Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Apr. 29, 2023 | May 19, 2023 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Apr. 29, 2023 | |
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 | 22,052,211 | |
Entity Central Index Key | 0001528849 | |
Current Fiscal Year End Date | --02-03 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 1,516,689 | $ 1,508,101 |
Restricted cash | 3,538 | 3,662 |
Accounts receivable-net | 60,233 | 59,763 |
Merchandise inventories | 766,301 | 801,841 |
Prepaid expense and other current assets | 129,083 | 139,297 |
Total current assets | 2,475,844 | 2,512,664 |
Property and equipment-net | 1,640,596 | 1,635,984 |
Operating lease right-of-use assets | 528,010 | 527,246 |
Goodwill | 141,026 | 141,048 |
Tradenames, trademarks and other intangible assets | 75,144 | 74,633 |
Deferred tax assets | 150,539 | 167,039 |
Equity method investments | 132,997 | 101,468 |
Other non-current assets | 175,674 | 149,207 |
Total assets | 5,319,830 | 5,309,289 |
Current liabilities: | ||
Accounts payable and accrued expenses | 321,743 | 374,949 |
Deferred revenue and customer deposits | 344,944 | 325,754 |
Operating lease liabilities | 81,262 | 80,384 |
Other current liabilities | 101,860 | 103,190 |
Total current liabilities | 851,503 | 885,973 |
Real estate loans | 17,905 | 17,909 |
Non-current operating lease liabilities | 504,479 | 505,809 |
Non-current finance lease liabilities | 648,792 | 653,050 |
Deferred tax liabilities | 6,402 | 6,315 |
Other non-current obligations | 8,165 | 8,074 |
Total liabilities | 4,480,444 | 4,524,628 |
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 April 29, 2023 and January 28, 2023 | ||
Common stock-$0.0001 par value per share, 180,000,000 shares authorized, 22,051,251 shares issued and outstanding as of April 29, 2023; 22,045,385 shares issued and outstanding as of January 28, 2023 | 2 | 2 |
Additional paid-in capital | 257,616 | 247,076 |
Accumulated other comprehensive loss | (108) | (2,403) |
Retained earnings | 581,876 | 539,986 |
Total stockholders' equity | 839,386 | 784,661 |
Total liabilities and stockholders' equity | 5,319,830 | 5,309,289 |
Term loan B | ||
Current liabilities: | ||
Term loan-net | 1,932,356 | 1,936,529 |
Term loan B-2 | ||
Current liabilities: | ||
Term loan-net | 469,091 | 469,245 |
2023 Notes | ||
Current liabilities: | ||
Convertible senior notes due 2023 | 1,694 | 1,696 |
2024 Notes | ||
Current liabilities: | ||
Convertible senior notes due-noncurrent | $ 41,751 | $ 41,724 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Apr. 29, 2023 | Jan. 28, 2023 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
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 | 22,051,251 | 22,045,385 |
Common stock, shares outstanding | 22,051,251 | 22,045,385 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||
Net revenues | $ 739,162 | $ 957,292 |
Cost of goods sold | 391,617 | 458,709 |
Gross profit | 347,545 | 498,583 |
Selling, general and administrative expenses | 248,305 | 293,295 |
Income from operations | 99,240 | 205,288 |
Other expenses | ||
Interest expense-net | 39,816 | 20,855 |
Loss on extinguishment of debt | 146,116 | |
Other income-net | (653) | (343) |
Total other expenses | 39,163 | 166,628 |
Income before income taxes and equity method investments | 60,077 | 38,660 |
Income tax expense (benefit) | 16,585 | (163,426) |
Income before equity method investments | 43,492 | 202,086 |
Share of equity method investments loss | 1,602 | 1,375 |
Net income | $ 41,890 | $ 200,711 |
Weighted-average shares used in computing basic net income per share | 22,047,029 | 22,608,537 |
Basic net income per share | $ 1.90 | $ 8.88 |
Weighted-average shares used in computing diluted net income per share | 23,758,788 | 27,808,082 |
Diluted net income per share | $ 1.76 | $ 7.22 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||
Net income | $ 41,890 | $ 200,711 |
Net gains (losses) from foreign currency translation | 2,295 | (4,145) |
Comprehensive income | $ 44,185 | $ 196,566 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital Impact of adoption, adjustment | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) Impact of adoption, adjustment | Retained Earnings (Accumulated Deficit) | Treasury Stock | Impact of adoption, adjustment | Total |
Balances at Jan. 29, 2022 | $ 2 | $ 620,577 | $ (1,410) | $ 551,108 | $ 1,170,277 | ||||
Balances, shares at Jan. 29, 2022 | 21,506,967 | ||||||||
Stock-based compensation | 12,802 | 12,802 | |||||||
Vested and delivered restricted stock units | (266) | (266) | |||||||
Vested and delivered restricted stock units, Shares | 1,409 | ||||||||
Exercise of stock options | 149,570 | 149,570 | |||||||
Exercise of stock options, Shares | 3,153,400 | ||||||||
Settlement of convertible senior notes | (14,705) | $ 14,705 | |||||||
Settlement of convertible senior notes, Shares | 36,973 | (36,968) | |||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes | 14,705 | $ (14,705) | |||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes (in shares) | (36,968) | 36,968 | |||||||
Termination of common stock warrants | (386,708) | (386,708) | |||||||
Termination of convertible note hedge | 236,050 | 236,050 | |||||||
Net income | 200,711 | 200,711 | |||||||
Net gain (losses) from foreign currency translation | (4,145) | (4,145) | |||||||
Balances at Apr. 30, 2022 | $ 2 | $ (56,390) | 575,635 | (5,555) | $ 19,889 | 771,708 | $ (36,501) | 1,341,790 | |
Balances, shares at Apr. 30, 2022 | 24,661,781 | ||||||||
Balances at Jan. 28, 2023 | $ 2 | 247,076 | (2,403) | 539,986 | 784,661 | ||||
Balances, shares at Jan. 28, 2023 | 22,045,385 | ||||||||
Stock-based compensation | 10,180 | 10,180 | |||||||
Vested and delivered restricted stock units | (96) | (96) | |||||||
Vested and delivered restricted stock units, Shares | 847 | ||||||||
Exercise of stock options | 456 | 456 | |||||||
Exercise of stock options, Shares | 5,017 | ||||||||
Settlement of convertible senior notes, Shares | 2 | ||||||||
Net income | 41,890 | 41,890 | |||||||
Net gain (losses) from foreign currency translation | 2,295 | 2,295 | |||||||
Balances at Apr. 29, 2023 | $ 2 | $ 257,616 | $ (108) | $ 581,876 | $ 839,386 | ||||
Balances, shares at Apr. 29, 2023 | 22,051,251 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 41,890 | $ 200,711 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 27,770 | 24,758 |
Non-cash operating lease cost | 19,865 | 18,391 |
Asset impairments | 2,475 | 5,923 |
Stock-based compensation expense | 10,180 | 12,802 |
Non-cash finance lease interest expense | 8,486 | 7,071 |
Product recalls | 560 | |
Deferred income taxes | 16,527 | 5,493 |
Loss on extinguishment of debt | 146,116 | |
Gain on derivative instruments-net | (3,177) | |
Share of equity method investments loss | 1,602 | 1,375 |
Other non-cash items | 2,215 | 1,269 |
Change in assets and liabilities: | ||
Accounts receivable | (462) | (7,715) |
Merchandise inventories | 35,915 | (83,115) |
Prepaid expense and other assets | (4,311) | (160,116) |
Landlord assets under construction-net of tenant allowances | (9,583) | (12,148) |
Accounts payable and accrued expenses | (54,354) | (14,778) |
Deferred revenue and customer deposits | 19,160 | 48,909 |
Other current liabilities | (556) | (30,057) |
Current and non-current operating lease liabilities | (21,543) | (19,379) |
Other non-current obligations | (8,538) | (6,944) |
Net cash provided by operating activities | 86,738 | 135,949 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (34,190) | (29,364) |
Equity method investments | (33,131) | (1,115) |
Net cash used in investing activities | (67,321) | (30,479) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayments under term loans | (6,250) | (5,000) |
Repayments under real estate loans | (6) | |
Repayments under promissory and equipment security notes | (1,160) | (10,910) |
Repayments of convertible senior notes | (2) | (13,048) |
Principal payments under finance lease agreements-net of tenant allowances | (3,877) | (3,559) |
Proceeds from termination of convertible senior note hedges | 231,796 | |
Payments for termination of common stock warrants | (390,934) | |
Proceeds from exercise of stock options | 456 | 149,570 |
Tax withholdings related to issuance of stock-based awards | (96) | (266) |
Net cash used in financing activities | (10,935) | (42,351) |
Effects of foreign currency exchange rate translation | (18) | (278) |
Net increase in cash and cash equivalents, restricted cash and restricted cash equivalents | 8,464 | 62,841 |
Cash and cash equivalents, restricted cash and restricted cash equivalents | ||
Beginning of period-cash and cash equivalents | 1,508,101 | 2,177,889 |
Beginning of period-restricted cash | 3,662 | |
Beginning of period-restricted cash equivalents (acquisition related escrow deposits) | 3,975 | |
Beginning of period-cash and cash equivalents, restricted cash and restricted cash equivalents | 1,511,763 | 2,181,864 |
End of period-cash and cash equivalents | 1,516,689 | 2,243,255 |
End of period-restricted cash | 3,538 | |
End of period-restricted cash equivalents (acquisition related escrow deposits) | 1,450 | |
End of period-cash and cash equivalents, restricted cash and restricted cash equivalents | 1,520,227 | 2,244,705 |
Non-cash transactions: | ||
Property and equipment additions in accounts payable and accrued expenses at period-end | 20,441 | 12,248 |
Landlord asset additions in accounts payable and accrued expenses at period-end | $ 2,564 | 16,823 |
Reclassification of assets from landlord assets under construction to finance lease right-of-use assets | 109,677 | |
Extinguishment of convertible senior notes related to repurchase obligation | (180,322) | |
Financing liability and embedded derivative arising from convertible senior notes repurchase | 325,363 | |
Shares issued on settlement of convertible senior notes | (14,705) | |
Shares received on exercise of call option under bond hedge upon settlement of convertible senior notes | $ 14,705 |
The Company
The Company | 3 Months Ended |
Apr. 29, 2023 | |
The Company | |
The Company | NOTE 1—THE COMPANY Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” “our” or the “Company”), is a leading retailer and luxury lifestyle brand operating primarily in the home furnishings market. Our curated and fully integrated assortments are presented consistently across our sales channels, including our retail locations, websites and Source Books. We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and baby, child and teen furnishings. As of April 29, 2023, we operated a total of 67 RH Galleries and 39 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. In September 2022, we opened our first RH Guesthouse in New York. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of April 29, 2023, and the results of operations for the three months ended April 29, 2023 and April 30, 2022. Our current fiscal year, which consists of 53 weeks, ends on February 3, 2024 (“fiscal 2023”). The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, as well as the financial information of variable interest entities (“VIEs”) where we represent the primary beneficiary and have the power to direct the activities that most significantly impact the entity’s performance. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. 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 our senior leadership team 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, 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, and intangible and other long-lived assets. Our current assessment of these estimates is included in our condensed consolidated financial statements as of and for the three months ended April 29, 2023. As additional information becomes available to us, our future assessment of these estimates, as well as other factors, could change and the results of any such change 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 January 28, 2023 (the “2022 Form 10-K”). The results of operations for the three months ended April 29, 2023, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year. Our business, like the businesses of retailers generally, is subject to uncertainty surrounding the financial impact of the factors as discussed in Business Conditions Business Conditions There are a number of macroeconomic factors and uncertainties affecting the overall business climate as well as our business, including increased inflation, rising interest and mortgage rates, and unpredictability in the global financial markets related to the foregoing as well as, among other things, the war in Ukraine and recent failures of several financial institutions. We experienced increased demand for our products during the pandemic and there have been significant shifts in consumer consumption patterns with the easing of the pandemic including increases in travel and services rather than spending on home furnishings. These and other macroeconomic factors may have a number of adverse effects on macroeconomic conditions and markets in which we operate, including the housing market, with the potential for an economic recession and a sustained downturn in the housing market. Factors such as a slowdown in the housing market or negative trends in stock market prices could have an adverse impact on demand for our products. We believe that these macroeconomic and other factors have contributed to the slowdown in demand that we have experienced in our business over the last several fiscal quarters. Our decisions regarding the sources and uses of capital will continue to reflect and adapt to changes in market conditions and our business, including further developments with respect to macroeconomic factors. For more information, refer to the section entitled “Risk Factors” in our 2022 Form 10-K. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Apr. 29, 2023 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS New Accounting Standards or Updates Adopted Disclosure of Supplier Finance Program Obligations In September 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-04 — Disclosure of Supplier Finance Program Obligations Supplier Finance Program We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank. We are not a party to the supplier agreements with the Bank, and the terms of our payment obligations to suppliers are not impacted by a supplier’s participation in the Financing Program. Our responsibility is limited to making payments to the Bank on the terms originally negotiated with our suppliers, which are typically either 30 days or 60 days. There are no assets pledged as security or other forms of guarantees provided under the Financing Program. The Financing Program is not indicative of a borrowing arrangement and the liabilities under the Financing Program are included in accounts payable and accrued expenses accounts payable and accrued expenses |
Prepaid Expense and Other Asset
Prepaid Expense and Other Assets | 3 Months Ended |
Apr. 29, 2023 | |
