases (8,801) (7,136) Total cash outflows from leases $ (72,222) $ (99,011) Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash) Operating leases $ 45,341 $ 18,892 Finance leases 57,440 26,241 Sale-Leaseback Transaction During the second quarter of fiscal 2020, we executed a sale-leaseback transaction for the Minneapolis Design Gallery for sales proceeds of $25.5 million, which qualified for sale-leaseback accounting in accordance with ASC 842. Concurrently with the sale, we entered into an operating leaseback arrangement with an initial lease term of 20 years and a renewal option for an additional 10 years. We recognized a loss related to the execution of the sale transaction of $9.4 million in the second quarter of fiscal 2020, which was recorded in selling, general and administrative expenses on the condensed consolidated statements of income. During the third quarter of fiscal 2019, we 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, we entered into an operating leaseback arrangement with an initial lease term of 15 years and renewal options for up to an additional 30 years. We recognized a gain related to the execution of the sale transaction of $1.2 million in the third quarter of fiscal 2019, which was recorded in selling, general and administrative expenses on the condensed consolidated statements of income. Long-lived Asset Impairment During the first quarter of fiscal 2020, we recognized long-lived asset impairment charges of $3.5 million related to one RH Baby & Child Gallery and one Waterworks showroom, comprised of lease right-of-use asset impairment of $2.0 million and property and equipment impairment of $1.5 million. |
Convertible Senior Notes
Convertible Senior Notes | 9 Months Ended |
Oct. 31, 2020 | |
Debt Disclosure | |
Convertible Senior Notes | NOTE 9—CONVERTIBLE SENIOR NOTES $350 million 0.00% Convertible Senior Notes due 2024 In September 2019 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, we 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 are 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 our 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 our common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. The first condition was satisfied during the calendar quarter ended September 30, 2020 and, accordingly, holders are eligible to convert their 2024 Notes during the calendar quarter ending December 31, 2020. 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 our election, in cash, shares of our common stock, or a combination of cash and shares of our 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. We may not redeem the 2024 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the notes), holders may require us 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, we 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, we 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. 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 months ended October 31, 2020 and November 2, 2019, we recorded $0.2 million and $0.1 million related to the amortization of debt issuance costs related to the 2024 Notes, respectively. During the nine months ended October 31, 2020 and November 2, 2019, we recorded $0.5 million and $0.1 million related to the amortization of debt issuance costs related to the 2024 Notes, respectively. The carrying value of the 2024 Notes, excluding the discounts upon original issuance and third party offering costs, is as follows ( in thousands October 31, February 1, 2020 2020 Liability component Principal $ 350,000 $ 350,000 Less: Debt discount (69,857) (81,634) Net carrying amount $ 280,143 $ 268,366 Equity component (1) $ 87,252 $ 87,252 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. We recorded interest expense of $4.0 million and $1.8 million for the amortization of the debt discount related to the 2024 Notes during the three months ended October 31, 2020 and November 2, 2019, respectively. We recorded interest expense of $11.8 million and $1.8 million for the amortization of the debt discount related to the 2024 Notes during the nine months ended October 31, 2020 and November 2, 2019, respectively. 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 dilution from the conversion of the 2024 Notes until our 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. We 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 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, we 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 are 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 our 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 our common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. The first condition was satisfied during the calendar quarter ended September 30, 2020 and, accordingly, holders are eligible to convert their 2023 Notes during the calendar quarter ending December 31, 2020. 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 our election, in cash, shares of our common stock, or a combination of cash and shares of our 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. We may not redeem the 2023 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the notes), holders may require us 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, we 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, we 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. 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 October 31, 2020 and November 2, 2019, we recorded $0.2 million related to the amortization of debt issuance costs. During both the nine months ended October 31, 2020 and November 2, 2019, we recorded $0.7 million related to the amortization of debt issuance costs. The carrying values of the 2023 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands October 31, February 1, 2020 2020 Liability component Principal $ 335,000 $ 335,000 Less: Debt discount (51,585) (64,729) Net carrying amount $ 283,415 $ 270,271 Equity component (1) $ 90,990 $ 90,990 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. We recorded interest expense of $4.4 million and $4.1 million for the amortization of the debt discount related to the 2023 Notes during the three months ended October 31, 2020 and November 2, 2019, respectively. We recorded interest expense of $13.1 million and $12.3 million for the amortization of the debt discount related to the 2023 Notes during the nine months ended October 31, 2020 and November 2, 2019, 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 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). We 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 our 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. We 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 July 2015 The initial conversion rate applicable to the 2020 Notes was 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which was equivalent to an initial conversion price of approximately $118.13 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 2020 Notes, we would, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elected to convert its 2020 Notes in connection with such make-whole fundamental change. Prior to March 15, 2020, the 2020 Notes were 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 our 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 our common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. The first condition was satisfied during the calendar quarter ended December 31, 2019 and, accordingly, holders were eligible to convert their 2020 Notes during the calendar quarter ending March 31, 2020. In addition, on and after March 15, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders could convert all or a portion of their 2020 Notes at any time. 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, we 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 was amortized to interest expense using an effective interest rate of 6.47% over the expected life of the 2020 Notes. The equity component was not remeasured as it continued 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, we allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component were 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 were netted with the equity component in stockholders’ equity. Discounts and third party offering costs attributable to the liability component were recorded as a contra-liability and were presented net against the convertible senior notes due 2020 balance on the condensed consolidated balance sheets. We did not record amortization of debt issuance costs related to the 2020 Notes during the three months ended October 31, 2020. During the three months ended November 2, 2019, we recorded $0.3 million related to the amortization of debt issuance costs. During the nine months ended October 31, 2020 and November 2, 2019, we recorded $0.6 million and $0.9 million related to the amortization of debt issuance costs, respectively. In May 2020, $9.4 million in aggregate principal amount of 2020 Notes were converted at the option of the noteholders. We paid $9.2 million in cash and delivered 14,927 shares of common stock to settle the converted 2020 Notes. As a result, we recognized a gain on extinguishment of the liability component of $0.2 million in the second quarter of fiscal 2020. We also received 14,927 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2020 Notes as described below, and therefore, on a net basis did not issue any shares of our common stock in respect to such settlement of the 2020 Notes. In July 2020, upon the maturity of the 2020 Notes, the remaining $290.6 million in aggregate principal amount of the 2020 Notes were converted at the option of the noteholders. We paid $290.6 million in cash and delivered 1,116,718 shares of common stock to settle the converted 2020 Notes. No gain or loss arose on extinguishment of the liability component. We also received 1,116,735 shares of common stock from the exercise of the remainder of the convertible bond hedge we purchased concurrently with the issuance of the 2020 Notes as described below, and therefore, on a net basis received 17 shares of our common stock (which were recorded as treasury stock within the condensed consolidated statements of stockholders’ equity) in respect to such settlement of the 2020 Notes. As of October 31, 2020, the 2020 Notes are no longer outstanding. As of February 1, 2020, the carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, was as follows ( in thousands February 1, 2020 Liability component Principal $ 300,000 Less: Debt discount (8,890) Net carrying amount $ 291,110 Equity component (1) $ 84,003 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. We did not record amortization of the debt discount related to the 2020 Notes during the three months ended October 31, 2020. We recorded interest expense of $4.6 million for the amortization of the debt discount related to the 2020 Notes during the three months ended November 2, 2019. We recorded interest expense of $8.9 million and $13.5 million for the amortization of the debt discount related to the 2020 Notes during the nine months ended October 31, 2020 and November 2, 2019. 2020 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2020 Notes in June 2015 July 2015 As a result of the operation of the bond hedge in connection with the maturity of the 2020 Notes, we were not required to issue any new shares to settle the notes as these shares were delivered to us under the terms of the bond hedge. The bond hedge was exercised in connection with the maturity date of the 2020 Notes. During October 2020, we began settling the 2020 warrants by the delivery of net shares on a weekly basis in accordance with the terms of the warrant agreements, and as of October 31, 2020, we had delivered 290,967 shares of common stock upon exercise of the warrants. We are continuing to deliver shares on a weekly basis in settlement of the 2020 warrants and, as of December 9, 2020, we have delivered an incremental 552,276 shares of common stock in settlement of the 2020 warrants in our fourth fiscal quarter. The final settlement of the 2020 warrants will continue through December and the first week of January 2021. The exact number of shares remaining to be delivered will depend on the extent to which the share price of our common stock remains above the exercise price of $189.00 per share under the warrants. We 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 non-current deferred tax assets on the condensed consolidated balance sheets. There is no deferred tax asset or liability remaining as of October 31, 2020 due to the maturity of the 2020 Notes. |
Credit Facilities
Credit Facilities | 9 Months Ended |
Oct. 31, 2020 | |
Debt Disclosure | |
Credit Facilities | NOTE 10—CREDIT FACILITIES in thousands October 31, February 1, 2020 2020 Outstanding Unamortized Debt Net Carrying Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Amount Issuance Costs Amount Asset based credit facility (1) $ — $ — $ — $ — $ — $ — Equipment promissory notes (2) 43,058 (206) 42,852 53,372 (310) 53,062 Total credit facilities $ 43,058 $ (206) $ 42,852 $ 53,372 $ (310) $ 53,062 (1) Deferred financing fees associated with the asset based credit facility as of October 31, 2020 and February 1, 2020 were $1.8 million and $2.6 million, respectively, and are included in other non-current assets on the condensed consolidated balance sheets. The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit, which has a maturity date of June 28, 2022. (2) Represents total equipment security notes secured by certain of our property and equipment, of which $22.5 million outstanding was included in other current liabilities on the condensed consolidated balance sheets. The remaining $20.6 million outstanding, included in other non-current obligations on the condensed consolidated balance sheets, has principal payments due of $5.8 million, $13.6 million and $1.2 million in fiscal 2021, fiscal 2022 and fiscal 2023, respectively. Asset Based Credit Facility In August 2011 On June 28, 2017, Restoration Hardware, Inc. entered into an eleventh amended and restated credit agreement (as amended, 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 (“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. The maturity date of the Credit Agreement is June 28, 2022. 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. We repaid the full amount of the FILO term loan as of February 1, 2020. As a result of the repayment, we incurred a $0.8 million loss on extinguishment of debt in fiscal 2019, which represents the acceleration of amortization of debt issuance costs. We did not incur any prepayment penalties upon the early extinguishment of the FILO term loan. 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. 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). All obligations under the Credit Agreement are secured by substantially all of the assets, including accounts receivable, inventory, intangible assets, property, equipment, goods and fixtures of Restoration Hardware, Inc., Restoration Hardware Canada, Inc., RH US, LLC, Waterworks Operating Co., LLC and Waterworks IP Co., LLC. 