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: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Prepaid expenses $ 27,893 $ 24,352 Capitalized catalog costs 23,124 26,522 Vendor deposits 19,700 21,201 Federal and state tax receivable 13,203 12,322 Value added tax (VAT) receivable 6,264 7,465 Tenant allowance receivable 4,765 8,336 Right of return asset for merchandise 4,674 4,983 Promissory notes receivable, including interest (1) 4,533 2,991 Interest income receivable 2,737 4,878 Other current assets 22,190 26,247 Total prepaid expense and other current assets $ 129,083 $ 139,297 (1) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs (refer to Note 5— Variable Interest Entities ) . Other non-current assets consist of the following: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Landlord assets under construction—net of tenant allowances $ 61,069 $ 45,511 Initial direct costs prior to lease commencement 59,202 51,249 Capitalized cloud computing costs—net (1) 22,365 21,529 Vendor deposits—non-current 12,038 10,593 Other deposits 7,659 7,143 Deferred financing fees 3,276 3,528 Other non-current assets 10,065 9,654 Total other non-current assets $ 175,674 $ 149,207 (1) Presented net of accumulated amortization of $12 million and $11 million as of April 29, 2023 and January 28, 2023, respectively. |
Goodwill, Tradenames, Trademark
Goodwill, Tradenames, Trademarks and Other Intangible Assets | 3 Months Ended |
Apr. 29, 2023 | |
Goodwill, Tradenames, Trademarks and Other Intangible Assets | |
Goodwill, Tradenames, Trademarks and Other Intangible Assets | NOTE 4—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS The following sets forth the goodwill, tradenames, trademarks and other intangible assets activity for the RH Segment and Waterworks (refer to Note 17— Segment Reporting RH SEGMENT WATERWORKS TRADENAMES, TRADENAMES, TRADEMARKS AND TRADEMARKS AND OTHER INTANGIBLE OTHER INTANGIBLE GOODWILL ASSETS GOODWILL (1) ASSETS (2) (in thousands) January 28, 2023 $ 141,048 $ 57,633 $ — $ 17,000 Additions — 511 — — Foreign currency translation (22) — — — April 29, 2023 $ 141,026 $ 58,144 $ — $ 17,000 (1) Waterworks reporting unit goodwill of $51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) Presented net of an impairment charge of $35 million recognized in previous fiscal years. There are no |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Apr. 29, 2023 | |
Variable Interest Entities | |
Variable Interest Entities | NOTE 5—VARIABLE INTEREST ENTITIES Consolidated Variable Interest Entities and Noncontrolling Interests In fiscal 2022, we formed eight privately-held limited liability companies (each, a “Member LLC” and collectively, the “Member LLCs” or the “consolidated variable interest entities”) for real estate development activities related to our Gallery transformation and global expansion strategies. We hold a 50 percent membership interest in seven of the Member LLCs, and the remaining noncontrolling interest of 50 percent in each Member LLC is held by a third-party real estate development partner affiliated with the managing member of the Aspen LLCs (as defined in “Equity Method Investments” below). In one Member LLC we hold approximately 75 percent membership interest with the remaining noncontrolling interest of approximately 25 percent held in the same way by a real estate development partner affiliated with the managing member of the Aspen LLCs. The Member LLCs are qualitatively determined to be VIEs due to their having insufficient equity investment at risk to finance their activities without additional subordinated financial support. Upon the formation of each Member LLC we determined that the power to direct the most significant activities of each Member LLC is either controlled by us or shared between the members of the Member LLCs. In the instances where there is shared power among related parties as defined in the consolidation accounting guidance, we evaluated the related-party tiebreaker guidance and determined that we are most closely associated with each Member LLC. Accordingly, we are the primary beneficiary of the Member LLCs and we consolidate the results of operations, financial condition and cash flows of the Member LLCs in our consolidated financial statements. We measure the noncontrolling interests in the consolidated variable interest entities using the distribution provisions set out in the operating agreements of each Member LLC. As of April 29, 2023 and January 28, 2023, the noncontrolling interest holders had no claim to the net assets of each Member LLC . Accordingly, we did not recognize any noncontrolling interests as of 2023 and January 28, 2023. The carrying amounts and classification of the VIEs’ assets and liabilities included in the condensed consolidated balance sheets were as follows: APRIL 29, JANUARY 28, 2023 2023 (in thousands) ASSETS Cash and cash equivalents $ 6,657 $ 6,653 Restricted cash (1) 3,538 3,662 Prepaid expense and other current assets 3,927 3,670 Total current assets 14,122 13,985 Property and equipment—net (2) 206,172 187,093 Other non-current assets 214 122 Total assets $ 220,508 $ 201,200 LIABILITIES Accounts payable and accrued expenses $ 9,795 $ 6,685 Real estate loans (3) 17,905 17,909 Other non-current obligations 952 929 Total liabilities $ 28,652 $ 25,523 (1) Restricted cash deposits are held in escrow for one Member LLC and represent a portion of the proceeds from the issuance of the Promissory Note (defined below) that are required to be used for tenant allowances specified in a lease agreement between us and the Member LLC. (2) Includes $140 million and $125 million of construction in progress as of April 29, 2023 and January 28, 2023, respectively. (3) Real estate loans are secured by the assets of each respective Member LLC and the associated creditors do not have recourse against RH’s general assets. On August 3, 2022, a Member LLC as the borrower executed a Secured Promissory Note (the “Secured Promissory Note”) with a third-party in an aggregate principal amount equal to $2.0 million with a maturity date of August 1, 2032. The Secured Promissory Note bears interest at a fixed rate per annum equal to 6.00% . On September 9, 2022, a Member LLC as the borrower executed a Promissory Note (the “Promissory Note”) with a third-party bank in an aggregate principal amount equal to $16 million with a maturity date of September 9, 2032. The Promissory Note bears interest at a fixed rate per annum equal to 5.37% until September 15, 2027, on which date the interest rate will reset based on the five-year treasury rate plus 2.00% , subject to a total interest rate 3.00% floor. Equity Method Investments Equity method investments represent our membership interests in three privately-held limited liability companies in Aspen, Colorado (each, an “Aspen LLC” and collectively, the “Aspen LLCs” or the “equity method investments”) that were formed for the purpose of acquiring, developing, operating and selling certain real estate projects in Aspen, Colorado. We hold a 50 percent membership interest in two of the Aspen LLCs and a 70 percent membership interest in the third Aspen LLC. The Aspen LLCs are VIEs, however, we are not the primary beneficiary of these VIEs because we do not have the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance. Accordingly, we account for these investments using the equity method of accounting. We have previously made contractually required contributions to the Aspen LLCs in an aggregate amount of $105 million in prior periods. In February 2023, we elected to make equity contributions to two of the Aspen LLCs totaling $31 million whereby such funding was used to repay a portion of third-party debt secured by certain real estate assets held by the Aspen LLCs. In April 2023, we made an additional equity contribution to one Aspen LLC of $1.8 million whereby such funding was used in connection with the acquisition of additional real estate assets. Inclusive of the equity contributions made during the three months ended April 29, 2023, we have made in excess of $135 million in capital contributions to the Aspen LLCs. Our maximum exposure to loss with respect to these equity method investments is the carrying value of the equity method investments as of April 29, 2023. During the three months ended April 29, 2023 and April 30, 2022, we did not receive any distributions or have any undistributed earnings of equity method investments. |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Apr. 29, 2023 | |
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: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Accounts payable $ 156,531 $ 166,082 Accrued compensation 50,489 76,650 Accrued sales and use tax (1) 24,874 21,950 Accrued occupancy 24,290 28,830 Accrued freight and duty 13,881 17,497 Accrued legal reserves 8,430 8,921 Accrued professional fees 7,777 7,447 Accrued catalog costs (1) 1,595 1,546 Accrued interest 954 14,456 Other accrued expenses 32,922 31,570 Total accounts payable and accrued expenses $ 321,743 $ 374,949 (1) Prior year amounts have been adjusted to conform to the current period presentation. Reorganization As reported in the 2022 Form 10-K, we implemented a restructuring on March 24, 2023 that includes workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth. The workforce reduction associated with the initiative included the elimination of numerous leadership and other positions throughout the organization, which affected approximately 440 roles. The reorganization was completed during the first quarter of fiscal 2023. During the three months ended April 29, 2023, we incurred total charges relating to the reorganization of $7.6 million consisting primarily of severance costs and related taxes. As of April 29, 2023, we had accruals of $5.8 million included in accounts payable and accrued expenses Other current liabilities consist of the following: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Unredeemed gift card and merchandise credit liability $ 28,180 $ 26,733 Current portion of term loans 25,000 25,000 Allowance for sales returns 19,323 20,747 Finance lease liabilities 17,349 17,007 Foreign tax payable 4,425 4,365 Other current liabilities 7,583 9,338 Total other current liabilities $ 101,860 $ 103,190 Contract Liabilities We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue and customer deposits as of April 29, 2023 will be recognized within the next six months 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. During the three months ended April 29, 2023 and April 30, 2022, we recognized $6.1 million and $4.7 million, respectively, of revenue . We expect that approximately 70% of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers. |
Other Non-Current Obligations
Other Non-Current Obligations | 3 Months Ended |
Apr. 29, 2023 | |
Other Non-Current Obligations. | |
Other Non-Current Obligations | NOTE 7—OTHER NON-CURRENT OBLIGATIONS Other non-current obligations consist of the following: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Unrecognized tax benefits $ 2,992 $ 2,962 Other non-current obligations 5,173 5,112 Total other non-current obligations $ 8,165 $ 8,074 . |
Leases
Leases | 3 Months Ended |
Apr. 29, 2023 | |
Leases | |
Leases | NOTE 8—LEASES Lease costs—net consist of the following: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Operating lease cost (1) $ 26,300 $ 25,133 Finance lease costs Amortization of leased assets (1) 13,704 11,498 Interest on lease liabilities (2) 8,486 7,071 Variable lease costs (3) 6,168 9,087 Sublease income (4) (1,546) (1,128) Total lease costs—net $ 53,112 $ 51,661 (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 2022 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 $3.9 million and $6.7 million for the three months ended April 29, 2023 and April 30, 2022, respectively, and charges associated with common area maintenance of $2.3 million and $2.4 million for the three months ended April 29, 2023 and April 30, 2022, respectively. Other variable costs, which 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 in either period. (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: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 528,010 $ 527,246 Finance leases (1)(2)(3) Property and equipment—net 1,064,852 1,078,979 Total lease right-of-use assets $ 1,592,862 $ 1,606,225 Liabilities Current (4) Operating leases Operating lease liabilities $ 81,262 $ 80,384 Finance leases Other current liabilities 17,349 17,007 Total lease liabilities—current 98,611 97,391 Non-current Operating leases Non-current operating lease liabilities 504,479 505,809 Finance leases Non-current finance lease liabilities 648,792 653,050 Total lease liabilities—non-current 1,153,271 1,158,859 Total lease liabilities $ 1,251,882 $ 1,256,250 (1) Includes 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) Recorded net of accumulated amortization of $237 million and $224 million as of April 29, 2023 and January 28, 2023, respectively. (3) Includes $39 million as of both April 29, 2023 and January 28, 2023 related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs (refer to Note 5— Variable Interest Entities ). (4) 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 April 29, 2023: OPERATING FINANCE FISCAL YEAR LEASES LEASES TOTAL (in thousands) Remainder of fiscal 2023 $ 78,224 $ 37,283 $ 115,507 2024 98,711 49,941 148,652 2025 94,228 51,356 145,584 2026 89,951 52,124 142,075 2027 84,687 53,264 137,951 2028 55,407 52,484 107,891 Thereafter 197,403 910,714 1,108,117 Total lease payments (1)(2) 698,611 1,207,166 1,905,777 Less—imputed interest (3) (112,870) (541,025) (653,895) Present value of lease liabilities $ 585,741 $ 666,141 $ 1,251,882 (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 $663 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of April 29, 2023, of which $22 million, $37 million, $43 million, $43 million, $41 million and $38 million will be paid in the remainder of fiscal 2023, fiscal 2024, fiscal 2025, fiscal 2026, fiscal 2027 and fiscal 2028, respectively, and $439 million will be paid subsequent to fiscal 2028. (2) Excludes an immaterial amount of future commitments under short-term lease agreements. (3) Calculated using the discount rate for each lease at lease commencement. Supplemental information related to leases consists of the following: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 Weighted-average remaining lease term (years) Operating leases 8.2 8.9 Finance leases 21.7 21.1 Weighted-average discount rate Operating leases 4.19% 3.95% Finance leases 5.32% 5.06% Other information related to leases consists of the following: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (27,612) $ (25,199) Operating cash flows from finance leases (8,615) (7,071) Financing cash flows from finance leases (3,877) (3,559) Total cash outflows from leases $ (40,104) $ (35,829) Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash) Operating leases $ 20,861 $ 12,459 Finance leases — 38,252 |
Convertible Senior Notes
Convertible Senior Notes | 3 Months Ended |
Apr. 29, 2023 | |
CREDIT FACILITIES | |