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. The Credit Agreement contains various restrictive covenants, including, among others, 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. The Credit Agreement also contains various affirmative covenants, including the obligation to deliver notice to the First Lien Administrative Agent following the Company’s obtaining knowledge of any matter that has resulted or could reasonably be expected to result in a “Material Adverse Effect” (as defined in the Credit Agreement). In addition, under the Credit Agreement, we are required to meet specified financial ratios in order to undertake certain actions, and we 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 lesser of (x) the domestic revolving commitments under the Credit Agreement and (y) the domestic revolving 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. As of October 31, 2020, Restoration Hardware, Inc. was in compliance with all applicable financial covenants of the Credit Agreement. The Credit Agreement requires a daily sweep of all cash receipts and collections to prepay the loans under the agreement while (i) an event of default exists or (ii) the availability under the revolving line of credit for extensions of credit is less than the greater of (A) $40.0 million and (B) 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 LILO term loan or (y) the LILO term loan borrowing base. The Credit Agreement includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, terminate any existing commitments under the Credit Agreement and declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable. As of October 31, 2020, we had no outstanding borrowings under the revolving credit facility portion of the Credit Agreement. 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 October 31, 2020 was $316.4 million, net of $14.6 million in outstanding letters of credit. 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 were 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 $200.0 million in principal was repaid in full on September 20, 2019. The Second Lien Term Loan bore interest at an annual rate generally based on the LIBOR plus 6.50%. This rate was a floating rate that reset 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 we agreed that BAL would finance certain equipment of ours 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. The maturity dates of the equipment security notes vary, but generally have a maturity of three |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Oct. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 11—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, we utilize market data or assumptions that we believe 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. Our 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 of the asset based credit facility approximates cost as the interest rate associated with the facility is variable and resets frequently. The estimated fair value and carrying value of the 2020 Notes, 2023 Notes and 2024 Notes were as follows ( in thousands October 31, February 1, 2020 2020 Fair Carrying Fair Carrying Value Value (1) Value Value (1) Convertible senior notes due 2020 (2) $ — $ — $ 295,573 $ 291,110 Convertible senior notes due 2023 278,349 283,415 272,623 270,271 Convertible senior notes due 2024 270,467 280,143 255,849 268,366 (1) Carrying value represents the principal amount less the equity component of the 2020 Notes, 2023 Notes and 2024 Notes classified in stockholders’ equity, 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 2020 Notes matured on July 15, 2020. The fair value of each of the 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 our convertible notes, when available, our common stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2). Fair Value Measurements Non-Recurring The fair value of the Waterworks reporting unit tradename was determined based on unobservable (Level 3) inputs and valuation techniques, as discussed in Note 4— Goodwill, Trademarks, Trademarks and Domain Names Significant Accounting Policies Business Combination |
Income Taxes
Income Taxes | 9 Months Ended |
Oct. 31, 2020 | |
Income Taxes | |
Income Taxes | NOTE 12—INCOME TAXES We recorded income tax expense of $49.2 million and $8.4 million in the three months ended October 31, 2020 and November 2, 2019, respectively. We recorded income tax expense of $66.6 million and $36.8 million in the nine months ended October 31, 2020 and November 2, 2019, respectively. The effective tax rate was 51.4% and 13.7% for the three months ended October 31, 2020 and November 2, 2019, respectively. The effective tax rate was 32.0% and 19.5% for the nine months ended October 31, 2020 and November 2, 2019, respectively. The increase in our effective tax rate for the three months ended October 31, 2020 was significantly impacted by non-deductible stock-based compensation and lower discrete tax benefits related to net excess tax windfalls from stock-based compensation in the three months ended October 31, 2020 as compared to the three months ended November 2, 2019. The increase in our effective tax rate for the nine months ended October 31, 2020 was significantly impacted by non-deductible stock-based compensation and higher discrete tax benefits related to net excess tax windfalls from stock-based compensation in the nine months ended October 31, 2020 as compared to the nine months ended November 2, 2019. As of October 31, 2020, we 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. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized. As of October 31, 2020, we had $6.1 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 |
Oct. 31, 2020 | |
Net Income Per Share | |
Net Income Per Share | NOTE 13—NET INCOME PER SHARE The weighted-average shares used for net income per share are as follows: Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Weighted-average shares—basic 19,552,836 18,765,769 19,393,931 19,069,501 Effect of dilutive stock-based awards 5,918,350 4,712,355 5,164,775 4,347,713 Effect of dilutive convertible senior notes (1) 2,814,938 692,048 1,792,488 392,211 Weighted-average shares—diluted 28,286,124 24,170,172 26,351,194 23,809,425 (1) The 2020 Notes, 2023 Notes and 2024 Notes have an impact on our dilutive share count beginning at stock prices of $118.13 per share, $193.65 per share and $211.40 per share, respectively. The 2020 Notes terminated on July 15, 2020 and did not have an impact on our dilutive share count post-termination. The warrants associated with our 2020 Notes, 2023 Notes and 2024 Notes have an impact on our dilutive share count beginning at stock prices of $189.00 per share, $309.84 per share and $338.24 per share, respectively. The warrants associated with our 2020 Notes expire through January 2021. While the share price for our common stock trades above the applicable conversion price of each series of notes or the applicable exercise price of each series of warrants for the 2020 Notes, the 2023 Notes and the 2024 Notes, these instruments will have a dilutive effect with respect to our common stock to the extent that the price per share of our common stock continues to exceeds the applicable conversion or exercise price of the notes and warrants. Refer to Note 9— Convertible Senior Notes . Dilutive options of 311,242 and 190,766 were excluded from the calculation of diluted net income per share for the three months ended October 31, 2020 and November 2, 2019, respectively, because their inclusion would have been anti-dilutive. Dilutive options of 451,559 and 457,300 were excluded from the calculation of diluted net income per share for the nine months ended October 31, 2020 and November 2, 2019, respectively, because their inclusion would have been anti-dilutive. |
Share Repurchases and Share Ret
Share Repurchases and Share Retirements | 9 Months Ended |
Oct. 31, 2020 | |
Share Repurchases and Share Retirements | |
Share Repurchases and Share Retirements | NOTE 14—SHARE REPURCHASES AND SHARE RETIREMENTS Share Repurchase Program On October 10, 2018, our 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 (as replenished, the “$950 Million Repurchase Program”). We did not make any repurchases under this program during the nine months ended October 31, 2020. During the nine months ended November 2, 2019, we repurchased approximately 2.2 million shares of our common stock at an average price of $115.36 per share, for an aggregate repurchase amount of approximately $250.0 million under this share repurchase program. As of October 31, 2020, there was $450.0 million remaining for future share repurchases under this program. Share Repurchases Under Equity Plans As of October 31, 2020 and February 1, 2020, the aggregate unpaid principal amount of the notes payable for share repurchases was $18.8 million and $18.7 million, respectively, which were included in other non-current obligations on the condensed consolidated balance sheets. During both the three months ended October 31, 2020 and November 2, 2019, we recorded interest expense on the outstanding notes of $0.2 million. During both the nine months ended October 31, 2020 and November 2, 2019, we recorded interest expense on the outstanding notes of $0.7 million. Of the $18.8 million and $18.7 million notes payable for share repurchases outstanding as of October 31, 2020 and February 1, 2020, $15.5 million is related to a promissory note due to a current board member. Share Retirements During the nine months ended October 31, 2020, we retired 600 shares of our common stock related to shares we had repurchased under equity plans and we retired 17 shares of our common stock related to shares we received upon the maturity of the 2020 Notes (refer to Note 9— Convertible Senior Notes During the nine months ended November 2, 2019, we retired 2,170,154 shares of our common stock related to shares we had repurchased under the $950 Million Repurchase Program. As a result of this retirement, we reclassified a total of $250.3 million from treasury stock, of which $13.2 million was allocated to additional paid-in capital and $237.1 million was allocated to retained earnings (accumulated deficit) on the condensed consolidated balance sheets as of February 1, 2020 and on the condensed consolidated statements of stockholders’ equity (deficit) as of November 2, 2019. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Oct. 31, 2020 | |
Stock-Based Compensation. | |
Stock-Based Compensation | NOTE 15—STOCK-BASED COMPENSATION We recorded stock-based compensation expense of $118.8 million and $5.1 million during the three months ended October 31, 2020 and November 2, 2019, respectively, which is included in selling, general and administrative expenses on the condensed consolidated statements of income. We recorded stock-based compensation expense of $131.5 million and $16.1 million during the nine months ended October 31, 2020 and November 2, 2019, respectively. No stock-based compensation cost has been capitalized in the accompanying condensed consolidated financial statements. Chairman and Chief Executive Officer Option Grant On October 18, 2020, our Board of Directors granted Mr. Friedman an option to purchase 700,000 shares of our common stock with an exercise price equal to $385.30 per share under the 2012 Stock Incentive Plan. The option contains selling restrictions on the underlying shares that lapse upon the achievement of both time-based service requirements and stock price performance-based metrics as described further below. The option is fully vested on the date of grant but the shares underlying the option remain subject to transfer restrictions to the extent the performance-based and time-based requirements have not been met. The option will result in aggregate non-cash stock compensation expense of $173.6 million, of which $111.2 million was recognized during the three months ended October 31, 2020 (which is included in the stock-based compensation expense recorded during the three and nine months ended October 31, 2020 noted above). As of October 31, 2020, the total unrecognized compensation expense was $62.4 million, which will be recognized on an accelerated basis through May 2025. Time-Based Restrictions The time-based restrictions are measured over a four-year performance year period which will begin in May 2021, on the anniversary of the option granted to Mr. Friedman in 2017. The time-based restrictions will lapse at the end of each of the successive anniversary dates from May 2022 through May 2025 at a rate of 175,000 shares per year if (i) Mr. Friedman remains in service with us at the end of such year with the authority, duties, or responsibilities of a chief executive officer at such date and (ii) the stock price performance-based metrics have been achieved in such year as described further below. Performance-Based Restrictions The stock price performance-based restrictions of the option are measured annually over the performance year period and may lapse as to only one four Any selling restrictions that have not lapsed in any performance year during the first four performance years may be achieved in a successive performance year through the end of the eighth performance year which ends in May 2029, provided Mr. Friedman continues to satisfy the service requirement through the date the performance target is achieved. Any selling restrictions that have not lapsed by the end of the eighth performance year will thereafter only lapse in May 2041, the 20 2012 Stock Incentive Plan and 2012 Stock Option Plan As of October 31, 2020, 8,535,569 options were outstanding with a weighted-average exercise price of $101.78 per share and 6,611,534 options were vested with a weighted-average exercise price of $88.89 per share. The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of October 31, 2020 was $2,028.2 million, $1,930.3 million, and $1,628.7 million, respectively. Stock options exercisable as of October 31, 2020 had a weighted-average remaining contractual life of 4.2 years. As of October 31, 2020, the total unrecognized compensation expense related to unvested options was $102.9 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 4.83 years. In addition, as of October 31, 2020, the total unrecognized compensation expense related to the fully vested option grant made to Mr. Friedman in October 2020 was $62.4 million, which will be recognized on an accelerated basis through May 2025 (refer to Chairman and Chief Executive Officer Option Grant As of October 31, 2020, we had 94,390 restricted stock units outstanding with a weighted-average grant date fair value of $45.93 per share. During the three months ended October 31, 2020, 4,440 restricted stock units vested with a weighted-average grant date fair value of $63.07 per share. During the nine months ended October 31, 2020, 105,015 restricted stock units vested with a weighted-average grant date fair value of $52.75 per share and 3,192 restricted stock shares were delivered with a weighted-average grant date fair value of $285.03. As of October 31, 2020, there was $2.8 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 0.94 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 option-pricing model (“OPM”). We did not record any expense related to the Appreciation Rights during both the three and nine months ended October 31, 2020 and November 2, 2019. As of both October 31, 2020 and February 1, 2020, 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 October 31, 2020 and November 2, 2019, we 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 October 31, 2020 and November 2, 2019, we recorded $0.3 million related to the Profit Interests. As of October 31, 2020 and February 1, 2020, the liability associated with the Profit Interests was $1.9 million and $1.6 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 |