Convertible Senior Notes | NOTE 9—CONVERTIBLE SENIOR NOTES In June 2018, we issued in a private offering $300 million principal amount of 0.00% convertible senior notes due 2023 and issued an additional $35 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering (collectively, the “2023 Notes”). In September 2019, we issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 (the “2024 Notes” and, together with the 2023 Notes, the “Convertible Senior Notes” or the “Notes”). The outstanding balances under the 2023 Notes and 2024 Notes were as follows: APRIL 29, JANUARY 28, 2023 2023 UNAMORTIZED UNAMORTIZED DEBT NET DEBT NET PRINCIPAL ISSUANCE CARRYING PRINCIPAL ISSUANCE CARRYING AMOUNT COST AMOUNT AMOUNT COST AMOUNT (in thousands) Convertible senior notes due 2023 (1) $ 1,694 $ — $ 1,694 $ 1,696 $ — $ 1,696 Convertible senior notes due 2024 (2) 41,904 (153) 41,751 41,904 (180) 41,724 Total convertible senior notes $ 43,598 $ (153) $ 43,445 $ 43,600 $ (180) $ 43,420 (1) As of both April 29, 2023 and January 28, 2023, the 2023 Notes outstanding were classified as convertible senior notes due 2023 within current liabilities . (2) As of both April 29, 2023 and January 28, 2023, the 2024 Notes outstanding were classified as convertible senior notes due 2024—net within non-current liabilities . 2023 Notes and 2024 Notes—Bond Hedge and Warrant Terminations and Notes Repurchase Bond Hedge and Warrant Terminations During the three months ended April 30, 2022, we entered into agreements with certain financial institutions (collectively, the “Counterparties”) to repurchase all of the warrants issued in connection with the 2023 Notes and 2024 Notes at an aggregate purchase price of $184 million and $203 million, respectively, subject to adjustment for a settlement feature based on pricing formulations linked to the trading price of our common stock over a volume weighted-average price measurement period of two other income—net During the three months ended April 30, 2022, we entered into agreements with the Counterparties to terminate all of the convertible note bond hedges issued in connection with the 2023 Notes and 2024 Notes to receive an aggregate closing price of $56 million and $180 million, respectively, subject to adjustment for a settlement feature based on pricing formulations linked to the trading price of our common stock over a three day volume weighted-average price measurement period. Upon entering into these agreements, the bond hedges were reclassified from stockholders’ equity to current assets on the condensed consolidated balance sheets, and accordingly, we recognized a corresponding loss on the fair value adjustment of the settlement feature of $4.3 million, which is classified within other income—net Notes Repurchase During the three months ended April 30, 2022, we entered into individual privately negotiated transactions with a limited number of sophisticated investors that were holders of the 2023 Notes and/or the 2024 Notes to repurchase in cash $45 million and $135 million in aggregate principal amount of the 2023 Notes and 2024 Notes, respectively (the “Notes Repurchase”). The Notes Repurchase provided for an estimated settlement cost of $325 million, subject to adjustment to the final settlement cost for an embedded feature based on pricing formulations linked to the trading price of our common stock over a five day volatility weighted-average price measurement period that ended on April 29, 2022. Upon execution of these agreements, we determined that we had modified the debt substantially and applied an extinguishment accounting model. Accordingly, we derecognized the aggregate principal amount of $180 million of the Convertible Senior Notes related to the extinguishment of such notes, and subsequently recognized a new financing liability with a fair value of $325 million. An embedded derivative related to the conversion feature was bifurcated from the new financing liability and separately recognized with an initial fair value of $278 million, with the remaining $47 million classified as debt and recognized at its amortized cost basis. Accordingly, we recognized a loss on extinguishment of debt of $146 million upon the execution of these agreements, inclusive of acceleration of amortization of debt issuance costs of $1.0 million. Upon the remeasurement of the amount owed to the holders in terms of the embedded feature, a total of $314 million was paid in cash to the holders, representing the combined carrying value of the debt liability of $47 million, as well as the fair value of the bifurcated embedded equity derivative upon settlement of $267 million. Accordingly, we recognized a gain on the fair value adjustment of the bifurcated embedded equity derivative of $11 million, which is classified within other income—net on the condensed consolidated statements of income. $350 million 0.00% Convertible Senior Notes due 2024 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 from the calendar quarter ended September 30, 2020 through the calendar quarter ended March 31, 2022. However, this condition was not met for the calendar quarter ended June 30, 2022 through the calendar quarter ended March 31, 2023, as a result, the 2024 Notes were not convertible as of March 31, 2023. 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. During the three months ended April 30, 2022, holders of $3.6 million in aggregate principal amount of the 2024 Notes elected to exercise the early conversion option and we elected to settle such conversions using combination settlement comprised of cash equal to the principal amount of the 2024 Notes converted and shares of our common stock for the remaining conversion value. During the three months ended April 30, 2022, we paid $3.6 million in cash and delivered 9,760 shares of common stock to settle the early conversion of these 2024 Notes. We also received 9,760 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2024 Notes. The remaining liability for the 2024 Notes is classified as a $335 million 0.00% Convertible Senior Notes due 2023 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 from the calendar quarter ended September 30, 2020 through the calendar quarter ended June 30, 2022 and, accordingly, holders were eligible to convert their 2023 Notes beginning in the calendar quarter ended December 31, 2020 and were eligible to convert their 2023 Notes through March 15, 2023. On and after March 15, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders were able to 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. During the three months ended April 30, 2022, holders of $9.4 million in aggregate principal amount of the 2023 Notes elected to exercise the early conversion option and we elected to settle such conversions using combination settlement comprised of cash equal to the principal amount of the 2023 Notes converted and shares of our common stock for the remaining conversion value. During the three months ended April 30, 2022, we paid $9.4 million in cash and delivered 27,213 shares of common stock to settle the early conversion of these 2023 Notes. We also received 27,208 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2023 Notes, and therefore, on a net basis issued 5 shares of our common stock in respect to such settlement of the converted 2023 Notes. The remaining liability for the 2023 Notes is classified as a current obligation on the condensed consolidated balance sheets since the settlement of the outstanding 2023 Notes is due on June 15, 2023. |
Credit Facilities
Credit Facilities | 3 Months Ended |
Apr. 29, 2023 | |
CREDIT FACILITIES | |
Credit Facilities | NOTE 10—CREDIT FACILITIES The outstanding balances under our credit facilities were as follows: APRIL 29, JANUARY 28, 2023 2023 UNAMORTIZED UNAMORTIZED DEBT NET DEBT NET INTEREST OUTSTANDING ISSUANCE CARRYING OUTSTANDING ISSUANCE CARRYING RATE (1) AMOUNT COSTS AMOUNT AMOUNT COSTS AMOUNT (dollars in thousands) Asset based credit facility (2) 6.33% $ — $ — $ — $ — $ — $ — Term loan B (3) 7.52% 1,970,000 (17,644) 1,952,356 1,975,000 (18,471) 1,956,529 Term loan B-2 (4) 8.33% 497,500 (23,409) 474,091 498,750 (24,505) 474,245 Equipment promissory notes (5) — — — — 1,160 — 1,160 Total credit facilities $ 2,467,500 $ (41,053) $ 2,426,447 $ 2,474,910 $ (42,976) $ 2,431,934 (1) Interest rates for the asset based credit facility and term loans represent the weighted-average interest rates as of April 29, 2023. (2) Deferred financing fees associated with the asset based credit facility as of April 29, 2023 and January 28, 2023 were $3.3 million and $3.5 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. (3) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $1,950 million and $20 million were included in term loan—net and other current liabilities on the condensed consolidated balance sheets, respectively, as of April 29, 2023. Outstanding amounts of $1,955 million and $20 million were included in term loan—net and other current liabilities , respectively, on the condensed consolidated balance sheets as of January 28, 2023. (4) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $493 million and $5.0 million were included in term loan B-2—net and other current liabilities , respectively, on the condensed consolidated balance sheets as of April 29, 2023. Outstanding amounts of $494 million and $5.0 million were included in term loan B-2—net and other current liabilities , respectively, on the condensed consolidated balance sheets as of January 28, 2023. (5) Represents total equipment security notes secured by certain of our property and equipment, which was included in other current liabilities on the condensed consolidated balance sheets as of January 28, 2023. The equipment security note was repaid in full as of April 29, 2023. Asset Based Credit Facility On August 3, 2011, Restoration Hardware, Inc. (“RHI”), a wholly-owned subsidiary of RH, along with its Canadian subsidiary, Restoration Hardware Canada, Inc., entered into the Ninth Amended and Restated Credit Agreement (as amended prior to June 28, 2017, the “Original Credit Agreement”) by and among RHI, Restoration Hardware Canada, Inc., certain other subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Agent”). On June 28, 2017, RHI entered into the Eleventh Amended and Restated Credit Agreement (as amended prior to July 29, 2021, the “11 th On July 29, 2021, RHI entered into the Twelfth Amended and Restated Credit Agreement (as amended, the “ABL Credit Agreement”) by and among RHI, Restoration Hardware Canada, Inc., certain other subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and the ABL Agent, which amended and restated the 11 th The availability of credit at any given time under the ABL Credit Agreement will be constrained by the terms and conditions of the ABL Credit Agreement, including the amount of collateral available, a borrowing base formula based upon numerous factors, including the value of eligible inventory and eligible accounts receivable, and other restrictions contained in the ABL Credit Agreement. All obligations under the ABL Credit Agreement are secured by substantial assets of the loan parties, including inventory, receivables and certain types of intellectual property. Borrowings under the revolving line of credit (other than swing line loans, which are subject to interest at the base rate) bear interest, at the borrower’s option, at either the base rate or LIBOR subject to a 0.00% LIBOR floor (or, in the case of the Canadian borrowings, the “BA Rate” or the “Canadian Prime Rate”, as such terms are defined in the ABL Credit Agreement, for the Canadian borrowings denominated in Canadian dollars, or the “U.S. Index Rate”, as such term is defined in the ABL Credit Agreement, or LIBOR for Canadian borrowings denominated in United States dollars) plus an applicable interest rate margin, in each case. The ABL Credit Agreement was amended in December 2022 to transition from LIBOR to the Secured Overnight Financing Rate (“SOFR”). The ABL Credit Agreement contains various restrictive and affirmative covenants, including required financial reporting, limitations on granting certain liens, limitations on making certain loans or investments, limitations on incurring additional debt, restricted payment limitations limiting the payment of dividends and certain other transactions and distributions, limitations on transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of a similar type and size. The ABL Credit Agreement does not contain any significant financial ratio covenants or coverage ratio covenants other than a consolidated fixed charge coverage ratio (“FCCR”) covenant based on the ratio of (i) consolidated EBITDA to the amount of (ii) debt service costs plus certain other amounts, including dividends and distributions and prepayments of debt as defined in the ABL Credit Agreement (the “FCCR Covenant”). The FCCR Covenant only applies in certain limited circumstances, including when the unused availability under the ABL Credit Agreement drops below the greater of (A) $40 million and (B) an amount based on 10% of the total borrowing availability at the time. The FCCR Covenant ratio is set at 1.0 and measured on a trailing twelve-month basis. As of April 29, 2023, RHI was in compliance with the FCCR Covenant. The ABL 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) when the unused availability under the ABL Credit Agreement drops below the greater of (A) $40 million and (B) an amount based on 10% of the total borrowing availability at the time. The ABL Credit Agreement contains customary representations and warranties, events of defaults and other customary terms and conditions for an asset based credit facility. The availability of the revolving line of credit at any given time under the ABL Credit Agreement is limited by the terms and conditions of the ABL Credit Agreement, including the amount of collateral available, a borrowing base formula based upon numerous factors, including the value of eligible inventory and eligible accounts receivable, and other restrictions contained in the ABL Credit Agreement. As a result, 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). As of April 29, 2023, the amount available for borrowing under the revolving line of credit under the ABL Credit Agreement was $478 million, net of $27 million in outstanding letters of credit. Term Loan Credit Agreement On October 20, 2021, RHI entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) by and among RHI as the borrower, the lenders party thereto and Bank of America, N.A. as administrative agent and collateral agent (in such capacities, the “Term Agent”) with respect to an initial term loan (the “Term Loan B”) in an aggregate principal amount equal to $2,000,000,000 with a maturity date of October 20, 2028. The Term Loan B bears interest at an annual rate based on LIBOR subject to a 0.50% LIBOR floor plus an interest rate margin of 2.50% (with a stepdown of the interest rate margin if RHI achieves a specified public corporate family rating). LIBOR is a floating interest rate that resets periodically during the life of the Term