Oct. 31, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | NOTE 16—COMMITMENTS AND CONTINGENCIES Commitments We had no material off balance sheet commitments as of October 31, 2020. Contingencies We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes are increasing in number as the business expands and we grow larger. Litigation is inherently unpredictable. As a result, the outcome of matters in which we are involved could result in unexpected expenses and liability that could adversely affect our operations. In addition, any claims against us, 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. We review 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 we do 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 we accrue from time to time. We believe that the ultimate resolution of our current matters will not have a material adverse effect on our 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 our 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 our 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, we 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 our 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 our 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 in 2019, as well as our insurance carriers funding the settlement amount, we have 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 October 31, 2020, 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 the Company 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. We believe that plaintiffs lack standing to bring this derivative action. On September 28, 2018, we 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 pending resolution of the securities class action discussed above. On March 19, 2020, the parties reached an agreement in principle to settle the litigation and subsequently entered into a stipulation of settlement that was preliminarily approved by the Court on August 3, 2020. The settlement involves certain non-monetary terms as well as payment of the plaintiffs’ attorneys’ legal fees, which payment is expected to be funded by our insurance carriers. On October 6, 2020, the Court held a final settlement hearing. |
Segment Reporting
Segment Reporting | 9 Months Ended |
Oct. 31, 2020 | |
Segment Reporting | |
Segment Reporting | NOTE 17—SEGMENT REPORTING We define reportable and operating segments on the same basis that we use to evaluate our performance internally by the Chief Operating Decision Maker (the “CODM”), which we have determined is our Chief Executive Officer. We have two operating segments: RH Segment and Waterworks. The two operating segments include all sales channels accessed by our customers, including sales through catalogs, websites, stores, and the commercial channel. Our 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, we have determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors. We use operating income to evaluate segment profitability. Operating income is defined as net income before interest expense—net, tradename impairment and income tax expense. Segment Information The following table 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 October 31, November 2, 2020 2019 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 812,782 $ 31,231 $ 844,013 $ 645,378 $ 32,148 $ 677,526 Gross profit 394,689 13,641 408,330 270,721 13,445 284,166 Depreciation and amortization 25,135 1,341 26,476 22,316 1,119 23,435 Nine Months Ended October 31, November 2, 2020 2019 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 1,949,126 $ 87,064 $ 2,036,190 $ 1,881,412 $ 101,049 $ 1,982,461 Gross profit 902,932 37,471 940,403 769,133 42,805 811,938 Depreciation and amortization 73,086 3,602 76,688 72,490 3,455 75,945 The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting in thousands October 31, February 1, 2020 2020 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 135,306 $ — $ 135,306 $ 124,367 $ — $ 124,367 Tradenames, trademarks and domain names (2) 54,663 17,000 71,663 48,563 37,459 86,022 Total assets 2,554,294 124,956 2,679,250 2,301,823 143,871 2,445,694 (1) The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018, 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 $35.1 million, of which $20.5 million was recorded in the first quarter of fiscal 2020 and $14.6 million was recorded in fiscal 2018. Refer to “Waterworks Tradename Impairment” within Note 4— Goodwill, Trademarks, Trademarks and Domain Names. We use segment operating income to evaluate segment performance and allocate resources. Segment operating income excludes (i) a non-cash compensation charge related to a fully vested option grant made to Mr. Friedman in October 2020, (ii) asset impairments and change in useful lives, (iii) gain (loss) on sale leaseback transaction, (iv) severance costs associated with reorganizations, (v) product recall accruals and adjustments—net, (vi) favorable legal settlement and (vii) asset held for sale gain. 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 the CODM and management review. The following table presents segment operating income and income before income taxes ( in thousands Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Operating income: RH Segment $ 223,103 $ 86,936 $ 425,970 $ 260,429 Waterworks 2,208 825 2,331 2,839 Non-cash compensation (111,218) — (111,218) — Asset impairments and change in useful lives (2,091) (1,031) (11,901) (7,052) Gain (loss) on sale leaseback transaction — 1,196 (9,352) 1,196 Reorganization related costs — (1,075) (7,027) (1,075) Recall accrual (781) 2,053 (5,561) 3,988 Legal settlements — — — 1,193 Asset held for sale gain — 333 — 333 Income from operations 111,221 89,237 283,242 261,851 Interest expense—net 15,656 21,564 54,703 67,195 Tradename impairment — — 20,459 — (Gain) loss on extinguishment of debt—net — 6,857 (152) 5,903 Income before income taxes $ 95,565 $ 60,816 $ 208,232 $ 188,753 We classify our 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, as well as hospitality. Net revenues in each category were as follows ( in thousands Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Furniture $ 585,378 $ 460,231 $ 1,390,460 $ 1,326,477 Non-furniture 258,635 217,295 645,730 655,984 Total net revenues $ 844,013 $ 677,526 $ 2,036,190 $ 1,982,461 During the third fiscal quarter of 2020, we reviewed our segments and product lines and updated certain products and categories in our reporting of furniture and non-furniture product lines. While this reporting change did not impact our consolidated results, prior period segment data has been recast for consistency in reporting. We are domiciled in the United States and primarily operate our retail and outlet stores in the United States. As of October 31, 2020, we operated 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. 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% the three and nine months ended October 31, 2020 and November 2, 2019. |
Business Combination
Business Combination | 9 Months Ended |
Oct. 31, 2020 | |
Business Combination | |
Business Combination | NOTE 18—BUSINESS COMBINATION On August 28, 2020, we acquired a furniture business in North America, for total consideration of $15.0 million funded through available cash, of which $1.9 million was deposited into an escrow account for any potential post-closing adjustments. We have deposited into escrow an additional $5.0 million, which represents a deferred acquisition related payment subject to mutually agreed to conditions and expected to be paid over two years. We believe that this addition to the RH platform further positions us as a leader in the luxury design market as we continue to enhance the RH product assortment. For the three and nine months ended October 31, 2020, we incurred $0.6 million and $1.3 million, respectively, of acquisition-related costs associated with the transaction. These costs and expenses include fees associated with financial, legal and accounting advisors, and employment related costs, and are included in selling, general and administrative expenses on the condensed consolidated statements of income. The following table summarizes the purchase price allocation based on the fair value of the assets acquired and liabilities assumed ( in thousands Tangible assets acquired and liabilities assumed—net $ (796) Tradename 4,800 Goodwill 10,948 Total $ 14,952 The tradename has been assigned an indefinite life and therefore is not subject to amortization. The goodwill, included in the RH Segment, is representative of the benefits and expected synergies from the integration of the acquired company’s products, management and employees, which do not qualify for separate recognition as an intangible asset. The tradename and goodwill are expected to be deductible for tax purposes. Results of operations of the acquired company have been included in our condensed consolidated statements of income since the August 28, 2020 acquisition date. Pro forma results of the acquired business have not been presented as the results were not considered material to our consolidated financial statements for all periods presented and would not have been material had the acquisition occurred at the beginning of fiscal 2020. |
The Company (Policies)
The Company (Policies) | 9 Months Ended |
Oct. 31, 2020 | |
The Company | |
Nature of Business | Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” or 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 our stores, catalogs and websites. As of October 31, 2020, we operated a total of 68 RH Galleries and 38 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 14 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 our records and, in our opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of October 31, 2020, and the results of operations for the three and nine months ended October 31, 2020 and November 2, 2019. Our current fiscal year, which consists of 52 weeks, ends on January 30, 2021 (“fiscal 2020”). 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. The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the condensed consolidated financial statements. We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of the novel coronavirus disease (“COVID-19”) using information that is reasonably available to us at this time. The accounting estimates and other matters we have assessed include, but were not limited to, sales return reserve, inventory reserve, allowance for doubtful accounts, goodwill, intangible and other long-lived assets. Our current assessment of these estimates are included in our condensed consolidated financial statements as of and for the three and nine months ended October 31, 2020 and November 2, 2019. As additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our condensed consolidated financial statements in future reporting periods. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2020 (the “2019 Form 10-K”). The results of operations for the three and nine months ended October 31, 2020 and November 2, 2019 presented herein are not necessarily indicative of the results to be expected for the full fiscal year or future time periods. Our business, like the businesses of retailers generally, is subject to uncertainty surrounding the financial impact of the novel coronavirus disease as discussed in Recent Developments—COVID-19 |
Recent Developments-COVID-19 | Recent Developments—COVID-19 The initial wave of the COVID-19 outbreak starting in March 2020 caused disruption to our business operations as we temporarily closed all of our retail locations on March 17, 2020. While our retail locations were substantially closed at the end of the first fiscal quarter on May 2, 2020, during the second fiscal quarter we had reopened substantially all of our retail locations. As of the end of the third fiscal quarter on October 31, 2020 we had reopened all of our Galleries and Outlets, and 8 out of 10 of our restaurants. Our business substantially recovered during the second and third fiscal quarters as a result of both the reopening of most of our physical locations and also due to strong consumer demand for our products. During the time period of October through early December of 2020, there has been a spike in reported COVID-19 cases in various parts of both the U.S. and Canada. The recent surge in cases has led to the imposition of increasing levels of restriction on our physical operations with respect to Galleries, Outlets and restaurants. These limitations include restrictions on the level of occupancy that is permitted in some locations as well as full closure requirements for other locations. Although we have experienced strong demand for our products in connection with prior closure requirements earlier in this year, our overall demand in specific markets correlates favorably with our customers’ ability to access our Galleries and Outlets. Accordingly, we do anticipate some negative impact to overall demand in connection the restrictions on our physical locations and the duration and extent of these operational limits cannot be predicted with certainty. While our business strengthened during the second and third fiscal quarters, the lag in inventory receipts together with dislocations in our supply chain has resulted in some delays in our ability to convert business demand into revenues. Our global supply chain has not fully recovered from the impact of the COVID-19 dislocation. In light of the recent increase of virus infections and shelter in place orders which continue to negatively impact our manufacturing partners, we anticipate that our supply chain may not catch up to demand until the second half of 2021. Despite the strong growth in consumer demand in our business during the second and third fiscal quarters, revenue growth has lagged the increase in customer orders. As manufacturing and inventory receipts catch up with this backlog, we expect this demand will convert into revenue in the next several quarters. While we have continued to serve our customers and operate our business through the ongoing COVID-19 health crisis, there can be no assurance that future events will not have an impact on our business, results of operations or financial condition since the extent and duration of the health crisis remains uncertain. Future adverse developments in connection with the COVID-19 crisis, including additional waves or resurgences of COVID-19 outbreaks, evolving international, federal, state and local restrictions and safety regulations in response to COVID-19 risks, changes in consumer behavior and health concerns, the pace of economic activity in the wake of the COVID-19 crisis, or other similar issues could adversely affect our business, results of operations or financial condition in the future, or our financial results and business performance for the fiscal year ending January 30, 2021 and future time periods. Although the availability of vaccines and various treatments with respect to COVID-19 can be expected to have an overall positive impact on business conditions in the aggregate over time, the exact timing of these positive developments is uncertain and in the meantime reported cases of COVID-19 have surged in the U.S. and Canada from October through December 2020 resulting in various adverse operating restrictions on our physical locations. In our initial response to the COVID-19 health crisis we undertook immediate adjustments to our business operations including temporarily closing retail locations and restaurants, curtailing expenses and delaying investments including scaling back some inventory orders while we assessed the status of our business. Our approach to the crisis evolved quickly as our business trends substantially improved during the second and third fiscal quarters. We will continue to closely manage our expenses and investments while considering both the overall economic environment as well as the needs of our business operations. In addition, our near term decisions regarding the sources and uses of capital in our business will continue to reflect and adapt to changes in market conditions and our business related to the impact of COVID-19. During the second and third fiscal quarters of 2020 we have resumed many investments and previously deferred expenditures, but we anticipate that our decisions regarding these matters will continue to evolve in response to changing business circumstances including further development with respect to COVID-19. |
Commitments and Contingencies | We review 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 we do 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 we accrue from time to time. We believe that the ultimate resolution of our current matters will not have a material adverse effect on our condensed consolidated financial statements. |
Prepaid Expense and Other Ass_2
Prepaid Expense and Other Assets (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Prepaid Expense and Other Assets | |
Prepaid Expense and Other Current Assets | Prepaid expense and other current assets consist of the following ( in thousands October 31, February 1, 2020 2020 Prepaid expense and other current assets $ 30,661 $ 30,875 Promissory note receivable, including interest 22,499 — Capitalized catalog costs 13,878 13,740 Vendor deposits 11,180 11,258 Acquisition related escrow deposits 4,400 — Right of return asset for merchandise 6,257 5,746 Total prepaid expense and other current assets $ 88,875 $ 61,619 |
Schedule of Other Non-Current Assets | Other non-current assets consist of the following ( in thousands October 31, February 1, 2020 2020 Landlord assets under construction $ 144,792 $ 138,315 Deposits on asset under construction 60,000 60,000 Investments in joint ventures (Note 5) 7,500 — Promissory note receivable, including interest 5,500 5,354 Capitalized cloud computing costs—net 5,444 — Other deposits 5,264 5,157 Acquisition related escrow deposits 2,500 — Deferred financing fees 1,794 2,602 Other non-current assets 8,147 3,417 Total other non-current assets $ 240,941 $ 214,845 |
Goodwill and Tradenames, Tradem
Goodwill and Tradenames, Trademarks and Domain Names (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
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 RH Segment and Waterworks (See Note 17— Segment Reporting in thousands Foreign February 1, Currency October 31, 2020 Acquisition Impairment (1) Translation 2020 RH Segment Goodwill $ 124,367 $ 10,948 $ — $ (9) $ 135,306 Tradenames, trademarks and domain names 48,563 6,100 — — 54,663 Waterworks (1) Tradename (2) 37,459 — (20,459) — 17,000 (1) Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018, with $17.4 million and $33.7 million of impairment recorded in fiscal 2018 and fiscal 2017, respectively. (2) Presented net of an impairment charge of $35.1 million, with $20.5 million recorded in the first quarter of fiscal 2020 and $14.6 million recorded in fiscal 2018. |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following ( in thousands October 31, February 1, 2020 2020 Accounts payable $ 187,381 $ 180,714 Accrued compensation 66,628 64,659 Accrued freight and duty 28,675 25,170 Accrued sales taxes 24,685 19,618 Accrued occupancy 18,472 12,067 Deferred consideration for asset purchase 13,598 — Accrued professional fees 5,506 4,381 Accrued catalog costs 4,013 8,267 Other accrued expenses 19,594 15,433 Total accounts payable and accrued expenses $ 368,552 $ 330,309 |
Schedule of Other Current Liabilities | Other current liabilities consist of the following ( in thousands October 31, February 1, 2020 2020 Promissory notes on asset under construction $ 53,000 $ 53,000 Federal and state taxes payable 36,148 13,591 Current portion of equipment promissory notes 22,489 22,009 Allowance for sales returns 21,797 19,206 Unredeemed gift card and merchandise credit liability 14,929 16,625 Finance lease liabilities 14,314 9,188 Product recall reserve 6,619 2,055 Other current liabilities 4,900 5,040 Total other current liabilities $ 174,196 $ 140,714 |
Other Non-Current Obligations (
Other Non-Current Obligations (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Other Non-Current Obligations. | |
Schedule of Other Non-Current Obligations | Other non-current obligations consist of the following ( in thousands October 31, February 1, 2020 2020 Notes payable for share repurchases $ 18,813 $ 18,741 Rollover units and profit interests (1) 3,384 3,064 Unrecognized tax benefits 2,217 3,020 Other non-current obligations 3,144 3,695 Total other non-current obligations $ 27,558 $ 28,520 (1) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 15 — Stock-Based Compensation . |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Leases | |
Summary of Lease Costs-Net | Lease costs—net consist of the following ( in thousands ): Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Operating lease cost (1) $ 21,111 $ 21,115 $ 62,018 $ 63,491 Finance lease costs Amortization of leased assets (1) 10,841 9,471 30,554 27,558 Interest on lease liabilities (2) 6,158 5,678 17,887 16,864 Variable lease costs (3) 5,930 6,219 13,410 17,617 Sublease income (4) (1,519) (2,493) (6,213) (7,282) Total lease costs—net $ 42,521 $ 39,990 $ 117,656 $ 118,248 (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 our accounting policy. Refer to Note 3— Significant Accounting Policies in the 2019 Form 10-K. (2) Included in interest expense—net on the condensed consolidated statements of income. (3) Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $4.0 million for both the three months ended October 31, 2020 and November 2, 2019, respectively, and $8.3 million and $10.8 million for the nine months ended October 31, 2020 and November 2, 2019, respectively. Other variable costs include single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset were not material for the periods reported. (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 October 31, February 1, 2020 2020 Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 405,776 $ 410,904 Finance leases (1)(2) Property and equipment—net 721,772 642,117 Total lease right-of-use assets $ 1,127,548 $ 1,053,021 Liabilities Current (3) Operating leases Operating lease liabilities $ 64,879 $ 58,924 Finance leases Other current liabilities 14,314 9,188 Total lease liabilities—current 79,193 68,112 Non-current Operating leases Non-current operating lease liabilities 405,432 409,930 Finance leases Non-current finance lease liabilities 488,660 442,988 Total lease liabilities—non-current 894,092 852,918 Total lease liabilities $ 973,285 $ 921,030 (1) Finance lease right-of-use assets include capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement. (2) Finance lease right-of-use assets are recorded net of accumulated amortization of $122.5 million and $92.3 million as of October 31, 2020 and February 1, 2020, respectively. (3) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months. |
Summary of Maturities of Lease Liabilities | The maturities of lease liabilities are as follows as of October 31, 2020 ( in thousands Fiscal year Operating Finance Total Remainder of fiscal 2020 $ 20,600 $ 9,634 $ 30,234 2021 79,709 38,626 118,335 2022 67,896 39,044 106,940 2023 60,862 39,458 100,320 2024 56,550 39,945 96,495 2025 56,345 41,152 97,497 Thereafter 222,579 594,102 816,681 Total lease payments (1)(2) 564,541 801,961 1,366,502 Less—imputed interest (3) (94,230) (298,987) (393,217) Present value of lease liabilities $ 470,311 $ 502,974 $ 973,285 (1) Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Total lease payments exclude $651.8 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced as of October 31, 2020. (2) Excludes future commitments under short-term lease agreements of $1.4 million as of October 31, 2020. (3) Calculated using the incremental borrowing rate for each lease at lease commencement. |
Summary of Supplemental Information Related to Leases | Supplemental information related to leases consists of the following: Nine Months Ended October 31, November 2, 2020 2019 Weighted-average remaining lease term (years) Operating leases 8.8 9.0 Finance leases 18.6 18.7 Weighted-average discount rate Operating leases 3.86% 3.82% Finance leases 5.04% 5.25% |
Summary of Other Information Related to Leases | Other information related to leases consists of the following (in thousands) Nine Months Ended October 31, November 2, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (49,251) $ (75,011) Operating cash flows from finance leases (14,170) (16,864) Financing cash flows from finance leases (8,801) (7,136) Total cash outflows from leases $ (72,222) $ (99,011) Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash) Operating leases $ 45,341 $ 18,892 Finance leases 57,440 26,241 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
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 October 31, February 1, 2020 2020 Liability component Principal $ 350,000 $ 350,000 Less: Debt discount (69,857) (81,634) Net carrying amount $ 280,143 $ 268,366 Equity component (1) $ 87,252 $ 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 October 31, February 1, 2020 2020 Liability component Principal $ 335,000 $ 335,000 Less: Debt discount (51,585) (64,729) Net carrying amount $ 283,415 $ 270,271 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 | As of October 31, 2020, the 2020 Notes are no longer outstanding. As of February 1, 2020, the carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, was as follows ( in thousands February 1, 2020 Liability component Principal $ 300,000 Less: Debt discount (8,890) Net carrying amount $ 291,110 Equity component (1) $ 84,003 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Credit Facilities (Tables)
Credit Facilities (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Debt Disclosure | |
Schedule of Outstanding Balances Under our Credit Facilities | in thousands October 31, February 1, 2020 2020 Outstanding Unamortized Debt Net Carrying Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Amount Issuance Costs Amount Asset based credit facility (1) $ — $ — $ — $ — $ — $ — Equipment promissory notes (2) 43,058 (206) 42,852 53,372 (310) 53,062 Total credit facilities $ 43,058 $ (206) $ 42,852 $ 53,372 $ (310) $ 53,062 (1) Deferred financing fees associated with the asset based credit facility as of October 31, 2020 and February 1, 2020 were $1.8 million and $2.6 million, respectively, and are included in other non-current assets on the condensed consolidated balance sheets. The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit, which has a maturity date of June 28, 2022. (2) Represents total equipment security notes secured by certain of our property and equipment, of which $22.5 million outstanding was included in other current liabilities on the condensed consolidated balance sheets. The remaining $20.6 million outstanding, included in other non-current obligations on the condensed consolidated balance sheets, has principal payments due of $5.8 million, $13.6 million and $1.2 million in fiscal 2021, fiscal 2022 and fiscal 2023, respectively. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Fair Value Measurements | |
Estimated Fair Value and Carrying Value of Notes | The estimated fair value and carrying value of the 2020 Notes, 2023 Notes and 2024 Notes were as follows ( in thousands October 31, February 1, 2020 2020 Fair Carrying Fair Carrying Value Value (1) Value Value (1) Convertible senior notes due 2020 (2) $ — $ — $ 295,573 $ 291,110 Convertible senior notes due 2023 278,349 283,415 272,623 270,271 Convertible senior notes due 2024 270,467 280,143 255,849 268,366 (1) Carrying value represents the principal amount less the equity component of the 2020 Notes, 2023 Notes and 2024 Notes classified in stockholders’ equity, 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 2020 Notes matured on July 15, 2020. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Net Income Per Share | |
Schedule of Weighted Average Shares Used for Net Income per Share | Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Weighted-average shares—basic 19,552,836 18,765,769 19,393,931 19,069,501 Effect of dilutive stock-based awards 5,918,350 4,712,355 5,164,775 4,347,713 Effect of dilutive convertible senior notes (1) 2,814,938 692,048 1,792,488 392,211 Weighted-average shares—diluted 28,286,124 24,170,172 26,351,194 23,809,425 (1) The 2020 Notes, 2023 Notes and 2024 Notes have an impact on our dilutive share count beginning at stock prices of $118.13 per share, $193.65 per share and $211.40 per share, respectively. The 2020 Notes terminated on July 15, 2020 and did not have an impact on our dilutive share count post-termination. The warrants associated with our 2020 Notes, 2023 Notes and 2024 Notes have an impact on our dilutive share count beginning at stock prices of $189.00 per share, $309.84 per share and $338.24 per share, respectively. The warrants associated with our 2020 Notes expire through January 2021. While the share price for our common stock trades above the applicable conversion price of each series of notes or the applicable exercise price of each series of warrants for the 2020 Notes, the 2023 Notes and the 2024 Notes, these instruments will have a dilutive effect with respect to our common stock to the extent that the price per share of our common stock continues to exceeds the applicable conversion or exercise price of the notes and warrants. Refer to Note 9— Convertible Senior Notes . |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
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 table 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 October 31, November 2, 2020 2019 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 812,782 $ 31,231 $ 844,013 $ 645,378 $ 32,148 $ 677,526 Gross profit 394,689 13,641 408,330 270,721 13,445 284,166 Depreciation and amortization 25,135 1,341 26,476 22,316 1,119 23,435 Nine Months Ended October 31, November 2, 2020 2019 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 1,949,126 $ 87,064 $ 2,036,190 $ 1,881,412 $ 101,049 $ 1,982,461 Gross profit 902,932 37,471 940,403 769,133 42,805 811,938 Depreciation and amortization 73,086 3,602 76,688 72,490 3,455 75,945 |