Loan B. At the date of borrowing, the interest rate was set at the LIBOR floor of 0.50% plus 2.50% and the Term Loan B was issued at a discount of 0.50% to face value. The Term Loan Credit Agreement contains customary provisions addressing future transition from LIBOR. On May 13, 2022, RHI entered into a 2022 Incremental Amendment (the “2022 Incremental Amendment”) with Bank of America, N.A., as administrative agent, amending the Term Loan Credit Agreement (the Term Loan Credit Agreement as amended by the 2022 Incremental Amendment, the “Amended Term Loan Credit Agreement”). Pursuant to the terms of the 2022 Incremental Amendment, RHI incurred incremental term loans (the “Term Loan B-2”) in an aggregate principal amount equal to $500 million with a maturity date of October 20, 2028. The Term Loan B-2 constitutes a separate class from the Term Loan B under the Term Loan Credit Agreement. The Term Loan B-2 bears interest at an annual rate based on the SOFR subject to a 0.50% SOFR floor plus an interest rate margin of 3.25% plus a credit spread adjustment of 0.10%. Other than the terms relating to the Term Loan B-2, the terms of the Amended Term Loan Credit Agreement remain substantially the same as the terms of the existing Term Loan Credit Agreement, including representations and warranties, covenants and events of default. All obligations under the Term Loan B are guaranteed by certain domestic subsidiaries of RHI. Further, RHI and such subsidiaries have granted a security interest in substantially all of their assets (subject to customary and other exceptions) to secure the Term Loan B. Substantially all of the collateral securing the Term Loan B also secures the loans and other credit extensions under the ABL Credit Agreement. On October 20, 2021, in connection with the Term Loan Credit Agreement, RHI and certain other subsidiaries of RH party to the Term Loan Credit Agreement and the ABL Credit Agreement, as the case may be, entered into an Intercreditor Agreement (the “Intercreditor Agreement”) with the Term Agent and the ABL Agent. The Intercreditor Agreement establishes 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 ABL Credit Agreement and the Term Loan Credit Agreement without the consent of the other parties. The borrowings under the Term Loan Credit Agreement may be prepaid in whole or in part at any time, subject to a prepayment premium of 1.0% in connection with any repricing transaction within the six months following the closing date of the Term Loan Credit Agreement. The Term Loan Credit Agreement contains various restrictive and affirmative covenants, including required financial reporting, limitations on granting certain liens, limitations on making certain loans or investments, limitations on incurring additional debt, restricted payment limitations limiting the payment of dividends and certain other transactions and distributions, limitations on transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of a similar type and size, but provides for unlimited exceptions in the case of incurring indebtedness, granting of liens and making investments, dividend payments, and payments of material junior indebtedness, subject to satisfying specified leverage ratio tests. The Term Loan Credit Agreement does not contain a financial maintenance covenant. The Term Loan Credit Agreement contains customary representations and warranties, events of defaults and other customary terms and conditions for a term loan credit agreement. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Apr. 29, 2023 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 11—FAIR VALUE MEASUREMENTS Fair Value Measurements—Recurring Amounts reported as cash and equivalents, restricted cash, 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 (Level 2). The estimated fair value of the real estate loans approximate their carrying values as they were recently issued. The estimated fair value and carrying value of the 2023 Notes, the 2024 Notes and the Term Loan Credit Agreement were as follows: APRIL 29, JANUARY 28, 2023 2023 PRINCIPAL PRINCIPAL FAIR CARRYING FAIR CARRYING VALUE VALUE (1) VALUE VALUE (1) (in thousands) Convertible senior notes due 2023 $ 1,676 $ 1,694 $ 1,622 $ 1,696 Convertible senior notes due 2024 37,528 41,904 37,351 41,904 Term loan B 1,895,751 1,970,000 1,961,056 1,975,000 Term loan B-2 495,369 497,500 500,215 498,750 (1) The principal carrying value of the 2023 Notes and 2024 Notes excludes the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third-party offering costs, as applicable. The principal carrying values of the Term Loan B and Term Loan B-2 represent the outstanding amount under each class and exclude discounts upon original issuance and third-party offering costs. The fair value of each of the 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 stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2). The fair values of the Term Loan B and Term Loan B-2 were derived from discounted cash flows using risk-adjusted rates (Level 2). Fair Value Measurements—Non-Recurring Upon settlement of our convertible senior notes, including the settlements in which holders of the 2023 Notes and 2024 Notes elected to exercise the early conversion option, we recognized a gain or loss on extinguishment of debt in the condensed consolidated statements of income, which represents the difference between the carrying value and fair value of the convertible senior notes immediately prior to the settlement date. The fair value of each of the 2023 Notes and 2024 Notes related to the settlement of the early conversions 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). |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 29, 2023 | |
Income Taxes | |
Income Taxes | NOTE 12—INCOME TAXES We recorded income tax expense of $17 million and an income tax benefit of $163 million in the three months ended April 29, 2023 and April 30, 2022, respectively. The effective tax rate was 28.4% and (438.3)% for the three months ended April 29, 2023 and April 30, 2022, respectively. The increase in the effective tax rate for the three months ended April 29, 2023 as compared to the three months ended April 30, 2022 is primarily attributable to significantly lower net excess tax benefits from stock-based compensation in fiscal 2023. As of April 29, 2023, we had $8.2 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 April 29, 2023, we had $5.5 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 | 3 Months Ended |
Apr. 29, 2023 | |
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 APRIL 29, APRIL 30, 2023 2022 Weighted-average shares—basic 22,047,029 22,608,537 Effect of dilutive stock-based awards 1,504,784 4,367,607 Effect of dilutive convertible senior notes (1) 206,975 831,938 Weighted-average shares—diluted 23,758,788 27,808,082 (1) The dilutive effect of the 2023 Notes and 2024 Notes is calculated under the if-converted method, which assumes share settlement of the entire convertible debt instrument. The warrants associated with the 2023 Notes and 2024 Notes had an impact on our dilutive share count beginning at stock prices of $309.84 per share and $338.24 per share, respectively. The warrants associated with the 2023 Notes and 2024 Notes were repurchased in April 2022 and, as a result, no warrant instruments were outstanding as of and after April 30, 2022. Accordingly, the warrants have no impact on our dilutive shares post-repurchase. Refer to Note 9— Convertible Senior Notes . The following number of options and restricted stock units, as well as shares issuable under convertible senior notes prior to extinguishment in fiscal 2022, were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 Options 1,109,768 1,086,549 Restricted stock units 16,694 19,552 Convertible senior notes — 719,164 |
Share Repurchase Program
Share Repurchase Program | 3 Months Ended |
Apr. 29, 2023 | |
Share Repurchase Program | |
Share Repurchase Program | NOTE 14—SHARE REPURCHASE PROGRAM In 2018, our Board of Directors authorized a share repurchase program. On June 2, 2022, the Board of Directors authorized an additional $2.0 billion for the purchase of shares of our outstanding common stock, increasing the total authorized size of the share repurchase program to $2,450 million (the “Share Repurchase Program”). As of April 29, 2023, $1,450 million remains available for future share repurchases under this program. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Apr. 29, 2023 | |
Stock-Based Compensation. | |
Stock-Based Compensation | NOTE 15—STOCK-BASED COMPENSATION We recorded stock-based compensation expense of $10 million and $13 million during the three months ended April 29, 2023 and April 30, 2022, respectively, which is included in selling, general and administrative expenses 2023 Stock Incentive Plan The RH 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”) was approved by stockholders on April 4, 2023. The 2023 Stock Incentive Plan provides for the grant of incentive stock options to our employees and the grant of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants. The maximum number of shares that may be issued pursuant to all awards under the 2023 Stock Incentive Plan is (i) 3,000,000, plus (ii) any shares of our common stock covered by any outstanding award (or portion of any such award) that has been granted under the 2012 Stock Incentive Plan (as defined below) if such award (or a portion of such award) is forfeited, is canceled or expires (whether voluntarily or involuntarily) without the issuance of shares of our common stock or if the shares underlying such award (or a portion of such award) that are surrendered or withheld in payment of the award’s exercise or purchase price or in satisfaction of tax withholding obligations with respect to an award would be deemed not to have been issued for purposes of determining the maximum number of shares of our common stock that may be issued under the 2023 Stock Incentive Plan had such award been an award granted under the 2023 Stock Incentive Plan. The 2023 Stock Incentive Plan has a ten year term. Awards under the 2023 Stock Incentive Plan reduce the number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under the 2023 Stock Incentive Plan increase the number of shares available for future issuance. Shares issued as a result of award exercises under the 2023 Stock Incentive Plan will be funded with the issuance of new shares. We did not make any grants under the 2023 Stock Incentive Plan during the three months ended April 29, 2023. 2012 Stock Incentive Plan and 2012 Stock Option Plan As of April 29, 2023, 3,393,460 options granted under the Restoration Hardware 2012 Stock Incentive Plan (the “2012 Stock Incentive Plan”) and the Restoration Hardware 2012 Stock Option Plan were outstanding with a weighted-average exercise price of $179.73 per share and 3,216,721 options were vested with a weighted-average exercise price of $175.73 per share. The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of April 29, 2023 was $401 million, $390 million and $343 million, respectively. Stock options exercisable as of April 29, 2023 had a weighted-average remaining contractual life of 4.95 years. As of April 29, 2023, the total unrecognized compensation expense related to unvested options was $78 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 3.97 years. In addition, as of April 29, 2023, the total unrecognized compensation expense related to the fully vested option grant made to Mr. Friedman in October 2020 was $11 million, which will be recognized on an accelerated basis through May 2025 (refer to Chairman and Chief Executive Officer Option Grant As of April 29, 2023, we had 19,670 restricted stock units outstanding with a weighted-average grant date fair value of $444.30 per share. During the three months ended April 29, 2023, 1,250 restricted stock units vested with a weighted-average grant date fair value of $437.82 per share. As of April 29, 2023, there was $6.6 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 4.30 years. 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 will result in aggregate non-cash stock compensation expense of $174 million, of which $3.5 million and $5.9 million was recognized during the three months ended April 29, 2023 and April 30, 2022 (which is included in the stock-based compensation expense recorded during the three months ended April 29, 2023 and April 30, 2022 noted above). |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 29, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | NOTE 16—COMMITMENTS AND CONTINGENCIES Commitments We had no material off-balance sheet commitments as of April 29, 2023. Contingencies We are subject to contingencies, including in connection with lawsuits, claims, investigations and other legal proceedings incident to the ordinary course of our business. These disputes are increasing in number as we expand our business and provide new product and service offerings, such as restaurants and hospitality, and as we enter new markets and legal jurisdictions and face increased complexity related to compliance and regulatory requirements. In addition, we are subject to governmental and regulatory examinations, information requests, and investigations from time to time at the state and federal levels. Certain legal proceedings that we currently face involve various class-action allegations regarding employment practices, including under state wage-and-hour laws. We have faced similar litigation in the past. Due to the inherent difficulty of predicting the course of legal actions related to these class-action allegations, such as the eventual scope, duration or outcome, we may be unable to estimate the amount or range of any potential loss that could result from an unfavorable outcome arising from such matters. Our assessment of these legal proceedings, as well as other lawsuits, could change from future determinations or the discovery of facts that are not presently known. We continue to defend such cases and our estimates may evolve over time. Accordingly, the ultimate costs to resolve these cases may be substantially higher or lower than our estimates. With respect to such contingencies, we review the need for any loss contingency reserves and establish reserves when, in the opinion of our senior leadership team, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Loss contingencies determined to be probable and estimable are recorded in accounts payable and accrued expenses Accounts Payable, Accrued Expenses and Other Current Liabilities Although we are self-insured or maintain deductibles in the United States for workers’ compensation, general liability and product liability up to predetermined amounts, above which third-party insurance applies, depending on the facts and circumstances of the underlying claims, coverage under our insurance policies may not be available. Even if we believe coverage does apply under our insurance programs, our insurance carriers may dispute coverage based on the underlying facts and circumstances. As a result, the outcome of any 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 our senior leadership team’s time, result in the diversion of significant operational resources, and require changes to our business operations, policies and practices. Legal costs related to such claims are expensed as incurred. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Apr. 29, 2023 | |