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 October 31, February 1, 2020 2020 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 135,306 $ — $ 135,306 $ 124,367 $ — $ 124,367 Tradenames, trademarks and domain names (2) 54,663 17,000 71,663 48,563 37,459 86,022 Total assets 2,554,294 124,956 2,679,250 2,301,823 143,871 2,445,694 (1) The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018, 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 $35.1 million, of which $20.5 million was recorded in the first quarter of fiscal 2020 and $14.6 million was recorded in fiscal 2018. Refer to “Waterworks Tradename Impairment” within Note 4— Goodwill, Trademarks, Trademarks and Domain Names. |
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 October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Operating income: RH Segment $ 223,103 $ 86,936 $ 425,970 $ 260,429 Waterworks 2,208 825 2,331 2,839 Non-cash compensation (111,218) — (111,218) — Asset impairments and change in useful lives (2,091) (1,031) (11,901) (7,052) Gain (loss) on sale leaseback transaction — 1,196 (9,352) 1,196 Reorganization related costs — (1,075) (7,027) (1,075) Recall accrual (781) 2,053 (5,561) 3,988 Legal settlements — — — 1,193 Asset held for sale gain — 333 — 333 Income from operations 111,221 89,237 283,242 261,851 Interest expense—net 15,656 21,564 54,703 67,195 Tradename impairment — — 20,459 — (Gain) loss on extinguishment of debt—net — 6,857 (152) 5,903 Income before income taxes $ 95,565 $ 60,816 $ 208,232 $ 188,753 |
Net Revenues | We classify our 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, as well as hospitality. Net revenues in each category were as follows ( in thousands Three Months Ended Nine Months Ended October 31, November 2, October 31, November 2, 2020 2019 2020 2019 Furniture $ 585,378 $ 460,231 $ 1,390,460 $ 1,326,477 Non-furniture 258,635 217,295 645,730 655,984 Total net revenues $ 844,013 $ 677,526 $ 2,036,190 $ 1,982,461 |
Business Combination (Tables)
Business Combination (Tables) | 9 Months Ended |
Oct. 31, 2020 | |
Business Combination | |
Schedule of purchase price allocation | The following table summarizes the purchase price allocation based on the fair value of the assets acquired and liabilities assumed ( in thousands Tangible assets acquired and liabilities assumed—net $ (796) Tradename 4,800 Goodwill 10,948 Total $ 14,952 |
The Company - Additional Inform
The Company - Additional Information (Detail) | Oct. 31, 2020itemstatestore |
Nature of Business | |
Number of galleries | 68 |
Number of RH outlet stores | store | 38 |
Number of states that galleries and stores operate, District of Columbia and Canada | state | 31 |
Number of waterworks showrooms throughout the United States and in the U.K. | 14 |
Restaurants reopened, COVID-19 | 8 |
Number of restaurants | 10 |
Recently Issued Accounting St_2
Recently Issued Accounting Standards - Additional Information - (Detail) - USD ($) $ in Millions | 9 Months Ended | ||
Oct. 31, 2020 | Feb. 02, 2020 | Feb. 01, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle | |||
Allowance for doubtful accounts | $ 3.3 | $ 2.2 | |
ASU 2018-15 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true | ||
Capitalized implementation costs, service term | 3 years | ||
Hosted arrangements, additional renewal period | 3 years | ||
ASU 2018-15 | Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Hosted arrangements, additional renewal period | 1 year | ||
ASU 2016-13 | |||
New Accounting Pronouncements or Change in Accounting Principle | |||
Change in Accounting Principle, Accounting Standards Update, Adopted [true false] | true |
Prepaid Expense and Other Ass_3
Prepaid Expense and Other Assets - Prepaid Expense and Other Current Assets (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Prepaid Expense And Other Assets Current [Abstract] | ||
Prepaid expense and other current assets | $ 30,661 | $ 30,875 |
Promissory note receivable, including interest | 22,499 | |
Capitalized catalog costs | 13,878 | 13,740 |
Vendor deposits | 11,180 | 11,258 |
Acquisition related escrow deposits | 4,400 | |
Right of return asset for merchandise | 6,257 | 5,746 |
Total prepaid expense and other current assets | $ 88,875 | $ 61,619 |
Prepaid Expense and Other Ass_4
Prepaid Expense and Other Assets - Other Non-Current Assets (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Other Assets Noncurrent [Abstract] | ||
Landlord assets under construction | $ 144,792 | $ 138,315 |
Deposits on asset under construction | 60,000 | 60,000 |
Investments in joint ventures (Note 5) | 7,500 | |
Promissory note receivable, including interest | 5,500 | 5,354 |
Capitalized cloud computing costs-net | 5,444 | |
Other deposits | 5,264 | 5,157 |
Acquisition related escrow deposits | 2,500 | |
Deferred financing fees | 1,794 | 2,602 |
Other non-current assets | 8,147 | 3,417 |
Total other non-current assets | $ 240,941 | $ 214,845 |
Goodwill, Tradenames, Tradema_2
Goodwill, Tradenames, Trademarks and Domain Names - Goodwill, Tradenames, Trademarks and Domain Names Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | 36 Months Ended | |||
May 02, 2020 | Oct. 31, 2020 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2021 | |
Goodwill Activity | |||||||
Goodwill, February 1, 2020 | $ 124,367 | $ 124,367 | |||||
Goodwill, October 31, 2020 | 135,306 | $ 124,367 | |||||
Tradenames, trademarks and domain names Activity | |||||||
Indefinite-lived intangible assets, February 1, 2020 | 86,022 | 86,022 | |||||
Indefinite-lived intangible assets, Impairment | (20,459) | ||||||
Indefinite-lived intangible assets, October 31, 2020 | 71,663 | 86,022 | |||||
RH Segment | |||||||
Goodwill Activity | |||||||
Goodwill, February 1, 2020 | 124,367 | 124,367 | |||||
Goodwill, Acquisition | 10,948 | ||||||
Goodwill, Foreign Currency Translation | (9) | ||||||
Goodwill, October 31, 2020 | 135,306 | 124,367 | |||||
Tradenames, trademarks and domain names Activity | |||||||
Indefinite-lived intangible assets, February 1, 2020 | 48,563 | 48,563 | |||||
Indefinite-lived intangible assets, October 31, 2020 | 54,663 | 48,563 | |||||
RH Segment | Tradenames, trademarks and domain names | |||||||
Tradenames, trademarks and domain names Activity | |||||||
Indefinite-lived intangible assets, February 1, 2020 | 48,563 | 48,563 | |||||
Indefinite-lived intangible assets, Acquisition | 6,100 | ||||||
Indefinite-lived intangible assets, October 31, 2020 | 54,663 | 48,563 | |||||
Waterworks | |||||||
Goodwill Activity | |||||||
Goodwill, Impairment | $ 17,400 | $ 33,700 | $ 51,100 | ||||
Tradenames, trademarks and domain names Activity | |||||||
Indefinite-lived intangible assets, February 1, 2020 | 37,459 | 37,459 | |||||
Indefinite-lived intangible assets, Impairment | (20,500) | (35,100) | $ (14,600) | $ (35,100) | |||
Indefinite-lived intangible assets, October 31, 2020 | 17,000 | 37,459 | |||||
Waterworks | Tradename | |||||||
Tradenames, trademarks and domain names Activity | |||||||
Indefinite-lived intangible assets, February 1, 2020 | 37,459 | 37,459 | |||||
Indefinite-lived intangible assets, Impairment | (20,500) | (20,459) | |||||
Indefinite-lived intangible assets, October 31, 2020 | $ 17,000 | $ 17,000 | $ 37,459 |
Goodwill, Tradenames, Tradema_3
Goodwill, Tradenames, Trademarks and Domain Names - Acquisition of Goodwill and Tradename (Detail) - Furniture business acquired in North America - USD ($) $ in Thousands | Aug. 28, 2020 | Oct. 31, 2020 |
Acquisition of Goodwill and Tradename | ||
Total consideration | $ 15,000 | $ 14,952 |
Purchase price allocated to goodwill | 10,900 | |
Tradename | ||
Acquisition of Goodwill and Tradename | ||
Intangible assets acquired | $ 4,800 |
Goodwill, Tradenames, Tradema_4
Goodwill, Tradenames, Trademarks and Domain Names - Waterworks Tradename Impairment (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | 36 Months Ended | |
May 02, 2020 | Oct. 31, 2020 | Feb. 01, 2020 | Feb. 02, 2019 | Jan. 30, 2021 | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Impaired Intangible Asset, Facts and Circumstances Leading to Impairment | COVID-19 health crisis and related Showroom closures and slowdown in construction activity | ||||
Impaired Intangible Asset, Description | We performed an interim impairment test on the Waterworks tradename and the estimated future cash flows of the Waterworks reporting unit indicated the fair value of the tradename asset was below its carrying amount. | ||||
Impaired Intangible Asset, Method for Fair Value Determination | We determined fair value utilizing a discounted cash flow methodology under the relief-from-royalty method. Significant assumptions under this method include forecasted net revenues and the estimated royalty rate, expressed as a percentage of revenues, in addition to the discount rate based on the weighted-average cost of capital. | ||||
Non-cash impairment charge | $ 20,459 | ||||
Indefinite-lived tradename asset | 71,663 | $ 86,022 | |||
Waterworks | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Non-cash impairment charge | $ 20,500 | 35,100 | $ 14,600 | $ 35,100 | |
Indefinite-lived tradename asset | 17,000 | 37,459 | |||
Tradename | Waterworks | |||||
Indefinite Lived Intangible Assets By Major Class [Line Items] | |||||
Non-cash impairment charge | 20,500 | 20,459 | |||
Indefinite-lived tradename asset | $ 17,000 | $ 17,000 | $ 37,459 |
Investments in Joint Ventures (
Investments in Joint Ventures (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Oct. 31, 2020USD ($) | Oct. 31, 2020USD ($) | Aug. 01, 2020item | |
Related Party Transaction [Line Items] | |||
Joint venture included in other non-current assets | $ 7,500 | $ 7,500 | |
Limited liability companies (the "JVs") | |||
Related Party Transaction [Line Items] | |||
Joint venture, percentage of ownership | 50.00% | ||
Number of privately held limited liability companies (the "JVs") | item | 2 | ||
Joint venture included in other non-current assets | 7,500 | 7,500 | |
Proportional share of the JVs operations |
Accounts Payable, Accrued Exp_3
Accounts Payable, Accrued Expenses and Other Current Liabilities - Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Accounts payable | $ 187,381 | $ 180,714 |
Accrued compensation | 66,628 | 64,659 |
Accrued freight and duty | 28,675 | 25,170 |
Accrued sales taxes | 24,685 | 19,618 |
Accrued occupancy | 18,472 | 12,067 |
Deferred consideration for asset purchase | 13,598 | |
Accrued catalog costs | 4,013 | 8,267 |
Accrued professional fees | 5,506 | 4,381 |
Other accrued expenses | 19,594 | 15,433 |
Total accounts payable and accrued expenses | $ 368,552 | $ 330,309 |
Accounts Payable, Accrued Exp_4
Accounts Payable, Accrued Expenses and Other Current Liabilities - Other Current Liabilities (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Promissory notes on asset under construction | $ 53,000 | $ 53,000 |
Federal and state taxes payable | 36,148 | 13,591 |
Current portion of equipment promissory notes | 22,489 | 22,009 |
Allowance for sales returns | 21,797 | 19,206 |
Unredeemed gift card and merchandise credit liability | 14,929 | 16,625 |
Finance lease liabilities | 14,314 | 9,188 |
Product recall reserve | 6,619 | 2,055 |
Other current liabilities | 4,900 | 5,040 |
Total other current liabilities | $ 174,196 | $ 140,714 |
Accounts Payable, Accrued Exp_5
Accounts Payable, Accrued Expenses and Other Current Liabilities - Contract Liabilities (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Contract Liabilities | ||||
Revenue related to previous deferrals related to gift cards and merchandise credits | $ 5.6 | $ 5.1 | $ 16.2 | $ 14.4 |
Gift card breakage recorded | $ 0.2 | $ 0.5 | $ 1 | $ 1.3 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-11-01 | ||||
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||||
Remaining gift card and merchandise credit liabilities, percentage | 70.00% | 70.00% | ||
Contract Liabilities | ||||
Expected satisfied period for recognized of performance obligation | 12 months | 12 months |
Other Non-Current Obligations_2
Other Non-Current Obligations (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Other Non-Current Obligations. | ||
Notes payable for share repurchases | $ 18,813 | $ 18,741 |
Rollover units and profit interests | 3,384 | 3,064 |
Unrecognized tax benefits | 2,217 | 3,020 |
Other non-current obligations | 3,144 | 3,695 |
Total other non-current obligations | $ 27,558 | $ 28,520 |
Leases - Lease Costs-Net (Detai
Leases - Lease Costs-Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Lease costs-net: | ||||
Operating lease cost | $ 21,111 | $ 21,115 | $ 62,018 | $ 63,491 |
Finance Lease Costs [Abstract] | ||||
Amortization of leased assets | 10,841 | 9,471 | 30,554 | 27,558 |
Interest on lease liabilities | 6,158 | 5,678 | 17,887 | 16,864 |
Variable lease costs | 5,930 | 6,219 | 13,410 | 17,617 |
Sublease income | (1,519) | (2,493) | (6,213) | (7,282) |
Total lease cost-net | 42,521 | 39,990 | 117,656 | 118,248 |
Variable lease payments | $ 4,000 | $ 4,000 | $ 8,300 | $ 10,800 |
Leases - Lease Right-of-Use Ass
Leases - Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating leases | $ 405,776 | $ 410,904 |
Balance Sheet Classification, Operating lease right-of-use assets | us-gaap:OperatingLeaseRightOfUseAsset | us-gaap:OperatingLeaseRightOfUseAsset |
Finance leases | $ 721,772 | $ 642,117 |
Balance Sheet Classification, Property and equipment-net | us-gaap:PropertyPlantAndEquipmentNet | us-gaap:PropertyPlantAndEquipmentNet |
Total lease right-of-use assets | $ 1,127,548 | $ 1,053,021 |
Liabilities, Current | ||
Operating leases, current | $ 64,879 | $ 58,924 |
Balance Sheet Classification, Operating lease liabilities | us-gaap:OperatingLeaseLiabilityCurrent | us-gaap:OperatingLeaseLiabilityCurrent |
Finance leases, current | $ 14,314 | $ 9,188 |
Balance Sheet Classification, Other current liabilities | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Total lease liabilities-current | $ 79,193 | $ 68,112 |
Liabilities, Non-current | ||
Operating leases, noncurrent | $ 405,432 | $ 409,930 |
Balance Sheet Classification, Non-current operating lease liabilities | us-gaap:OperatingLeaseLiabilityNoncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent |
Finance leases, noncurrent | $ 488,660 | $ 442,988 |
Balance Sheet Classification, Non-current finance lease liabilities | us-gaap:FinanceLeaseLiabilityNoncurrent | us-gaap:FinanceLeaseLiabilityNoncurrent |
Total lease liabilities-non-current | $ 894,092 | $ 852,918 |
Total lease liabilities | 973,285 | 921,030 |
Finance lease right-of-use assets, accumulated amortization | $ 122,500 | $ 92,300 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2020 | Feb. 01, 2020 | |
Maturities of lease liabilities, Operating Leases | ||
Remainder of fiscal 2020 | $ 20,600 | |
2021 | 79,709 | |
2022 | 67,896 | |
2023 | 60,862 | |
2024 | 56,550 | |
2025 | 56,345 | |
Thereafter | 222,579 | |
Total lease payments | 564,541 | |
Less-imputed interest | (94,230) | |