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 (“CODM”), which we have determined is our Chief Executive Officer. We have three operating segments: RH Segment, Waterworks and Real Estate. The RH Segment and Waterworks operating segments (the “retail operating segments”) include all sales channels accessed by our customers, including sales through retail locations and outlets, including hospitality, websites, Source Books, and the Trade and Contract channels. The Real Estate segment represents operations associated with our equity method investments and certain of our consolidated variable interest entities that are non-wholly owned subsidiaries and have operations that are not directly related to RH’s operations (refer to Note 5— Variable Interest Entities The retail operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared senior leadership 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. Segment Information We use operating income to evaluate segment profitability for the retail operating segments and to allocate resources. Operating income is defined as net income before interest expense—net, loss on extinguishment of debt, other income—net, income tax expense (benefit) and our share of equity method investments loss. Segment operating income excludes (i) severance costs associated with a reorganization, (ii) non-cash compensation amortization related to an option grant made to Mr. Friedman in October 2020, (iii) employer payroll tax expense related to an option exercise by Mr. Friedman, (iv) professional fee related to the 2023 Notes and 2024 Notes transactions (refer to Note 9— Convertible Senior Notes The following table presents segment operating income and income before income taxes and equity method investments: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Operating income: RH Segment $ 103,721 $ 228,545 Waterworks 6,671 7,985 Total segment operating income 110,392 236,530 Reorganization related costs (7,621) — Non-cash compensation (3,531) (5,858) Employer payroll taxes on option exercise — (11,717) Professional fee — (7,184) Asset impairments — (5,923) Recall accrual — (560) Income from operations 99,240 205,288 Interest expense—net 39,816 20,855 Loss on extinguishment of debt — 146,116 Other income—net (653) (343) Income before income taxes and equity method investments $ 60,077 $ 38,660 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 THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 RH SEGMENT WATERWORKS TOTAL RH SEGMENT WATERWORKS TOTAL (in thousands) Net revenues $ 690,516 $ 48,646 $ 739,162 $ 908,948 $ 48,344 $ 957,292 Gross profit 321,584 25,961 347,545 472,822 25,761 498,583 Depreciation and amortization 26,425 1,345 27,770 23,524 1,234 24,758 In the three months ended April 29, 2023 and April 30, 2022, the Real Estate segment share of equity method investments loss were $1.6 million and $1.4 million, respectively. Our share of income from equity method investments for the Waterworks segment were immaterial for both fiscal periods presented. The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting APRIL 29, JANUARY 28, 2023 2023 RH SEGMENT WATERWORKS REAL ESTATE TOTAL RH SEGMENT WATERWORKS REAL ESTATE TOTAL (in thousands) Goodwill (1) $ 141,026 $ — $ — $ 141,026 $ 141,048 $ — $ — $ 141,048 Tradenames, trademarks and other intangible assets (2) 58,144 17,000 — 75,144 57,633 17,000 — 74,633 Equity method investments — 715 132,282 132,997 — 623 100,845 101,468 Total assets 4,924,726 225,551 169,553 5,319,830 4,953,610 217,228 138,451 5,309,289 (1) The Waterworks reporting unit goodwill of $51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $35 million recognized in previous fiscal years. 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 our hospitality operations. Net revenues in each category were as follows: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Furniture $ 496,391 $ 662,520 Non-furniture 242,771 294,772 Total net revenues $ 739,162 $ 957,292 We are domiciled in the United States and primarily operate our retail locations and outlets in the United States. As of April 29, 2023, we operated 4 retail locations and 2 outlets in Canada, and 1 retail location in the U.K. Geographic revenues in Canada and the U.K. are based upon revenues recognized at the retail locations in the respective country and were not material in any fiscal period presented. No single customer accounted for 10% or more of our consolidated net revenues in the three months ended April 29, 2023 or April 30, 2022. |
The Company (Policies)
The Company (Policies) | 3 Months Ended |
Apr. 29, 2023 | |
The Company | |
Nature of Business | Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” “our” or the “Company”), is a leading retailer and luxury lifestyle brand operating primarily in the home furnishings market. Our curated and fully integrated assortments are presented consistently across our sales channels, including our retail locations, websites and Source Books. We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and baby, child and teen furnishings. As of April 29, 2023, we operated a total of 67 RH Galleries and 39 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. In September 2022, we opened our first RH Guesthouse in New York. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of April 29, 2023, and the results of operations for the three months ended April 29, 2023 and April 30, 2022. Our current fiscal year, which consists of 53 weeks, ends on February 3, 2024 (“fiscal 2023”). The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, as well as the financial information of variable interest entities (“VIEs”) where we represent the primary beneficiary and have the power to direct the activities that most significantly impact the entity’s performance. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. 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 our senior leadership team 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, 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, and intangible and other long-lived assets. Our current assessment of these estimates is included in our condensed consolidated financial statements as of and for the three months ended April 29, 2023. As additional information becomes available to us, our future assessment of these estimates, as well as other factors, could change and the results of any such change 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 January 28, 2023 (the “2022 Form 10-K”). The results of operations for the three months ended April 29, 2023, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year. Our business, like the businesses of retailers generally, is subject to uncertainty surrounding the financial impact of the factors as discussed in Business Conditions |
Recently Issued Accounting Standards | New Accounting Standards or Updates Adopted Disclosure of Supplier Finance Program Obligations In September 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-04 — Disclosure of Supplier Finance Program Obligations Supplier Finance Program We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank. We are not a party to the supplier agreements with the Bank, and the terms of our payment obligations to suppliers are not impacted by a supplier’s participation in the Financing Program. Our responsibility is limited to making payments to the Bank on the terms originally negotiated with our suppliers, which are typically either 30 days or 60 days. There are no assets pledged as security or other forms of guarantees provided under the Financing Program. The Financing Program is not indicative of a borrowing arrangement and the liabilities under the Financing Program are included in accounts payable and accrued expenses accounts payable and accrued expenses |
Prepaid Expense and Other Ass_2
Prepaid Expense and Other Assets (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Prepaid Expense and Other Assets | |
Prepaid Expense and Other Current Assets | Prepaid expense and other current assets consist of the following: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Prepaid expenses $ 27,893 $ 24,352 Capitalized catalog costs 23,124 26,522 Vendor deposits 19,700 21,201 Federal and state tax receivable 13,203 12,322 Value added tax (VAT) receivable 6,264 7,465 Tenant allowance receivable 4,765 8,336 Right of return asset for merchandise 4,674 4,983 Promissory notes receivable, including interest (1) 4,533 2,991 Interest income receivable 2,737 4,878 Other current assets 22,190 26,247 Total prepaid expense and other current assets $ 129,083 $ 139,297 (1) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs (refer to Note 5— Variable Interest Entities ) . |
Schedule of Other Non-Current Assets | Other non-current assets consist of the following: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Landlord assets under construction—net of tenant allowances $ 61,069 $ 45,511 Initial direct costs prior to lease commencement 59,202 51,249 Capitalized cloud computing costs—net (1) 22,365 21,529 Vendor deposits—non-current 12,038 10,593 Other deposits 7,659 7,143 Deferred financing fees 3,276 3,528 Other non-current assets 10,065 9,654 Total other non-current assets $ 175,674 $ 149,207 (1) Presented net of accumulated amortization of $12 million and $11 million as of April 29, 2023 and January 28, 2023, respectively. |
Goodwill, Tradenames, Tradema_2
Goodwill, Tradenames, Trademarks and Other Intangible Assets (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Goodwill, Tradenames, Trademarks and Other Intangible Assets | |
Goodwill, Tradenames, Trademarks and Other Intangible Assets | The following sets forth the goodwill, tradenames, trademarks and other intangible assets activity for the RH Segment and Waterworks (refer to Note 17— Segment Reporting RH SEGMENT WATERWORKS TRADENAMES, TRADENAMES, TRADEMARKS AND TRADEMARKS AND OTHER INTANGIBLE OTHER INTANGIBLE GOODWILL ASSETS GOODWILL (1) ASSETS (2) (in thousands) January 28, 2023 $ 141,048 $ 57,633 $ — $ 17,000 Additions — 511 — — Foreign currency translation (22) — — — April 29, 2023 $ 141,026 $ 58,144 $ — $ 17,000 (1) Waterworks reporting unit goodwill of $51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) Presented net of an impairment charge of $35 million recognized in previous fiscal years. |
Variable Interest Entities (Tab
Variable Interest Entities (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Variable Interest Entities | |
Schedule of Variable Interest Entities | APRIL 29, JANUARY 28, 2023 2023 (in thousands) ASSETS Cash and cash equivalents $ 6,657 $ 6,653 Restricted cash (1) 3,538 3,662 Prepaid expense and other current assets 3,927 3,670 Total current assets 14,122 13,985 Property and equipment—net (2) 206,172 187,093 Other non-current assets 214 122 Total assets $ 220,508 $ 201,200 LIABILITIES Accounts payable and accrued expenses $ 9,795 $ 6,685 Real estate loans (3) 17,905 17,909 Other non-current obligations 952 929 Total liabilities $ 28,652 $ 25,523 (1) Restricted cash deposits are held in escrow for one Member LLC and represent a portion of the proceeds from the issuance of the Promissory Note (defined below) that are required to be used for tenant allowances specified in a lease agreement between us and the Member LLC. (2) Includes $140 million and $125 million of construction in progress as of April 29, 2023 and January 28, 2023, respectively. (3) Real estate loans are secured by the assets of each respective Member LLC and the associated creditors do not have recourse against RH’s general assets. |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable and Accrued Expenses | APRIL 29, JANUARY 28, 2023 2023 (in thousands) Accounts payable $ 156,531 $ 166,082 Accrued compensation 50,489 76,650 Accrued sales and use tax (1) 24,874 21,950 Accrued occupancy 24,290 28,830 Accrued freight and duty 13,881 17,497 Accrued legal reserves 8,430 8,921 Accrued professional fees 7,777 7,447 Accrued catalog costs (1) 1,595 1,546 Accrued interest 954 14,456 Other accrued expenses 32,922 31,570 Total accounts payable and accrued expenses $ 321,743 $ 374,949 (1) Prior year amounts have been adjusted to conform to the current period presentation. |
Schedule of Other Current Liabilities | APRIL 29, JANUARY 28, 2023 2023 (in thousands) Unredeemed gift card and merchandise credit liability $ 28,180 $ 26,733 Current portion of term loans 25,000 25,000 Allowance for sales returns 19,323 20,747 Finance lease liabilities 17,349 17,007 Foreign tax payable 4,425 4,365 Other current liabilities 7,583 9,338 Total other current liabilities $ 101,860 $ 103,190 |
Other Non-Current Obligations (
Other Non-Current Obligations (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Other Non-Current Obligations. | |
Schedule of Other Non-Current Obligations | Other non-current obligations consist of the following: APRIL 29, JANUARY 28, 2023 2023 (in thousands) Unrecognized tax benefits $ 2,992 $ 2,962 Other non-current obligations 5,173 5,112 Total other non-current obligations $ 8,165 $ 8,074 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Leases | |
Summary of Lease Costs-Net | Lease costs—net consist of the following: THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Operating lease cost (1) $ 26,300 $ 25,133 Finance lease costs Amortization of leased assets (1) 13,704 11,498 Interest on lease liabilities (2) 8,486 7,071 Variable lease costs (3) 6,168 9,087 Sublease income (4) (1,546) (1,128) Total lease costs—net $ 53,112 $ 51,661 (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 2022 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 $3.9 million and $6.7 million for the three months ended April 29, 2023 and April 30, 2022, respectively, and charges associated with common area maintenance of $2.3 million and $2.4 million for the three months ended April 29, 2023 and April 30, 2022, respectively. Other variable costs, which 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 in either period. (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 | APRIL 29, JANUARY 28, 2023 2023 (in thousands) Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 528,010 $ 527,246 Finance leases (1)(2)(3) Property and equipment—net 1,064,852 1,078,979 Total lease right-of-use assets $ 1,592,862 $ 1,606,225 Liabilities Current (4) Operating leases Operating lease liabilities $ 81,262 $ 80,384 Finance leases Other current liabilities 17,349 17,007 Total lease liabilities—current 98,611 97,391 Non-current Operating leases Non-current operating lease liabilities 504,479 505,809 Finance leases Non-current finance lease liabilities 648,792 653,050 Total lease liabilities—non-current 1,153,271 1,158,859 Total lease liabilities $ 1,251,882 $ 1,256,250 (1) Includes 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) Recorded net of accumulated amortization of $237 million and $224 million as of April 29, 2023 and January 28, 2023, respectively. (3) Includes $39 million as of both April 29, 2023 and January 28, 2023 related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs (refer to Note 5— Variable Interest Entities ). (4) 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 April 29, 2023: OPERATING FINANCE FISCAL YEAR LEASES LEASES TOTAL (in thousands) Remainder of fiscal 2023 $ 78,224 $ 37,283 $ 115,507 2024 98,711 49,941 148,652 2025 94,228 51,356 145,584 2026 89,951 52,124 142,075 2027 84,687 53,264 137,951 2028 55,407 52,484 107,891 Thereafter 197,403 910,714 1,108,117 Total lease payments (1)(2) 698,611 1,207,166 1,905,777 Less—imputed interest (3) (112,870) (541,025) (653,895) Present value of lease liabilities $ 585,741 $ 666,141 $ 1,251,882 (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 $663 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of April 29, 2023, of which $22 million, $37 million, $43 million, $43 million, $41 million and $38 million will be paid in the remainder of fiscal 2023, fiscal 2024, fiscal 2025, fiscal 2026, fiscal 2027 and fiscal 2028, respectively, and $439 million will be paid subsequent to fiscal 2028. (2) Excludes an immaterial amount of future commitments under short-term lease agreements. (3) Calculated using the discount rate for each lease at lease commencement. |