Present value of lease liabilities | 470,311 | |
Maturities of lease liabilities, Finance Leases | ||
Remainder of fiscal 2020 | 9,634 | |
2021 | 38,626 | |
2022 | 39,044 | |
2023 | 39,458 | |
2024 | 39,945 | |
2025 | 41,152 | |
Thereafter | 594,102 | |
Total lease payments | 801,961 | |
Less-imputed interest | (298,987) | |
Present value of lease liabilities | 502,974 | |
Total maturities of lease liabilities | ||
Remainder of fiscal 2020 | 30,234 | |
2021 | 118,335 | |
2022 | 106,940 | |
2023 | 100,320 | |
2024 | 96,495 | |
2025 | 97,497 | |
Thereafter | 816,681 | |
Total lease payments | 1,366,502 | |
Less-imputed interest | (393,217) | |
Present value of lease liabilities | 973,285 | $ 921,030 |
Legally binding payments for leases signed but not yet commenced | 651,800 | |
Future commitments under short-term lease agreements | $ 1,400 | |
Short-term lease agreements, commitments | true |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Detail) | Oct. 31, 2020 | Nov. 02, 2019 |
Weighted-average remaining lease term (years) | ||
Operating leases, years | 8 years 9 months 18 days | 9 years |
Finance leases, years | 18 years 7 months 6 days | 18 years 8 months 12 days |
Weighted-average discount rate | ||
Operating leases, percent | 3.86% | 3.82% |
Finance leases, percent | 5.04% | 5.25% |
Leases - Other Information Rela
Leases - Other Information Related to Leases (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Oct. 31, 2020 | Nov. 02, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ (49,251) | $ (75,011) |
Operating cash flows from finance leases | (14,170) | (16,864) |
Financing cash flows from finance leases | (8,801) | (7,136) |
Total cash outflows from leases | (72,222) | (99,011) |
Lease right-of-use assets obtained in exchange for lease obligations-net of lease terminations (non-cash) | ||
Operating leases (non-cash) | 45,341 | 18,892 |
Finance leases (non-cash) | $ 57,440 | $ 26,241 |
Leases - Sale-Leaseback Transac
Leases - Sale-Leaseback Transaction and Long-lived Asset Impairment (Detail) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Aug. 01, 2020USD ($) | May 02, 2020USD ($)store | Nov. 02, 2019USD ($) | Oct. 31, 2020USD ($) | Nov. 02, 2019USD ($) | |
Sale Leaseback Transaction [Line Items] | |||||
Net gain (loss) related to the sale-leaseback transaction | $ 1,196 | $ (9,352) | $ 1,196 | ||
RH Baby & Child Gallery and Waterworks Showroom [Member] | |||||
Sale Leaseback Transaction [Line Items] | |||||
Impairment charge on long-lived assets | $ 3,500 | ||||
Property Plant and Equipment Other Than Leased Assets | RH Baby & Child Gallery and Waterworks Showroom [Member] | |||||
Sale Leaseback Transaction [Line Items] | |||||
Impairment charge on long-lived assets | 1,500 | ||||
Leased Assets | RH Baby & Child Gallery and Waterworks Showroom [Member] | |||||
Sale Leaseback Transaction [Line Items] | |||||
Impairment charge on long-lived assets | $ 2,000 | ||||
Sale-leaseback Transaction | Yountville Design Gallery | |||||
Sale Leaseback Transaction [Line Items] | |||||
Sale proceeds | $ 23,500 | ||||
Sale-leaseback Transaction | Minneapolis Design Gallery | |||||
Sale Leaseback Transaction [Line Items] | |||||
Sale proceeds | $ 25,500 | ||||
Operating Leaseback Arrangement | Yountville Design Gallery | |||||
Sale Leaseback Transaction [Line Items] | |||||
Initial lease terms, operating lease | 15 years | 15 years | |||
Renewal term, operating lease | 30 years | 30 years | |||
Operating Leaseback Arrangement | Minneapolis Design Gallery | |||||
Sale Leaseback Transaction [Line Items] | |||||
Initial lease terms, operating lease | 20 years | ||||
Renewal term, operating lease | 10 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 | $ 1,200 | ||||
Selling, general and administrative expenses | Operating Leaseback Arrangement | Minneapolis Design Gallery | |||||
Sale Leaseback Transaction [Line Items] | |||||
Net gain (loss) related to the sale-leaseback transaction | $ (9,400) | ||||
RH Segment | |||||
Sale Leaseback Transaction [Line Items] | |||||
Properties with impairment charges | store | 1 | ||||
Waterworks | |||||
Sale Leaseback Transaction [Line Items] | |||||
Properties with impairment charges | store | 1 |
Convertible Senior Notes - $350
Convertible Senior Notes - $350 million 0.00% Convertible Senior Notes due 2024 (Detail) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2020USD ($)$ / shares | Nov. 02, 2019USD ($) | Oct. 31, 2020USD ($)D$ / shares | Nov. 02, 2019USD ($) | Feb. 01, 2020USD ($) | |
Debt default conditions | |||||
Amortization of debt discount | $ 33,810,000 | $ 33,528,000 | |||
Convertible senior notes due 2024 | |||||
Debt Instrument | |||||
Debt instrument, issuance date | Sep. 30, 2019 | ||||
Debt instrument, principal amount | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | ||
Debt instrument, maturity date | Sep. 15, 2024 | ||||
Debt default conditions | |||||
Events of default and acceleration of maturity description | 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. Events of default under the indenture for the 2024 Notes include, among other things, the occurrence of an event of default by us as defined under any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness of the Company or any of its significant subsidiaries for money borrowed, if that event of default (i) constitutes the failure to pay when due indebtedness in the aggregate principal amount in excess of $20 million and (ii) such event of default continues for a period of 30 days after written notice is delivered to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% of the aggregate principal amount of the 2024 Notes then outstanding. | ||||
Debt default, failure to pay due indebtedness, threshold amount | 20,000,000 | $ 20,000,000 | |||
Debt default, failure to pay due indebtedness, threshold period | 30 days | ||||
Percentage of aggregate principal amount of notes outstanding | 25.00% | ||||
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, which represents a 25% premium to the $169.12 closing share price on the day the 2024 Notes were priced. | ||||
Debt instrument, initial conversion rate | 100 | ||||
Debt instrument, conversion principal amount | $ 1,000 | $ 1,000 | |||
Debt instrument, total conversion rate | 1,656,000 | ||||
Conversion price per share | $ / shares | $ 211.40 | $ 211.40 | |||
Premium on stock trigger price | 25.00% | ||||
Debt instrument, convertible, stock price trigger | $ / shares | $ 169.12 | ||||
Debt instrument, convertible earliest date | Jun. 15, 2024 | ||||
Debt instrument, effective interest rate | 5.74% | 5.74% | |||
Discounts upon original issuance | $ 3,500,000 | $ 3,500,000 | |||
Third party offering costs | 1,300,000 | 1,300,000 | |||
Amortization of debt issuance costs | 200,000 | $ 100,000 | 500,000 | 100,000 | |
Amortization of debt discount | $ 4,000,000 | $ 1,800,000 | $ 11,800,000 | $ 1,800,000 | |
Convertible senior notes due 2024 | Common Stock | |||||
Debt default conditions | |||||
Debt instrument, initial conversion rate | 4.7304 | ||||
Conversion price per share | $ / shares | $ 211.40 | $ 211.40 | |||
Convertible senior notes due 2024 | Convertible debt instrument conversion period one | |||||
Debt default conditions | |||||
Debt instrument, convertible trading days | D | 20 | ||||
Debt instrument, convertible consecutive trading days | D | 30 | ||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||
Convertible senior notes due 2024 | Convertible debt instrument conversion period two | |||||
Debt default conditions | |||||
Debt instrument, convertible trading days | D | 5 | ||||
Debt instrument, convertible consecutive trading days | D | 10 | ||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||
Private Offering | 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% |
Convertible Senior Notes - Carr
Convertible Senior Notes - Carrying Value of the 2024 Notes (Detail) - Convertible senior notes due 2024 - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Liability component | ||
Principal | $ 350,000 | $ 350,000 |
Less: Debt discount | (69,857) | (81,634) |
Net carrying amount | 280,143 | 268,366 |
Equity component | $ 87,252 | $ 87,252 |
Convertible Senior Notes - 2024
Convertible Senior Notes - 2024 Notes-Convertible Bond Hedge and Warrant Transactions (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 9 Months Ended | |
Oct. 31, 2020 | Nov. 02, 2019 | |
Debt Instrument | ||
Total cost of convertible note hedge transactions | $ 91,350 | |
Cash proceeds from sale of warrants | $ 50,225 | |
Convertible bond hedge and warrant transactions | ||
Debt Instrument | ||
Deferred tax asset | $ 22,700 | |
Convertible senior notes due 2024 | ||
Debt Instrument | ||
Debt instrument, issuance date | Sep. 30, 2019 | |
Conversion price per share | $ 211.40 | |
Premium on stock trigger price | 25.00% | |
Debt instrument, convertible, stock price trigger | $ 169.12 | |
Deferred tax liability | $ 21,700 | |
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | ||
Debt Instrument | ||
Convertible note hedge, description | we entered into convertible note hedge transactions whereby we have the option to purchase a total of approximately 1.656 million shares of our common stock at a price of approximately $211.40 per share. | |
Total cost of convertible note hedge transactions | $ 91,400 | |
Premium on stock trigger price | 100.00% | |
Debt instrument, convertible, stock price trigger | $ 169.12 | |
Overallotment Option | Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | ||
Debt Instrument | ||
Debt instrument, issuance date | Sep. 30, 2019 | |
Common Stock | Convertible senior notes due 2024 | ||
Debt Instrument | ||
Conversion price per share | $ 211.40 | |
Common Stock | Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | ||
Debt Instrument | ||
Shares issued upon conversion | 1,656 | |
Conversion price per share | $ 211.40 | |
Warrants sold to purchase common stock | 1,656 | |
Warrants price per share | $ 338.24 | |
Earnings dilution threshold, common stock price per share | $ 338.24 | |
Warrants Subject to Certain Adjustment Mechanisms | Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | ||
Debt Instrument | ||
Cash proceeds from sale of warrants | $ 50,200 | |
Warrants Subject to Certain Adjustment Mechanisms | Common Stock | Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | Maximum | ||
Debt Instrument | ||
Warrants sold to purchase common stock | 3,300 |
Convertible Senior Notes - $335
Convertible Senior Notes - $335 million 0.00% Convertible Senior Notes due 2023 (Detail) | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2020USD ($)$ / shares | Nov. 02, 2019USD ($) | Oct. 31, 2020USD ($)D$ / shares | Nov. 02, 2019USD ($) | Feb. 01, 2020USD ($) | |
Debt default conditions | |||||
Amortization of debt discount | $ 33,810,000 | $ 33,528,000 | |||
Convertible senior notes due 2023 | |||||
Debt Instrument | |||||
Debt instrument, issuance date | Jun. 30, 2018 | ||||
Debt instrument, principal amount | $ 335,000,000 | $ 335,000,000 | $ 335,000,000 | ||
Debt instrument, maturity date | Jun. 15, 2023 | ||||
Debt default conditions | |||||
Events of default and acceleration of maturity description | 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. Events of default under the indenture for the 2023 Notes include, among other things, the occurrence of an event of default by us as defined under any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness of the Company or any of its significant subsidiaries for money borrowed, if that event of default (i) constitutes the failure to pay when due indebtedness in the aggregate principal amount in excess of $20 million and (ii) such event of default continues for a period of 30 days after written notice is delivered to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% of the aggregate principal amount of the 2023 Notes then outstanding. | ||||
Debt default, failure to pay due indebtedness, threshold amount | 20,000,000 | $ 20,000,000 | |||
Debt default, failure to pay due indebtedness, threshold period | 30 days | ||||
Percentage of aggregate principal amount of notes outstanding | 25.00% | ||||
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. | ||||
Debt instrument, initial conversion rate | 100 | ||||
Debt instrument, conversion principal amount | 1,000 | $ 1,000 | |||
Debt instrument, convertible earliest date | Mar. 15, 2023 | ||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | $ 1,000 | |||
Debt instrument, effective interest rate | 6.35% | 6.35% | |||
Discounts upon original issuance | $ 1,700,000 | $ 1,700,000 | |||
Third party offering costs | 4,600,000 | 4,600,000 | |||
Amortization of debt issuance costs | 200,000 | $ 200,000 | 700,000 | 700,000 | |
Amortization of debt discount | 4,400,000 | $ 4,100,000 | $ 13,100,000 | $ 12,300,000 | |
Convertible senior notes due 2023 | Convertible debt instrument conversion period one | |||||
Debt default conditions | |||||
Debt instrument, convertible trading days | D | 20 | ||||
Debt instrument, convertible consecutive trading days | D | 30 | ||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period two | |||||
Debt default conditions | |||||
Debt instrument, convertible trading days | D | 5 | ||||
Debt instrument, convertible consecutive trading days | D | 10 | ||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||
Convertible senior notes due 2023 | Common Stock | |||||
Debt default conditions | |||||
Debt instrument, initial conversion rate | 5.1640 | ||||
Debt instrument, conversion principal amount | $ 1,000 | $ 1,000 | |||
Conversion price per share | $ / shares | $ 193.65 | $ 193.65 | |||
Private Offering | Convertible senior notes due 2023 | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 300,000,000 | $ 300,000,000 | |||
Debt instrument, interest rate | 0.00% | 0.00% | |||
Overallotment Option | Convertible senior notes due 2023 | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 35,000,000 | $ 35,000,000 |
Convertible Senior Notes - Ca_2
Convertible Senior Notes - Carrying Value of the 2023 Notes (Detail) - Convertible senior notes due 2023 - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Liability component | ||
Principal | $ 335,000 | $ 335,000 |
Less: Debt discount | (51,585) | (64,729) |
Net carrying amount | 283,415 | 270,271 |
Equity component | $ 90,990 | $ 90,990 |
Convertible Senior Notes - 2023
Convertible Senior Notes - 2023 Notes-Convertible Bond Hedge and Warrant Transactions (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 1 Months Ended | 9 Months Ended | |
Jun. 30, 2018 | Oct. 31, 2020 | Nov. 02, 2019 | |
Debt Instrument | |||
Total cost of convertible note hedge transactions | $ 91,350 | ||
Cash proceeds from sale of warrants | $ 50,225 | ||
Convertible bond hedge and warrant transactions | |||
Debt Instrument | |||
Deferred tax asset | $ 22,700 | ||
Convertible senior notes due 2023 | |||
Debt Instrument | |||
Debt instrument, issuance date | Jun. 30, 2018 | ||
Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | |||
Debt Instrument | |||
Debt instrument, issuance date | Jun. 30, 2018 | ||
Convertible note hedge, description | we entered into convertible note hedge transactions whereby we have the option to purchase a total of approximately 1.730 million shares of our common stock at a price of approximately $193.65 per share. | ||