Summary of Supplemental Information Related to Leases | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 Weighted-average remaining lease term (years) Operating leases 8.2 8.9 Finance leases 21.7 21.1 Weighted-average discount rate Operating leases 4.19% 3.95% Finance leases 5.32% 5.06% |
Summary of Other Information Related to Leases | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (27,612) $ (25,199) Operating cash flows from finance leases (8,615) (7,071) Financing cash flows from finance leases (3,877) (3,559) Total cash outflows from leases $ (40,104) $ (35,829) Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash) Operating leases $ 20,861 $ 12,459 Finance leases — 38,252 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
CREDIT FACILITIES | |
Outstanding balances under our 2023 Notes and 2024 Notes | APRIL 29, JANUARY 28, 2023 2023 UNAMORTIZED UNAMORTIZED DEBT NET DEBT NET PRINCIPAL ISSUANCE CARRYING PRINCIPAL ISSUANCE CARRYING AMOUNT COST AMOUNT AMOUNT COST AMOUNT (in thousands) Convertible senior notes due 2023 (1) $ 1,694 $ — $ 1,694 $ 1,696 $ — $ 1,696 Convertible senior notes due 2024 (2) 41,904 (153) 41,751 41,904 (180) 41,724 Total convertible senior notes $ 43,598 $ (153) $ 43,445 $ 43,600 $ (180) $ 43,420 (1) As of both April 29, 2023 and January 28, 2023, the 2023 Notes outstanding were classified as convertible senior notes due 2023 within current liabilities . (2) As of both April 29, 2023 and January 28, 2023, the 2024 Notes outstanding were classified as convertible senior notes due 2024—net within non-current liabilities . |
Credit Facilities (Tables)
Credit Facilities (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
CREDIT FACILITIES | |
Schedule of Outstanding Balances Under our Credit Facilities | The outstanding balances under our credit facilities were as follows: APRIL 29, JANUARY 28, 2023 2023 UNAMORTIZED UNAMORTIZED DEBT NET DEBT NET INTEREST OUTSTANDING ISSUANCE CARRYING OUTSTANDING ISSUANCE CARRYING RATE (1) AMOUNT COSTS AMOUNT AMOUNT COSTS AMOUNT (dollars in thousands) Asset based credit facility (2) 6.33% $ — $ — $ — $ — $ — $ — Term loan B (3) 7.52% 1,970,000 (17,644) 1,952,356 1,975,000 (18,471) 1,956,529 Term loan B-2 (4) 8.33% 497,500 (23,409) 474,091 498,750 (24,505) 474,245 Equipment promissory notes (5) — — — — 1,160 — 1,160 Total credit facilities $ 2,467,500 $ (41,053) $ 2,426,447 $ 2,474,910 $ (42,976) $ 2,431,934 (1) Interest rates for the asset based credit facility and term loans represent the weighted-average interest rates as of April 29, 2023. (2) Deferred financing fees associated with the asset based credit facility as of April 29, 2023 and January 28, 2023 were $3.3 million and $3.5 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. (3) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $1,950 million and $20 million were included in term loan—net and other current liabilities on the condensed consolidated balance sheets, respectively, as of April 29, 2023. Outstanding amounts of $1,955 million and $20 million were included in term loan—net and other current liabilities , respectively, on the condensed consolidated balance sheets as of January 28, 2023. (4) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $493 million and $5.0 million were included in term loan B-2—net and other current liabilities , respectively, on the condensed consolidated balance sheets as of April 29, 2023. Outstanding amounts of $494 million and $5.0 million were included in term loan B-2—net and other current liabilities , respectively, on the condensed consolidated balance sheets as of January 28, 2023. (5) Represents total equipment security notes secured by certain of our property and equipment, which was included in other current liabilities on the condensed consolidated balance sheets as of January 28, 2023. The equipment security note was repaid in full as of April 29, 2023. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Fair Value Measurements | |
Estimated Fair Value and Carrying Value of Notes and Term Loan Credit Agreement | APRIL 29, JANUARY 28, 2023 2023 PRINCIPAL PRINCIPAL FAIR CARRYING FAIR CARRYING VALUE VALUE (1) VALUE VALUE (1) (in thousands) Convertible senior notes due 2023 $ 1,676 $ 1,694 $ 1,622 $ 1,696 Convertible senior notes due 2024 37,528 41,904 37,351 41,904 Term loan B 1,895,751 1,970,000 1,961,056 1,975,000 Term loan B-2 495,369 497,500 500,215 498,750 (1) The principal carrying value of the 2023 Notes and 2024 Notes excludes the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third-party offering costs, as applicable. The principal carrying values of the Term Loan B and Term Loan B-2 represent the outstanding amount under each class and exclude discounts upon original issuance and third-party offering costs. |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Net Income Per Share | |
Schedule of weighted-average shares used for net income per share | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 Weighted-average shares—basic 22,047,029 22,608,537 Effect of dilutive stock-based awards 1,504,784 4,367,607 Effect of dilutive convertible senior notes (1) 206,975 831,938 Weighted-average shares—diluted 23,758,788 27,808,082 (1) The dilutive effect of the 2023 Notes and 2024 Notes is calculated under the if-converted method, which assumes share settlement of the entire convertible debt instrument. The warrants associated with the 2023 Notes and 2024 Notes had an impact on our dilutive share count beginning at stock prices of $309.84 per share and $338.24 per share, respectively. The warrants associated with the 2023 Notes and 2024 Notes were repurchased in April 2022 and, as a result, no warrant instruments were outstanding as of and after April 30, 2022. Accordingly, the warrants have no impact on our dilutive shares post-repurchase. Refer to Note 9— Convertible Senior Notes . |
Anti-Dilutive Securities Excluded from Diluted Net Income per Share | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 Options 1,109,768 1,086,549 Restricted stock units 16,694 19,552 Convertible senior notes — 719,164 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Segment Reporting | |
Schedule of Segment Operating Income and Income Before Income Taxes and Equity Method Investments | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Operating income: RH Segment $ 103,721 $ 228,545 Waterworks 6,671 7,985 Total segment operating income 110,392 236,530 Reorganization related costs (7,621) — Non-cash compensation (3,531) (5,858) Employer payroll taxes on option exercise — (11,717) Professional fee — (7,184) Asset impairments — (5,923) Recall accrual — (560) Income from operations 99,240 205,288 Interest expense—net 39,816 20,855 Loss on extinguishment of debt — 146,116 Other income—net (653) (343) Income before income taxes and equity method investments $ 60,077 $ 38,660 |
Summary of Statements of Income Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 RH SEGMENT WATERWORKS TOTAL RH SEGMENT WATERWORKS TOTAL (in thousands) Net revenues $ 690,516 $ 48,646 $ 739,162 $ 908,948 $ 48,344 $ 957,292 Gross profit 321,584 25,961 347,545 472,822 25,761 498,583 Depreciation and amortization 26,425 1,345 27,770 23,524 1,234 24,758 |
Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting | APRIL 29, JANUARY 28, 2023 2023 RH SEGMENT WATERWORKS REAL ESTATE TOTAL RH SEGMENT WATERWORKS REAL ESTATE TOTAL (in thousands) Goodwill (1) $ 141,026 $ — $ — $ 141,026 $ 141,048 $ — $ — $ 141,048 Tradenames, trademarks and other intangible assets (2) 58,144 17,000 — 75,144 57,633 17,000 — 74,633 Equity method investments — 715 132,282 132,997 — 623 100,845 101,468 Total assets 4,924,726 225,551 169,553 5,319,830 4,953,610 217,228 138,451 5,309,289 (1) The Waterworks reporting unit goodwill of $51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $35 million recognized in previous fiscal years. |
Summary of net revenues | THREE MONTHS ENDED APRIL 29, APRIL 30, 2023 2022 (in thousands) Furniture $ 496,391 $ 662,520 Non-furniture 242,771 294,772 Total net revenues $ 739,162 $ 957,292 |
The Company (Detail)
The Company (Detail) | Apr. 29, 2023 state item store |
The Company | |
Number of galleries | 67 |
Number of RH outlet stores | store | 39 |
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 |
Recently Issued Accounting St_2
Recently Issued Accounting Standards - Additional Information - (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Recently Issued Accounting Standards | ||
Assets pledged as security | $ 0 | |
Liabilities under financing program | $ 24,000 | $ 26,000 |
Prepaid Expense and Other Ass_3
Prepaid Expense and Other Assets - Prepaid Expense and Other Current Assets (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Prepaid Expense and Other Assets | ||
Prepaid expenses | $ 27,893 | $ 24,352 |
Capitalized catalog costs | 23,124 | 26,522 |
Vendor deposits | 19,700 | 21,201 |
Federal and state tax receivable | 13,203 | 12,322 |
Value added tax (VAT) receivable | 6,264 | 7,465 |
Tenant allowance receivable | 4,765 | 8,336 |
Right of return asset for merchandise | 4,674 | 4,983 |
Promissory notes receivable, including interest | 4,533 | 2,991 |
Interest income receivable | 2,737 | 4,878 |
Other current assets | 22,190 | 26,247 |
Total prepaid expense and other current assets | $ 129,083 | $ 139,297 |
Prepaid Expense and Other Ass_4
Prepaid Expense and Other Assets - Other Non-Current Assets (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 29, 2023 | Jan. 28, 2023 | |
Other Assets Noncurrent [Abstract] | ||
Landlord assets under construction-net of tenant allowances | $ 61,069 | $ 45,511 |
Initial direct costs prior to lease commencement | 59,202 | 51,249 |
Capitalized cloud computing costs-net | 22,365 | 21,529 |
Vendor deposits-non-current | 12,038 | 10,593 |
Other deposits | 7,659 | 7,143 |
Deferred financing fees | 3,276 | 3,528 |
Other non-current assets | 10,065 | 9,654 |
Total other non-current assets | 175,674 | 149,207 |
Accumulated amortization | $ 12,000 | $ 11,000 |
Goodwill, Tradenames, Tradema_3
Goodwill, Tradenames, Trademarks and Other Intangible Assets - Goodwill, Tradenames, Trademarks and Domain Names Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 29, 2023 | Jan. 28, 2017 | |
Goodwill Activity | ||
Goodwill, Beginning balance | $ 141,048 | |
Goodwill, Ending balance | 141,026 | |
Tradenames, trademarks and domain names Activity | ||
Indefinite-lived intangible assets, Beginning balance | 74,633 | |
Indefinite-lived intangible assets, Ending balance | 75,144 | |
RH Segment | ||
Goodwill Activity | ||
Goodwill, Beginning balance | 141,048 | |
Goodwill, Foreign currency translation | (22) | |
Goodwill, Ending balance | 141,026 | |
Tradenames, trademarks and domain names Activity | ||
Indefinite-lived intangible assets, Beginning balance | 57,633 | |
Indefinite-lived intangible assets, Ending balance | 58,144 | |
RH Segment | Tradenames, trademarks and other intangible assets | ||
Tradenames, trademarks and domain names Activity | ||
Indefinite-lived intangible assets, Beginning balance | 57,633 | |
Indefinite-lived intangible assets, Additions | 511 | |
Indefinite-lived intangible assets, Ending balance | 58,144 | |
Waterworks | ||
Goodwill Activity | ||
Goodwill impairment charge | 51,000 | $ 51,000 |
Tradenames, trademarks and domain names Activity | ||
Indefinite-lived intangible assets, Beginning balance | 17,000 | |
Tradename impairment | 35,000 | |
Indefinite-lived intangible assets, Ending balance | 17,000 | |
Impairment of intangible assets indefinite lived | 35,000 | |
Waterworks | Tradenames, trademarks and other intangible assets | ||
Tradenames, trademarks and domain names Activity | ||
Indefinite-lived intangible assets, Beginning balance | 17,000 | |
Indefinite-lived intangible assets, Ending balance | $ 17,000 |
Variable Interest Entities - Co
Variable Interest Entities - Consolidated Variable Interest Entities and Noncontrolling Interests (Detail) $ in Millions | 12 Months Ended | ||
Sep. 09, 2022 USD ($) | Jan. 28, 2023 item | Aug. 03, 2022 USD ($) | |
Seven Member LLC | |||
Variable Interest Entity [Line Items] | |||
Remaining noncontrolling interest | 50% | ||
Aspen LLCs | |||
Variable Interest Entity [Line Items] | |||
Remaining noncontrolling interest | 25% | ||
Aspen LLCs | |||
Variable Interest Entity [Line Items] | |||
Number of privately held limited companies | 3 | ||
Ownership percentage | 50% | ||
One Member LLC | |||
Variable Interest Entity [Line Items] | |||
Number of real estate development limited liability companies | 1 | ||
Ownership percentage | 75% | ||
Seven Member LLC | |||
Variable Interest Entity [Line Items] | |||
Number of real estate development limited liability companies | 7 | ||
Ownership percentage | 50% | ||
Promissory Note | One Member LLC | |||
Variable Interest Entity [Line Items] | |||
Principal amount | $ | $ 16 | ||
Fixed rate | 5.37% | ||
Interest rate added to the five-year treasury rate | 2% | ||
Interest rate, floor | 3% | ||
Member LLCs | |||
Variable Interest Entity [Line Items] | |||
Number of privately held limited companies | 8 | ||
One Member LLC | Secured Promissory Note | |||
Variable Interest Entity [Line Items] | |||
Principal amount | $ | $ 2 | ||
Fixed rate | 6% |
Variable Interest Entities - Cl
Variable Interest Entities - Classification of VIEs Assets and Liabilities (Details) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 | Jan. 29, 2022 |
ASSETS | ||||
Cash and cash equivalents | $ 1,516,689 | $ 1,508,101 | $ 2,243,255 | $ 2,177,889 |
Restricted cash | 3,538 | 3,662 | ||
Prepaid expense and other current assets | 129,083 | 139,297 | ||
Total current assets | 2,475,844 | 2,512,664 | ||
Property and equipment-net | 1,640,596 | 1,635,984 | ||
Other non-current assets | 175,674 | 149,207 | ||
Total assets | 5,319,830 | 5,309,289 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Accounts payable and accrued expenses | 321,743 | 374,949 | ||
Real estate loans | 17,905 | 17,909 | ||
Other non-current obligations | 8,165 | 8,074 | ||
Total liabilities | 4,480,444 | 4,524,628 | ||
Member LLC | ||||
ASSETS | ||||
Cash and cash equivalents | 6,657 | 6,653 | ||
Restricted cash | 3,538 | 3,662 | ||
Prepaid expense and other current assets | 3,927 | 3,670 | ||
Total current assets | 14,122 | 13,985 | ||
Property and equipment-net | 206,172 | 187,093 | ||
Other non-current assets | 214 | 122 | ||
Total assets | 220,508 | 201,200 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Accounts payable and accrued expenses | 9,795 | 6,685 | ||
Real estate loans | 17,905 | 17,909 | ||
Other non-current obligations | 952 | 929 | ||
Total liabilities | 28,652 | 25,523 | ||
Construction in Progress | Member LLC | ||||
ASSETS | ||||
Property and equipment-net | $ 140,000 | $ 125,000 |
Variable Interest Entities - Eq
Variable Interest Entities - Equity Method Investments (Detail) | 1 Months Ended | 3 Months Ended | ||||
Apr. 30, 2023 USD ($) | Feb. 28, 2023 USD ($) | Apr. 29, 2023 USD ($) | Apr. 30, 2022 USD ($) | Jan. 30, 2021 USD ($) | Jan. 28, 2023 item | |
Variable Interest Entity [Line Items] | ||||||
Share of equity method investments loss | $ 1,602,000 | $ 1,375,000 | ||||
Capital contributions | 33,131,000 | 1,115,000 | ||||
Aspen LLCs | ||||||
Variable Interest Entity [Line Items] | ||||||
Joint venture, percentage of ownership | 50% | |||||
Number of privately held limited companies | item | 3 | |||||
Minimum capital contributions required | $ 105,000,000 | |||||
Capital contributions | $ 1,800,000 | $ 31,000,000 | $ 135,000,000 | |||
Distributions received or undistributed earnings of equity method investments | $ 0 | $ 0 | ||||
Third Aspen LLC | ||||||
Variable Interest Entity [Line Items] | ||||||
Joint venture, percentage of ownership | 70% |
Accounts Payable, Accrued Exp_3
Accounts Payable, Accrued Expenses and Other Current Liabilities - Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Accounts payable | $ 156,531 | $ 166,082 |
Accrued compensation | 50,489 | 76,650 |
Accrued sales and use tax | 24,874 | 21,950 |
Accrued occupancy | 24,290 | 28,830 |
Accrued freight and duty | 13,881 | 17,497 |
Accrued legal reserves | 8,430 | 8,921 |
Accrued professional fees | 7,777 | 7,447 |
Accrued catalog costs | 1,595 | 1,546 |
Accrued interest | 954 | 14,456 |
Other accrued expenses | 32,922 | 31,570 |
Total accounts payable and accrued expenses | $ 321,743 | $ 374,949 |
Accounts Payable, Accrued Exp_4
Accounts Payable, Accrued Expenses and Other Current Liabilities - Reorganization Related Costs (Detail) $ in Millions | 3 Months Ended |
Apr. 29, 2023 USD ($) item | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Number of roles | item | 440 |
Restructuring charges | $ 7.6 |
Restructuring reserve | $ 5.8 |
Accounts Payable, Accrued Exp_5
Accounts Payable, Accrued Expenses and Other Current Liabilities - Other Current Liabilities (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Unredeemed gift card and merchandise credit liability | $ 28,180 | $ 26,733 |
Current portion of term loans | 25,000 | 25,000 |
Allowance for sales returns | 19,323 | 20,747 |
Finance lease liabilities | 17,349 | 17,007 |
Foreign tax payable | 4,425 | 4,365 |
Other current liabilities | 7,583 | 9,338 |
Total other current liabilities | $ 101,860 | $ 103,190 |
Accounts Payable, Accrued Exp_6
Accounts Payable, Accrued Expenses and Other Current Liabilities - Contract Liabilities (Detail) - Gift Card and Merchandise Credit [Member] - USD ($) $ in Millions | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Contract Liabilities | ||
Revenue related to previous deferrals related to gift cards | $ 6.1 | $ 4.7 |
Percentage of remaining revenue recognized on gift card | 70% |
Other Non-Current Obligations_2
Other Non-Current Obligations (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Other Non-Current Obligations. | ||
Unrecognized tax benefits | $ 2,992 | $ 2,962 |
Other non-current obligations | 5,173 | 5,112 |
Total other non-current obligations | $ 8,165 | $ 8,074 |
Leases - Lease Costs-Net (Detai
Leases - Lease Costs-Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Lease costs-net: | ||
Operating lease cost | $ 26,300 | $ 25,133 |
Finance lease costs | ||
Amortization of leased assets | 13,704 | 11,498 |
Interest on lease liabilities | 8,486 | 7,071 |
Variable lease costs | 6,168 | 9,087 |
Sublease income | (1,546) | (1,128) |
Total lease cost-net | 53,112 | 51,661 |
Variable lease payments | 3,900 | 6,700 |
Common area maintenance | $ 2,300 | $ 2,400 |
Leases - Lease Right-of-Use Ass
Leases - Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating leases | $ 528,010 | $ 527,246 |
Balance Sheet Classification, Operating lease right-of-use assets | Operating leases | Operating leases |
Finance leases | $ 1,064,852 | $ 1,078,979 |
Balance Sheet Classification, Property and equipment-net | Property and equipment-net | Property and equipment-net |
Total lease right-of-use assets | $ 1,592,862 | $ 1,606,225 |
Liabilities, Current | ||
Operating leases, current | $ 81,262 | $ 80,384 |
Balance Sheet Classification, Operating lease liabilities | Operating leases, current | Operating leases, current |
Finance leases, current | $ 17,349 | $ 17,007 |
Balance Sheet Classification, Other current liabilities | Other current liabilities | Other current liabilities |
Total lease liabilities-current | $ 98,611 | $ 97,391 |
Liabilities, Non-current | ||
Operating leases, noncurrent | $ 504,479 | $ 505,809 |
Balance Sheet Classification, Non-current operating lease liabilities | Operating leases, noncurrent | Operating leases, noncurrent |
Finance leases, noncurrent | $ 648,792 | $ 653,050 |
Balance Sheet Classification, Non-current finance lease liabilities | Finance leases, noncurrent | Finance leases, noncurrent |
Total lease liabilities-non-current | $ 1,153,271 | $ 1,158,859 |
Total lease liabilities | 1,251,882 | 1,256,250 |
Rent payments made to landlords for which the respective Galleries are not yet opened | 39,000 | 39,000 |
Finance lease right-of-use assets, accumulated amortization | $ 237,000 | $ 224,000 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Jan. 28, 2023 | |
Leases | ||
Remainder of 2023 | $ 22,000 | |
2024 | 37,000 | |
2025 | 43,000 | |
2026 | 43,000 | |
2027 | 41,000 | |
2028 | 38,000 | |
Thereafter | 439,000 | |
Maturities of lease liabilities, Operating Leases | ||
Remainder of fiscal 2023 | 78,224 | |
2024 | 98,711 | |
2025 | 94,228 | |
2026 | 89,951 | |
2027 | 84,687 | |
2028 | 55,407 | |
Thereafter | 197,403 | |
Total lease payments | 698,611 | |
Less-imputed interest | (112,870) | |
Present value of lease liabilities | 585,741 | |
Maturities of lease liabilities, Finance Leases | ||
Remainder of fiscal 2023 | 37,283 | |
2024 | 49,941 | |
2025 | 51,356 | |
2026 | 52,124 | |
2027 | 53,264 | |
2028 | 52,484 | |
Thereafter | 910,714 | |
Total lease payments | 1,207,166 | |
Less-imputed interest | (541,025) | |
Present value of lease liabilities | 666,141 | |
Total maturities of lease liabilities | ||
Remainder of fiscal 2023 | 115,507 | |
2024 | 148,652 | |
2025 | 145,584 | |
2026 | 142,075 | |
2027 | 137,951 | |
2028 | 107,891 | |
Thereafter | 1,108,117 | |
Total lease payments | 1,905,777 | |
Less-imputed interest | (653,895) | |
Present value of lease liabilities | 1,251,882 | $ 1,256,250 |
Legally binding payments for leases signed but not yet commenced | $ 663,000 | |
Short-term lease agreements, commitments | true |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Detail) | Apr. 29, 2023 | Apr. 30, 2022 |
Weighted-average remaining lease term (years) | ||
Operating leases, years | 8 years 2 months 12 days | 8 years 10 months 24 days |
Finance leases, years | 21 years 8 months 12 days | 21 years 1 month 6 days |
Weighted-average discount rate | ||
Operating leases, percent | 4.19% | 3.95% |
Finance leases, percent | 5.32% | 5.06% |
Leases - Other Information Rela
Leases - Other Information Related to Leases (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from operating leases | $ (27,612) | $ (25,199) |
Operating cash flows from finance leases | (8,615) | (7,071) |
Financing cash flows from finance leases | (3,877) | (3,559) |
Total cash outflows from leases | (40,104) | (35,829) |
Lease right-of-use assets obtained in exchange for lease obligations-net of lease terminations (non-cash) | ||
Operating leases | $ 20,861 | 12,459 |
Finance leases | $ 38,252 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Detail) - USD ($) $ in Millions | Jul. 30, 2022 | Apr. 30, 2022 | Jan. 29, 2022 | Sep. 30, 2019 | Jun. 30, 2018 |
2023 Notes | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 9.4 | ||||
Private Offering | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 300 | ||||
Private Offering | 2024 Notes | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 350 | $ 350 | |||
Debt instrument, interest rate | 0% | ||||
Private Offering | 2023 Notes | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 335 | ||||
Debt instrument, interest rate | 0% | ||||
Overallotment option | 2023 Notes | |||||
Debt Instrument | |||||
Debt outstanding | $ 35 |
Convertible Senior Notes - Outs
Convertible Senior Notes - Outstanding Balances under 2023 Notes and 2024 Notes (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Debt Instrument | ||
Principal amount | $ 2,467,500 | $ 2,474,910 |
Convertible senior notes | ||
Debt Instrument | ||
Principal amount | 43,598 | 43,600 |
Unamortized Debt Issuance Cost | (153) | (180) |
Net Carrying Amount | 43,445 | 43,420 |
2023 Notes | Convertible senior notes | ||
Debt Instrument | ||
Principal amount | 1,694 | 1,696 |
Net Carrying Amount | 1,694 | 1,696 |
2024 Notes | Convertible senior notes | ||
Debt Instrument | ||
Principal amount | 41,904 | 41,904 |
Unamortized Debt Issuance Cost | (153) | (180) |
Net Carrying Amount | $ 41,751 | $ 41,724 |
Convertible Senior Notes - Bond
Convertible Senior Notes - Bond Hedge and Warrant Terminations and Notes Repurchases (Detail) - USD ($) | 3 Months Ended | ||
Apr. 30, 2022 | Apr. 29, 2023 | Jan. 28, 2023 | |
Debt Instrument | |||
Estimated settlement cost | $ 325,363,000 | ||
Loss on extinguishment of debt | 146,116,000 | ||
Outstanding Amount | $ 2,467,500,000 | $ 2,474,910,000 | |
Convertible note bond hedges | |||
Debt Instrument | |||
Aggregate amount received (paid) in cash to terminate warrants or bond hedges | $ 232,000,000 | ||
2023 and 2024 Notes | Convertible note bond hedges | |||
Debt Instrument | |||
Trading days used to determine the conversion value | 3 days | ||
2023 and 2024 Notes | Convertible note bond hedges | Other expense-net | |||
Debt Instrument | |||
Loss on extinguishment of debt | $ 4,300,000 | ||
2023 Notes | Convertible note bond hedges | |||
Debt Instrument | |||
Aggregate closing price received | 56,000,000 | ||
2024 Notes | Convertible note bond hedges | |||
Debt Instrument | |||
Aggregate closing price received | $ 180,000,000 | ||
Private Offering | Notes Repurchase | |||
Debt Instrument | |||
Trading days used to determine the conversion value | 5 days | ||
Aggregate notes repurchased and derecognized | $ 180,000,000 | ||
Financing liability, fair value | 278,000,000 | ||
Loss on extinguishment of debt | 146,000,000 | ||
Outstanding Amount | 47,000,000 | ||
Amortization of debt issuance costs | 1,000,000 | ||
Cash paid to holders | 314,000,000 | ||
Fair value of the bifurcated embedded equity derivative | 267,000,000 | ||
Private Offering | Notes Repurchase | Other expense-net | |||
Debt Instrument | |||
Gain on the fair value adjustment of the bifurcated embedded equity derivative | 11,000,000 | ||
Private Offering | 2023 Notes | Notes Repurchase | |||
Debt Instrument | |||
Aggregate notes repurchased and derecognized | 45,000,000 | ||
Private Offering | 2024 Notes | Notes Repurchase | |||
Debt Instrument | |||
Aggregate notes repurchased and derecognized | 135,000,000 | ||
Private Offering | Financing liability | Notes Repurchase | |||
Debt Instrument | |||
Estimated settlement cost | 325,000,000 | ||
Warrants | |||
Debt Instrument | |||
Aggregate amount received (paid) in cash to terminate warrants or bond hedges | (391,000,000) | ||
Warrants | 2023 and 2024 Notes | Other expense-net | |||
Debt Instrument | |||
Net loss on the fair value adjustment of the warrants | 4,200,000 | ||
Warrants | 2023 Notes | |||
Debt Instrument | |||
Aggregate purchase price | 184,000,000 | ||
Warrants | 2024 Notes | |||
Debt Instrument | |||
Aggregate purchase price | $ 203,000,000 | ||
Warrants | Common Stock | Maximum | |||
Debt Instrument | |||
Trading days used to determine the conversion value | 3 days | ||
Warrants | Common Stock | Minimum | |||
Debt Instrument | |||
Trading days used to determine the conversion value | 2 days |
Convertible Senior Notes - Note
Convertible Senior Notes - Notes Due 2024 (Detail) | 1 Months Ended | 3 Months Ended | ||||
Sep. 30, 2019 USD ($) | Sep. 30, 2019 USD ($) | Apr. 29, 2023 USD ($) | Apr. 30, 2022 USD ($) shares | Jul. 30, 2022 USD ($) | Jun. 30, 2018 USD ($) | |
Debt Instrument | ||||||
Debt amount settled in cash | $ 2,000 | $ 13,048,000 | ||||
Loss on extinguishment of debt | (146,116,000) | |||||
Private Offering | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 300,000,000 | |||||
2024 Notes | ||||||
Debt Instrument | ||||||
Debt instrument, conversion principal amount | $ 1,000 | $ 1,000 | ||||
Debt amount settled in cash | $ 3,600,000 | |||||
Shares issued upon conversion | shares | 9,760 | |||||
Debt instrument, convertible earliest date | Jun. 15, 2024 | Jun. 15, 2024 | ||||
Shares acquired from notes settlement | shares | 9,760 | |||||
2024 Notes | Private Offering | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | |||
Debt instrument, interest rate | 0% | 0% | ||||
2024 Notes | Circumstances (1) | ||||||
Debt Instrument | ||||||
Debt instrument, convertible trading days | 20 | |||||
Debt instrument, convertible consecutive trading days | 30 | |||||
Debt instrument, convertible percentage of stock price | 130% | |||||
2024 Notes | Circumstances (2) | ||||||
Debt Instrument | ||||||
Debt instrument, convertible trading days | 5 | |||||
Debt instrument, convertible consecutive trading days | 10 | |||||
Debt instrument, convertible percentage of stock price | 98% | |||||
Debt instrument, conversion principal amount | $ 1,000 | $ 1,000 |
Convertible Senior Notes - No_2
Convertible Senior Notes - Notes Due 2023 (Detail) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 USD ($) | Apr. 29, 2023 USD ($) | Apr. 30, 2022 USD ($) shares | Jan. 28, 2023 USD ($) | Jan. 29, 2022 USD ($) | |
Debt Instrument | |||||
Debt amount settled in cash | $ 2,000 | $ 13,048,000 | |||
Loss on extinguishment of debt | (146,116,000) | ||||