Total cost of convertible note hedge transactions | $ 91,900 | ||
Deferred tax liability | 22,300 | ||
Deferred tax asset | $ 22,500 | ||
Common Stock | Convertible senior notes due 2023 | |||
Debt Instrument | |||
Shares issued upon conversion | 1,730 | ||
Conversion price per share | $ 193.65 | ||
Common Stock | Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | |||
Debt Instrument | |||
Conversion price per share | $ 193.65 | ||
Convertible note hedge, number of shares | 1,730 | ||
Warrants price per share | $ 309.84 | ||
Earnings dilution threshold, common stock price per share | $ 309.84 | ||
Warrants Subject to Certain Adjustment Mechanisms | Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | |||
Debt Instrument | |||
Cash proceeds from sale of warrants | $ 51,000 | ||
Warrants Subject to Certain Adjustment Mechanisms | Common Stock | Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | Maximum | |||
Debt Instrument | |||
Warrants sold to purchase common stock | 3,500 |
Convertible Senior Notes - $300
Convertible Senior Notes - $300 million 0.00% Convertible Senior Notes due 2020 (Detail) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Oct. 31, 2020USD ($)$ / sharesshares | Aug. 01, 2020shares | Jul. 31, 2020USD ($)shares | May 31, 2020USD ($)shares | Oct. 31, 2020USD ($)$ / sharesshares | Aug. 01, 2020USD ($) | Nov. 02, 2019USD ($) | Oct. 31, 2020USD ($)D$ / sharesshares | Nov. 02, 2019USD ($)shares | Feb. 01, 2020USD ($)shares | |
Debt Instrument | ||||||||||
Amortization of debt discount | $ 33,810,000 | $ 33,528,000 | ||||||||
Debt amount settled in cash | 215,846,000 | 278,560,000 | ||||||||
(Gain) Loss on extinguishment of debt | $ (6,857,000) | $ 152,000 | $ (5,903,000) | |||||||
Common stock issued from settlement of Notes | shares | 19,844,455 | 19,844,455 | 19,844,455 | 19,236,681 | ||||||
Common Stock | ||||||||||
Debt Instrument | ||||||||||
Shares acquired from notes settlement | shares | 600 | 2,167,396 | ||||||||
Convertible senior notes due 2020 | ||||||||||
Debt Instrument | ||||||||||
Debt instrument, principal amount | $ 300,000,000 | $ 300,000,000 | $ 300,000,000 | $ 300,000,000 | ||||||
Debt instrument, maturity date | Jul. 15, 2020 | |||||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2020 Notes was 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which was equivalent to an initial conversion price of approximately $118.13 per share. | |||||||||
Events of default and acceleration of maturity description | Certain events were also considered “events of default” under the 2020 Notes, which could have resulted in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the 2020 Notes. | |||||||||
Debt instrument, convertible earliest date | Mar. 15, 2020 | |||||||||
Debt instrument, effective interest rate | 6.47% | 6.47% | 6.47% | |||||||
Discounts upon original issuance | $ 3,800,000 | $ 3,800,000 | $ 3,800,000 | |||||||
Third party offering costs | 2,300,000 | 2,300,000 | 2,300,000 | |||||||
Amortization of debt issuance costs | 0 | 300,000 | 600,000 | $ 900,000 | ||||||
Amortization of debt discount | 0 | $ 4,600,000 | 8,900,000 | $ 13,500,000 | ||||||
Aggregate amounts outstanding | 0 | $ 290,600,000 | $ 9,400,000 | 0 | $ 0 | |||||
Debt amount settled in cash | $ 290,600,000 | $ 9,200,000 | ||||||||
Shares issued upon conversion | shares | 1,116,718 | 14,927 | ||||||||
(Gain) Loss on extinguishment of debt | $ 0 | $ 200,000 | ||||||||
Shares acquired from notes settlement | shares | 17 | |||||||||
Convertible senior notes due 2020 | Common Stock | ||||||||||
Debt Instrument | ||||||||||
Debt instrument, initial conversion rate | 8.4656 | |||||||||
Debt instrument, conversion principal amount | $ 1,000 | $ 1,000 | $ 1,000 | |||||||
Conversion price per share | $ / shares | $ 118.13 | $ 118.13 | $ 118.13 | |||||||
Convertible senior notes due 2020 | Convertible debt instrument conversion period one | ||||||||||
Debt Instrument | ||||||||||
Debt instrument, convertible trading days | D | 20 | |||||||||
Debt instrument, convertible consecutive trading days | D | 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, conversion principal amount | $ 1,000 | $ 1,000 | $ 1,000 | |||||||
Debt instrument, convertible trading days | D | 5 | |||||||||
Debt instrument, convertible consecutive trading days | D | 10 | |||||||||
Debt instrument, convertible percentage of stock price | 98.00% | |||||||||
Private Offering | Convertible senior notes due 2020 | ||||||||||
Debt Instrument | ||||||||||
Debt instrument, issuance date | Jun. 30, 2015 | |||||||||
Debt instrument, principal amount | $ 250,000,000 | $ 250,000,000 | $ 250,000,000 | |||||||
Debt instrument, interest rate | 0.00% | 0.00% | 0.00% | |||||||
Overallotment Option | Convertible senior notes due 2020 | ||||||||||
Debt Instrument | ||||||||||
Debt instrument, issuance date | Jul. 31, 2015 | |||||||||
Debt instrument, principal amount | $ 50,000,000 | $ 50,000,000 | $ 50,000,000 | |||||||
Convertible bond hedge and warrant transactions | Convertible senior notes due 2020 | ||||||||||
Debt Instrument | ||||||||||
Debt instrument, issuance date | Jun. 30, 2015 | |||||||||
Conversion price per share | $ / shares | $ 189 | $ 189 | $ 189 | |||||||
Shares issued upon conversion | shares | 290,967 | |||||||||
Shares received upon exercise of warrants | shares | 1,116,735 | 14,927 | ||||||||
Common stock issued from settlement of Notes | shares | 0 | |||||||||
Convertible bond hedge and warrant transactions | Convertible senior notes due 2020 | Common Stock | ||||||||||
Debt Instrument | ||||||||||
Conversion price per share | $ / shares | $ 118.13 | $ 118.13 | $ 118.13 | |||||||
Shares issued upon conversion | shares | 2,540,000 |
Convertible Senior Notes - Ca_3
Convertible Senior Notes - Carrying Value of the 2020 Notes (Detail) - Convertible senior notes due 2020 - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Liability component | ||
Principal | $ 300,000 | $ 300,000 |
Less: Debt discount | (8,890) | |
Net carrying amount | 291,110 | |
Equity component | $ 84,003 |
Convertible Senior Notes - 2020
Convertible Senior Notes - 2020 Notes-Convertible Bond Hedge and Warrant Transactions (Detail) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 2 Months Ended | 9 Months Ended | ||||
Oct. 31, 2020 | Jul. 31, 2020 | May 31, 2020 | Jan. 02, 2021 | Oct. 31, 2020 | Nov. 02, 2019 | Feb. 01, 2020 | |
Debt Instrument | |||||||
Total cost of convertible note hedge transactions | $ 91,350 | ||||||
Cash proceeds from sale of warrants | $ 50,225 | ||||||
Convertible bond hedge and warrant transactions | |||||||
Debt Instrument | |||||||
Deferred tax asset | $ 22,700 | $ 22,700 | |||||
Convertible senior notes due 2020 | |||||||
Debt Instrument | |||||||
Shares issued upon conversion | 1,116,718 | 14,927 | |||||
Cash proceeds from sale of warrants | 30,400 | ||||||
Deferred tax liability | $ 0 | $ 0 | $ 32,800 | ||||
Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | |||||||
Debt Instrument | |||||||
Debt instrument, issuance date | Jun. 30, 2015 | ||||||
Convertible note hedge, description | we entered into convertible note hedge transactions whereby we had the option to purchase a total of approximately 2.540 million shares of our common stock at a price of approximately $118.13 per share. | ||||||
Shares issued upon conversion | 290,967 | ||||||
Conversion price per share | $ 189 | $ 189 | |||||
Total cost of convertible note hedge transactions | $ 68,300 | ||||||
Deferred tax asset | $ 0 | $ 0 | $ 26,600 | ||||
Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | Subsequent Event | |||||||
Debt Instrument | |||||||
Shares issued upon conversion | 552,276 | ||||||
Overallotment Option | Convertible senior notes due 2020 | |||||||
Debt Instrument | |||||||
Debt instrument, issuance date | Jul. 31, 2015 | ||||||
Common Stock | Convertible senior notes due 2020 | |||||||
Debt Instrument | |||||||
Conversion price per share | $ 118.13 | $ 118.13 | |||||
Common Stock | Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | |||||||
Debt Instrument | |||||||
Shares issued upon conversion | 2,540,000 | ||||||
Conversion price per share | 118.13 | $ 118.13 | |||||
Warrants price per share | $ 189 | $ 189 | |||||
Warrants sold to purchase common stock | 2,540,000 | 2,540,000 | |||||
Warrants Subject to Certain Adjustment Mechanisms | Common Stock | Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | Maximum | |||||||
Debt Instrument | |||||||
Warrants sold to purchase common stock | 5,100,000 | 5,100,000 |
Credit Facilities - Credit Faci
Credit Facilities - Credit Facilities (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Line of Credit Facility | ||
Outstanding Amount | $ 43,058 | $ 53,372 |
Unamortized Debt Issuance Costs | (206) | (310) |
Net Carrying Amount | 42,852 | 53,062 |
Equipment promissory notes | ||
Line of Credit Facility | ||
Outstanding Amount | 43,058 | 53,372 |
Unamortized Debt Issuance Costs | (206) | (310) |
Net Carrying Amount | $ 42,852 | $ 53,062 |
Credit Facilities - Narrative (
Credit Facilities - Narrative (Detail) - USD ($) $ in Thousands | Sep. 20, 2019 | Apr. 10, 2019 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | Feb. 01, 2020 |
Line of Credit Facility | ||||||
Outstanding amount | $ 43,058 | $ 53,372 | ||||
Availability under revolving line of credit for extensions of credit, percentage of sum of lesser of aggregate revolving commitments and aggregate revolving borrowing base plus lesser of outstanding LILO term loan or LILO term loan borrowing base | 10.00% | |||||
Fixed charge coverage ratio, fixed amount available under revolving line of credit | $ 40,000 | |||||
Availability under revolving line of credit for extensions of credit, fixed amount | $ 40,000 | |||||
Fixed charge coverage ratio, percentage of sum of lesser of aggregate revolving commitments and aggregate revolving borrowing base plus lesser of outstanding LILO term loan or LILO term loan borrowing base | 10.00% | |||||
Availability under revolving line of credit for extensions of credit, sweep cash to prepayment of loan description | The Credit Agreement requires a daily sweep of all cash receipts and collections to prepay the loans under the agreement while (i) an event of default exists or (ii) the availability under the revolving line of credit for extensions of credit is less than the greater of (A) $40.0 million and (B) 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 LILO term loan or (y) the LILO term loan borrowing base. | |||||
(Gain) loss on extinguishment of debt-net | $ 6,857 | $ (152) | $ 5,903 | |||
Outstanding revolving line of credit | $ 42,852 | 53,062 | ||||
Original Credit Agreement | ||||||
Line of Credit Facility | ||||||
Agreement, date | Aug. 31, 2011 | |||||
Credit Agreement | ||||||
Line of Credit Facility | ||||||
Agreement, date | Jun. 28, 2017 | |||||
Line of credit facility, maturity date | Jun. 28, 2022 | |||||
Third Amendment | Restoration Hardware Canada, Inc. | ||||||
Line of Credit Facility | ||||||
Acceleration of amortization of debt issuance costs | 800 | |||||
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 | $ 22,500 | |||||
Equipment Loan Facility | Other non-current obligations | ||||||
Line of Credit Facility | ||||||
Aggregate amounts outstanding | 20,600 | |||||
Asset based credit facility | ||||||
Line of Credit Facility | ||||||
Repaid amount of loan | 359,400 | $ 380,000 | ||||
Asset based credit facility | Other non-current assets | ||||||
Line of Credit Facility | ||||||
Deferred financing fees | 1,800 | 2,600 | ||||
Revolving Credit Facility | ||||||
Line of Credit Facility | ||||||
Aggregate amounts outstanding | 0 | |||||
Line of credit | 14,600 | |||||
Line of Credit Facility, Remaining Borrowing Capacity | 316,400 | |||||
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 | ||||||
Line of Credit Facility | ||||||
Line of credit | 800,000 | |||||
Line of credit facility, maximum borrowing capacity | 600,000 | |||||
Revolving Credit Facility | Credit Agreement | Minimum | ||||||
Line of Credit Facility | ||||||
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 | Third Amendment | ||||||
Line of Credit Facility | ||||||
Agreement, date | Apr. 4, 2019 | |||||
Outstanding amount | $ 120,000 | |||||
Interest rate greater than interest rate under the revolving credit facility | 1.25% | |||||
LILO Term Loan Facility | Credit Agreement | ||||||
Line of Credit Facility | ||||||
Line of credit facility, maximum borrowing capacity | $ 80,000 | |||||
Second Lien Credit Agreement | ||||||
Line of Credit Facility | ||||||
Agreement, date | Apr. 10, 2019 | |||||
Line of credit facility, maximum borrowing capacity | $ 200,000 | |||||
Line of credit facility, maturity date | Apr. 9, 2024 | |||||
Repaid amount of loan | $ 200,000 | |||||
Interest rate description | annual rate generally based on the LIBOR plus 6.50% | |||||
Debt instrument, basis spread on variable rate | 6.50% | |||||
Variable interest rate description | one-month LIBOR plus 6.50% | |||||
Equipment promissory notes | ||||||
Line of Credit Facility | ||||||
2021 | $ 5,800 | |||||
2022 | 13,600 | |||||
2023 | 1,200 | |||||
Outstanding amount | 43,058 | 53,372 | ||||
Outstanding revolving line of credit | $ 42,852 | $ 53,062 |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value and Carrying Value of Notes (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Convertible senior notes due 2020 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | $ 295,573 | |
Convertible senior notes, Carrying Value | 291,110 | |
Convertible senior notes due 2023 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | $ 278,349 | 272,623 |
Convertible senior notes, Carrying Value | 283,415 | 270,271 |
Convertible senior notes due 2024 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | 270,467 | 255,849 |
Convertible senior notes, Carrying Value | $ 280,143 | $ 268,366 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Income Taxes | ||||
Income tax expense | $ 49,154 | $ 8,353 | $ 66,610 | $ 36,811 |
Effective income tax rate | 51.40% | 13.70% | 32.00% | 19.50% |
Unrecognized tax benefits | $ 8,300 | $ 8,300 | ||
Tax expense and the effective tax rate, if recognized | 7,600 | 7,600 | ||
Exposures related to unrecognized tax benefits | $ 6,100 | $ 6,100 | ||
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 | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Net Income Per Share | ||||
Weighted-average shares-basic | 19,552,836 | 18,765,769 | 19,393,931 | 19,069,501 |
Effect of dilutive stock-based awards | 5,918,350 | 4,712,355 | 5,164,775 | 4,347,713 |
Effect of dilutive convertible senior notes | 2,814,938 | 692,048 | 1,792,488 | 392,211 |
Weighted-average shares-diluted | 28,286,124 | 24,170,172 | 26,351,194 | 23,809,425 |
Net Income Per Share - Schedu_2
Net Income Per Share - Schedule of Weighted-Average Shares Used for Net Income per Share Footnotes (Detail) | Oct. 31, 2020$ / shares |
Convertible senior notes due 2020 | Common Stock | |
Earnings Per Share Diluted | |
Conversion price per share | $ 118.13 |
Convertible senior notes due 2020 | Warrant | |
Earnings Per Share Diluted | |
Conversion price per share | 189 |
Convertible senior notes due 2023 | Common Stock | |
Earnings Per Share Diluted | |
Conversion price per share | 193.65 |
Convertible senior notes due 2023 | Warrant | |
Earnings Per Share Diluted | |
Conversion price per share | 309.84 |
Convertible senior notes due 2024 | |
Earnings Per Share Diluted | |
Conversion price per share | 211.40 |
Convertible senior notes due 2024 | Common Stock | |
Earnings Per Share Diluted | |
Conversion price per share | 211.40 |
Convertible senior notes due 2024 | Warrant | |
Earnings Per Share Diluted | |
Conversion price per share | $ 338.24 |
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 | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Stock Options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||||
Options were excluded from calculation of diluted net earnings share | 311,242 | 190,766 | 451,559 | 457,300 |
Share Repurchases and Share R_2
Share Repurchases and Share Retirements (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | Feb. 01, 2020 | Feb. 02, 2019 | Mar. 25, 2019 | Oct. 10, 2018 | |
Share Repurchase Program and Equity Plans | ||||||||
Shares of common stock purchased under repurchase program | $ 72 | $ 250,032 | ||||||
Treasury stock, shares retired | 600 | |||||||
Treasury stock reclassified, amount | $ 100 | |||||||
Aggregate unpaid principal amount of notes payable for share repurchases | $ 18,813 | 18,813 | $ 18,741 | |||||
Additional Paid-In Capital | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock reclassified, amount | 5 | 77 | 13,180 | |||||
Retained Earnings (Accumulated Deficit) | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock reclassified, amount | $ 237,091 | |||||||
$950 Million Repurchase Program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | $ 950,000 | |||||||
Shares of common stock purchased under repurchase program, shares | 2,200,000 | |||||||
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 | |||||||
Treasury stock, shares retired | 2,170,154 | |||||||
Amount of shares available under repurchase program | 450,000 | $ 450,000 | ||||||
Treasury stock reclassified, amount | $ 250,300 | |||||||
$950 Million Repurchase Program | Additional Paid-In Capital | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock reclassified, amount | 13,200 | 13,200 | ||||||
$950 Million Repurchase Program | Retained Earnings (Accumulated Deficit) | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock reclassified, amount | 237,100 | 237,100 | ||||||
Fiscal 2018 $700 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | $ 700,000 | |||||||
Share repurchase | $ 250,000 | |||||||
Share repurchases under equity plans | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock, shares retired | 17 | |||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,800 | $ 18,800 | 18,700 | |||||
Interest expense related to notes payable for share repurchases | 200 | $ 200 | 700 | $ 700 | ||||
Board of Directors (CEO) | $950 Million Repurchase Program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | $ 950,000 | |||||||
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 - Narr
Stock-Based Compensation - Narrative (Detail) - USD ($) | Oct. 28, 2020 | Oct. 18, 2020 | Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | Feb. 01, 2020 | May 31, 2016 |
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Stock-based compensation expense | $ 118,800,000 | $ 5,100,000 | $ 131,472,000 | $ 16,109,000 | ||||
Stock-based compensation cost capitalized | 0 | 0 | ||||||
Rollover units and profit interests | 3,384,000 | 3,384,000 | $ 3,064,000 | |||||
Selling, general and administrative expenses | 297,109,000 | 194,929,000 | $ 657,161,000 | 550,087,000 | ||||
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 | 1,900,000 | $ 1,900,000 | 1,600,000 | |||||
First performance year | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Performance years | 1 year | |||||||
Fourth performance year | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Performance years | 4 years | |||||||
Stock Options | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Option to purchase of common stock | 700,000 | |||||||
Exercise price of option granted | $ 385.30 | |||||||
Time based restricted | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Number of share lapse per year | 175,000 | |||||||
Time based restricted | Chairman and Chief Executive Officer | Stock Options | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Option vesting period | 4 years | |||||||
Performance based restricted | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Expected vested exercise price description | requirements and stock price performance-based metrics as described further below. | |||||||
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 | $ 1,500,000 | ||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Stock Options | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Outstanding shares | 8,535,569 | 8,535,569 | ||||||
Options outstanding, weighted-average exercise price per share | $ 101.78 | $ 101.78 | ||||||
Numbers of options vested | 6,611,534 | |||||||
Vested weighted-average exercise price per share | $ 88.89 | |||||||
Aggregate intrinsic value of options outstanding | $ 2,028,200,000 | $ 2,028,200,000 | ||||||
Aggregate intrinsic value of options vested or expected to vest | 1,930,300,000 | 1,930,300,000 | ||||||
Aggregate intrinsic value of options exercisable | 1,628,700,000 | $ 1,628,700,000 | ||||||
Weighted-average remaining contractual life of options exercisable | 4 years 2 months 12 days | |||||||
Unrecognized compensation expense related to unvested options | 102,900,000 | $ 102,900,000 | ||||||
Unrecognized compensation expense with weighted-average period | 4 years 9 months 29 days | |||||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Stock Options | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Unrecognized compensation expense related to unvested options | $ 62,400,000 | $ 62,400,000 | ||||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Restricted stock and restricted stock unit | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Outstanding shares | 3,192 | 3,192 | ||||||
Unrecognized compensation expense with weighted-average period | 11 months 8 days | |||||||
Outstanding shares | 94,390 | 94,390 | ||||||
Restricted stock awards outstanding with weighted-average grant date fair value per share | $ 45.93 | $ 45.93 | ||||||
Vested restricted stock unit | 4,440 | 105,015 | ||||||
Weighted-average fair value per share of awards granted | $ 63.07 | $ 52.75 | ||||||
Unrecognized compensation expense related to unvested options | $ 2,800,000 | $ 2,800,000 | ||||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Restricted stock and restricted stock unit | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Restricted stock awards outstanding with weighted-average grant date fair value per share | $ 285.03 | $ 285.03 | ||||||
Time-Based Restrictions and Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Stock-based compensation expense | $ 111,200,000 | |||||||
Aggregate non-cash stock compensation expense | $ 173,600,000 | |||||||
Performance-Based Restrictions | Chairman and Chief Executive Officer | Stock Options | Price Objective 1 | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Option to purchase of common stock | 58,333 | |||||||
Performance-Based Restrictions | Chairman and Chief Executive Officer | Stock Options | Fourth performance year | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Profit interest expected life | 20 years | |||||||
Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Common stock, lapse description | The stock price performance-based metrics for the option are set at $500 per share, $650 per share and $800 per share. With respect to any given performance year, if the “twenty day average trading price” our common stock exceeds $500 per share, $650 per share, or $800 per share during such performance year, then the selling restrictions will lapse as to 58,333 shares, 58,333 share and 58,334 shares, respectively, on the last day of such performance year, if Mr. Friedman remains in service with us at such date. | |||||||
Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | Price Objective 1 | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Exercise price of option granted | $ 500 | |||||||
Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | Price Objective 2 | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Exercise price of option granted | 650 | |||||||
Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | Price Objective 3 | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Exercise price of option granted | $ 800 | |||||||
Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | Stock Options | Price Objective 2 | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Option to purchase of common stock | 58,333 | |||||||
Performance-Based Restrictions | Stock Options | Chairman and Chief Executive Officer | Stock Options | Price Objective 3 | ||||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||||
Option to purchase of common stock | 58,334 |
Commitments and Contingencies (
Commitments and Contingencies (Detail) - USD ($) | Mar. 21, 2019 | Oct. 31, 2020 |
Commitments and Contingencies. | ||
Material off balance sheet commitments | $ 0 | |
Aggregate settlement amount | $ 50,000,000 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Detail) | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020storecustomer | Nov. 02, 2019customer | Oct. 31, 2020customerstoresegment | Nov. 02, 2019customer | |
Segment Reporting Information | ||||
Number of operating segments | segment | 2 | |||
Number of RH outlet stores | 38 | 38 | ||
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 | ||
Number of RH outlet stores | 2 | 2 | ||
U.K | ||||
Segment Reporting Information | ||||
Number of retail stores | 1 | 1 |
Segment Reporting - Statements
Segment Reporting - Statements of Operations Metrics Reviewed by CODM to Evaluate Performance Internally or as Required under ASC 280 (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Segment Reporting Information | ||||
Net revenues | $ 844,013 | $ 677,526 | $ 2,036,190 | $ 1,982,461 |
Gross profit | 408,330 | 284,166 | 940,403 | 811,938 |
Depreciation and amortization | 26,476 | 23,435 | 76,688 | 75,945 |
RH Segment | ||||
Segment Reporting Information | ||||
Net revenues | 812,782 | 645,378 | 1,949,126 | 1,881,412 |
Gross profit | 394,689 | 270,721 | 902,932 | 769,133 |
Depreciation and amortization | 25,135 | 22,316 | 73,086 | 72,490 |
Waterworks | ||||
Segment Reporting Information | ||||
Net revenues | 31,231 | 32,148 | 87,064 | 101,049 |
Gross profit | 13,641 | 13,445 | 37,471 | 42,805 |
Depreciation and amortization | $ 1,341 | $ 1,119 | $ 3,602 | $ 3,455 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet Metrics as Required Under ASC 280 (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Feb. 01, 2020 |
Segment Reporting Information | ||
Goodwill | $ 135,306 | $ 124,367 |
Trademarks and domain names | 71,663 | 86,022 |
Total assets | 2,679,250 | 2,445,694 |
RH Segment | ||
Segment Reporting Information | ||
Goodwill | 135,306 | 124,367 |
Trademarks and domain names | 54,663 | 48,563 |
Total assets | 2,554,294 | 2,301,823 |
Waterworks | ||
Segment Reporting Information | ||
Trademarks and domain names | 17,000 | 37,459 |
Total assets | $ 124,956 | $ 143,871 |
Segment Reporting - Balance S_2
Segment Reporting - Balance Sheet Metrics as Required Under ASC 280 Footnotes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | 36 Months Ended | |||
May 02, 2020 | Oct. 31, 2020 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 | Jan. 30, 2021 | |
Segment Reporting Information | |||||||
Tradename impairment | $ 20,459 | ||||||
Waterworks | |||||||
Segment Reporting Information | |||||||
Goodwill impairment | $ 17,400 | $ 33,700 | $ 51,100 | ||||
Tradename impairment | $ 20,500 | $ 35,100 | $ 14,600 | $ 35,100 |
Segment Reporting - Segment Ope
Segment Reporting - Segment Operating Income (Loss) and Income (Loss) Before Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | 36 Months Ended | ||||
Oct. 31, 2020 | May 02, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | Feb. 01, 2020 | Feb. 02, 2019 | Jan. 30, 2021 | |
Segment Reporting Information | ||||||||
Income from operations | $ 111,221 | $ 89,237 | $ 283,242 | $ 261,851 | ||||
Non-cash compensation | (111,218) | (111,218) | ||||||
Asset impairments and change in useful lives | (2,091) | (1,031) | (11,901) | (7,052) | ||||
Gain (loss) on sale leaseback transaction | 1,196 | (9,352) | 1,196 | |||||
Reorganization related costs | (1,075) | (7,027) | (1,075) | |||||
Recall accrual | (781) | 2,053 | (5,561) | 3,988 | ||||
Legal settlements | 1,193 | |||||||
Asset held for sale gain | 333 | 333 | ||||||
Interest expense-net | 15,656 | 21,564 | 54,703 | 67,195 | ||||
Tradename impairment | 20,459 | |||||||
(Gain) loss on extinguishment of debt-net | 6,857 | (152) | 5,903 | |||||
Income before income taxes | 95,565 | 60,816 | 208,232 | 188,753 | ||||
Waterworks | ||||||||
Segment Reporting Information | ||||||||
Tradename impairment | $ 20,500 | $ 35,100 | $ 14,600 | $ 35,100 | ||||
Operating segments | RH Segment | ||||||||
Segment Reporting Information | ||||||||
Income from operations | 223,103 | 86,936 | 425,970 | 260,429 | ||||
Operating segments | Waterworks | ||||||||
Segment Reporting Information | ||||||||
Income from operations | $ 2,208 | $ 825 | $ 2,331 | $ 2,839 |
Segment Reporting - Net Revenue
Segment Reporting - Net Revenues, Categories (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Oct. 31, 2020 | Nov. 02, 2019 | Oct. 31, 2020 | Nov. 02, 2019 | |
Segment Reporting Information | ||||
Total net revenues | $ 844,013 | $ 677,526 | $ 2,036,190 | $ 1,982,461 |
Furniture | ||||
Segment Reporting Information | ||||
Total net revenues | 585,378 | 460,231 | 1,390,460 | 1,326,477 |
Non-furniture | ||||
Segment Reporting Information | ||||
Total net revenues | $ 258,635 | $ 217,295 | $ 645,730 | $ 655,984 |
Business Combination - Addition
Business Combination - Additional Information (Detail) - Furniture business acquired in North America - USD ($) $ in Thousands | Aug. 28, 2020 | Oct. 31, 2020 | Oct. 31, 2020 |
Business Acquisition [Line Items] | |||
Total consideration | $ 15,000 | $ 14,952 | $ 14,952 |
Escrow account for any post-closing adjustments | 1,900 | ||
Additional escrow, deferred acquisition related payment subject to mutually agreed to conditions | $ 5,000 | ||
Additional escrow, period | 2 years | ||
Selling, general and administrative expenses | |||
Business Acquisition [Line Items] | |||
Acquisition-related costs | $ 600 | $ 1,300 |
Business Combination - Purchase
Business Combination - Purchase Price Allocation (Detail) - USD ($) $ in Thousands | Oct. 31, 2020 | Aug. 28, 2020 | Feb. 01, 2020 |
Purchase price allocation | |||
Goodwill | $ 135,306 | $ 124,367 | |
Furniture business acquired in North America | |||
Purchase price allocation | |||
Tangible assets acquired and liabilities assumed-net | (796) | ||
Tradename | 4,800 | ||
Goodwill | 10,948 | ||
Total | $ 14,952 | $ 15,000 |