Private Offering | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 300,000,000 | ||||
2023 Notes | |||||
Debt Instrument | |||||
Debt amount settled in cash | 9,400,000 | ||||
Debt instrument, principal amount | $ 9,400,000 | ||||
Debt instrument, convertible earliest date | Mar. 15, 2023 | Mar. 15, 2023 | |||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | ||||
Aggregate principal amount, current | $ 1,694,000 | $ 1,696,000 | |||
2023 Notes | Common Stock | |||||
Debt Instrument | |||||
Shares issued upon conversion | shares | 27,213 | ||||
2023 Notes | Convertible note bond hedges | Common Stock | |||||
Debt Instrument | |||||
Shares issued upon conversion | shares | 5 | ||||
Shares acquired from notes settlement | shares | 27,208 | ||||
2023 Notes | Private Offering | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 335,000,000 | ||||
Debt instrument, interest rate | 0% | ||||
2023 Notes | Overallotment option | |||||
Debt Instrument | |||||
Debt outstanding | $ 35,000,000 | ||||
2023 Notes | Circumstances (1) | |||||
Debt Instrument | |||||
Debt instrument, convertible trading days | 20 | ||||
Debt instrument, convertible consecutive trading days | 30 | ||||
Debt instrument, convertible percentage of stock price | 130% | ||||
2023 Notes | Circumstances (2) | |||||
Debt Instrument | |||||
Debt instrument, convertible trading days | 5 | ||||
Debt instrument, convertible consecutive trading days | 10 | ||||
Debt instrument, convertible percentage of stock price | 98% | ||||
Debt instrument, conversion principal amount | $ 1,000 |
Credit Facilities - Outstanding
Credit Facilities - Outstanding Balances (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Jan. 28, 2023 | |
Line of Credit Facility | ||
Outstanding Amount | $ 2,467,500 | $ 2,474,910 |
Unamortized Debt Issuance Costs | (41,053) | (42,976) |
Net Carrying Amount | 2,426,447 | 2,431,934 |
Other current liabilities | Secured Debt [Member] | ||
Line of Credit Facility | ||
Outstanding Amount | 20,000 | |
Term loan-net | Secured Debt [Member] | ||
Line of Credit Facility | ||
Outstanding Amount | $ 1,950,000 | |
RHI | Asset Based Credit Facility [Member] | ||
Line of Credit Facility | ||
Interest Rate | 6.33% | |
RHI | Term loan B | ||
Line of Credit Facility | ||
Interest Rate | 7.52% | |
Outstanding Amount | $ 1,970,000 | 1,975,000 |
Unamortized Debt Issuance Costs | (17,644) | (18,471) |
Net Carrying Amount | 1,952,356 | 1,956,529 |
RHI | Term loan B-2 | ||
Line of Credit Facility | ||
Outstanding Amount | 497,500 | 498,750 |
Unamortized Debt Issuance Costs | (23,409) | (24,505) |
Net Carrying Amount | $ 474,091 | 474,245 |
RHI | Term loan B-2 | Credit facilities | ||
Line of Credit Facility | ||
Interest Rate | 8.33% | |
RHI | Equipment promissory notes | ||
Line of Credit Facility | ||
Outstanding Amount | 1,160 | |
Net Carrying Amount | 1,160 | |
RHI, Canadian subsidiary and other subsidiaries | Other non-current assets | Revolving line of credit | ||
Line of Credit Facility | ||
Deferred financing fees | $ 3,300 | |
RHI, Canadian subsidiary and other subsidiaries | Other non-current assets | Asset Based Credit Facility [Member] | ||
Line of Credit Facility | ||
Deferred financing fees | 3,500 | |
RHI, Canadian subsidiary and other subsidiaries | Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Debt outstanding | 1,955,000 | |
RHI, Canadian subsidiary and other subsidiaries | Term loan B-2 | Term loan B-2 | ||
Line of Credit Facility | ||
Net Carrying Amount | 493,000 | 494,000 |
RHI, Canadian subsidiary and other subsidiaries | Other current liabilities | Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Debt outstanding | 20,000 | |
RHI, Canadian subsidiary and other subsidiaries | Other current liabilities | Term loan B-2 | Secured Debt [Member] | ||
Line of Credit Facility | ||
Debt outstanding | $ 5,000 | $ 5,000 |
Credit Facilities - Outstandi_2
Credit Facilities - Outstanding Balances Footnotes (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Line of Credit Facility | ||
Net carrying amount | $ 2,426,447 | $ 2,431,934 |
RHI | Term loan B | ||
Line of Credit Facility | ||
Net carrying amount | 1,952,356 | 1,956,529 |
RHI | Term loan B-2 | ||
Line of Credit Facility | ||
Net carrying amount | 474,091 | 474,245 |
RHI | Equipment promissory notes | ||
Line of Credit Facility | ||
Net carrying amount | 1,160 | |
RHI, Canadian subsidiary and other subsidiaries | Other non-current assets | Revolving line of credit | ||
Line of Credit Facility | ||
Deferred financing fees | 3,300 | |
RHI, Canadian subsidiary and other subsidiaries | Other non-current assets | Asset Based Credit Facility [Member] | ||
Line of Credit Facility | ||
Deferred financing fees | 3,500 | |
RHI, Canadian subsidiary and other subsidiaries | Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Debt outstanding | 1,955,000 | |
RHI, Canadian subsidiary and other subsidiaries | Term loan B-2 | Term loan B-2 | ||
Line of Credit Facility | ||
Net carrying amount | 493,000 | 494,000 |
RHI, Canadian subsidiary and other subsidiaries | Other current liabilities | Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Debt outstanding | 20,000 | |
RHI, Canadian subsidiary and other subsidiaries | Other current liabilities | Term loan B-2 | Secured Debt [Member] | ||
Line of Credit Facility | ||
Debt outstanding | $ 5,000 | $ 5,000 |
Credit Facilities - Asset Based
Credit Facilities - Asset Based Credit Facility (Detail) $ in Millions | 3 Months Ended | |
Jul. 29, 2021 USD ($) | Apr. 29, 2023 USD ($) | |
Line of Credit Facility | ||
Debt Instrument, Covenant Description | The ABL Credit Agreement does not contain any significant financial ratio covenants or coverage ratio covenants other than a consolidated fixed charge coverage ratio (“FCCR”) covenant based on the ratio of (i) consolidated EBITDA to the amount of (ii) debt service costs plus certain other amounts, including dividends and distributions and prepayments of debt as defined in the ABL Credit Agreement (the “FCCR Covenant”). The FCCR Covenant only applies in certain limited circumstances, including when the unused availability under the ABL Credit Agreement drops below the greater of (A) $40 million and (B) an amount based on 10% of the total borrowing availability at the time. The FCCR Covenant ratio is set at 1.0 and measured on a trailing twelve-month basis. | |
Debt Instrument, Covenant Compliance | As of April 29, 2023, RHI was in compliance with the FCCR Covenant. | |
ABL Credit Agreement | RHI, Canadian subsidiary and other subsidiaries | ||
Line of Credit Facility | ||
FCCR Covenant, threshold amount | $ 40 | |
FCCR Covenant, threshold amount (percentage) | 10% | |
FCCR Covenant ratio | 1 | |
Revolving line of credit | ABL Credit Agreement | RHI, Canadian subsidiary and other subsidiaries | ||
Line of Credit Facility | ||
Line of credit facility, maximum borrowing capacity | $ 600 | |
Line of credit facility, accordion feature | 300 | |
Amount available for borrowing | $ 478 | |
Revolving line of credit | ABL Credit Agreement | RHI, Canadian subsidiary and other subsidiaries | LIBOR | ||
Line of Credit Facility | ||
Debt instrument, interest rate | 0% | |
Revolving line of credit | ABL Credit Agreement | RHI, Canadian subsidiary and other subsidiaries | Maximum | ||
Line of Credit Facility | ||
Line of credit facility, maximum borrowing capacity including accordion feature | 900 | |
Revolving line of credit | ABL Credit Agreement | RHI, Canadian subsidiary and other subsidiaries | Minimum | ||
Line of Credit Facility | ||
Line of credit facility, maximum borrowing capacity | 600 | |
Revolving line of credit | ABL Credit Agreement | Restoration Hardware Canada, Inc. | ||
Line of Credit Facility | ||
Line of credit facility, maximum borrowing capacity | $ 10 | |
Letter of credit | ||
Line of Credit Facility | ||
Line of Credit, outstanding amount | $ 27 |
Credit Facilities - Term Loan C
Credit Facilities - Term Loan Credit Agreement (Detail) - RHI - USD ($) | May 13, 2022 | Oct. 20, 2021 |
SOFR | 2022 Incremental Amendment | ||
Line of Credit Facility | ||
Credit spread adjustment | 0.10% | |
Debt instrument, basis spread on variable rate | 3.25% | |
Floor interest rate | 0.50% | |
Secured Promissory Note | ||
Line of Credit Facility | ||
Principal amount | $ 2,000,000,000 | |
Debt instrument, basis spread on variable rate | 2.50% | |
Percentage of discount on face value | 0.50% | |
Percentage of prepayment premium | 1% | |
Secured Promissory Note | 2022 Incremental Amendment | ||
Line of Credit Facility | ||
Principal amount | $ 500,000,000 | |
Secured Promissory Note | LIBOR | ||
Line of Credit Facility | ||
Debt instrument, basis spread on variable rate | 2.50% | |
Floor interest rate | 0.50% |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value and Carrying Value of Notes and Term Loan Credit Agreement (Detail) - Recurring - Level 2 - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
2023 Notes | Fair Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | $ 1,676 | $ 1,622 |
2023 Notes | Principal Carrying Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | 1,694 | 1,696 |
2024 Notes | Fair Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | 37,528 | 37,351 |
2024 Notes | Principal Carrying Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | 41,904 | 41,904 |
Term loan B | Fair Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 1,895,751 | 1,961,056 |
Term loan B | Principal Carrying Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 1,970,000 | 1,975,000 |
Term loan B-2 | Fair Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 495,369 | 500,215 |
Term loan B-2 | Principal Carrying Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | $ 497,500 | $ 498,750 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Income Taxes | ||
Income tax expense (benefit) | $ 16,585 | $ (163,426) |
Effective income tax rate | 28.40% | (438.30%) |
Unrecognized tax benefits | $ 8,200 | |
Tax expense and the effective tax rate, if recognized | 7,600 | |
Exposures related to unrecognized tax benefits | $ 5,500 | |
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 | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Net Income Per Share | ||
Weighted-average shares-basic | 22,047,029 | 22,608,537 |
Effect of dilutive stock-based awards | 1,504,784 | 4,367,607 |
Effect of dilutive convertible senior notes | 206,975 | 831,938 |
Weighted-average shares-diluted | 23,758,788 | 27,808,082 |
Net Income Per Share - Schedu_2
Net Income Per Share - Schedule of Weighted-Average Shares Used for Net Income per Share Footnotes (Detail) - USD ($) $ / shares in Units, $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 |
Earnings Per Share Diluted | |||
Outstanding Amount | $ 2,467,500 | $ 2,474,910 | |
2023 and 2024 Notes | Warrants | |||
Earnings Per Share Diluted | |||
Warrant instruments outstanding | 0 | ||
2023 Notes | Warrants | |||
Earnings Per Share Diluted | |||
Conversion price per share | $ 309.84 | ||
2024 Notes | Warrants | |||
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 | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Anti-dilutive securities excluded from diluted net income per share | 1,109,768 | 1,086,549 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Anti-dilutive securities excluded from diluted net income per share | 16,694 | 19,552 |
Convertible senior notes | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Anti-dilutive securities excluded from diluted net income per share | 719,164 |
Share Repurchase Program (Detai
Share Repurchase Program (Detail) - USD ($) $ in Millions | Apr. 29, 2023 | Jan. 28, 2023 | Jun. 02, 2022 |
Share Repurchase Program | |||
Share repurchase program authorized amount | $ 2,450 | $ 2,000 | |
Amount of shares available under repurchase program | $ 1,450 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Oct. 18, 2020 | Apr. 29, 2023 | Apr. 30, 2022 | Jan. 28, 2023 | Apr. 04, 2023 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Stock-based compensation expense | $ 10,180 | $ 12,802 | |||
Stock-based compensation cost capitalized | $ 0 | 0 | |||
2012 Stock Incentive Plan and 2012 Stock Option Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Outstanding shares | 3,393,460 | ||||
Options outstanding, weighted-average exercise price per share | $ 179.73 | ||||
Numbers of options vested | 3,216,721 | ||||
Vested , weighted average exercise price | $ 175.73 | ||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Stock Options | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Unrecognized compensation expense related to unvested options | $ 78,000 | ||||
Unrecognized compensation expense with weighted-average period | 3 years 11 months 19 days | ||||
Aggregate intrinsic value of options outstanding | $ 401,000 | ||||
Aggregate intrinsic value of options vested or expected to vest | 390,000 | ||||
Aggregate intrinsic value of options exercisable | $ 343,000 | ||||
Weighted-average remaining contractual life of options exercisable | 4 years 11 months 12 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 | $ 11,000 | ||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Restricted Stock Units | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Unrecognized compensation expense related to restricted stock and restricted stock units | $ 6,600 | ||||
Unrecognized compensation expense with weighted-average period | 4 years 3 months 18 days | ||||
Restricted stock units outstanding (in shares) | 19,670 | ||||
restricted stock units, Weighted-average grant date fair value per share | $ 444.30 | ||||
Restricted stock units, Weighted-average fair value per share of awards granted | $ 437.82 | ||||
Restricted stock units, Vested (in shares) | 1,250 | ||||
2023 Stock Incentive Plan | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Options granted | 0 | ||||
Shares available for future issuance | 3,000,000 | ||||
Profit interest expected life | 10 years | ||||
Stock Incentive Plan | Chairman and Chief Executive Officer | |||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||
Stock-based compensation expense | $ 3,500 | $ 5,900 | |||
Options granted | 700,000 | ||||
Exercise price of option granted | $ 385.30 | ||||
Aggregate non-cash stock compensation expense | $ 174,000 |
Commitments and Contingencies (
Commitments and Contingencies (Detail) | Apr. 29, 2023 USD ($) |
Commitments and Contingencies. | |
Material off balance sheet commitments | $ 0 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Detail) | 3 Months Ended | |
Apr. 29, 2023 store segment customer | Apr. 30, 2022 customer | |
Segment Reporting Information | ||
Number of operating segments | segment | 3 | |
Number of RH outlet stores | 39 | |
Number of customers accounted for more than 10% of Company's revenues | customer | 0 | 0 |
Sales [Member] | Customer Concentration Risk [Member] | ||
Segment Reporting Information | ||
Threshold portion of specified customers portion in total revenues | 10% | 10% |
Canada [Member] | ||
Segment Reporting Information | ||
Number of retail stores | 4 | |
Number of RH outlet stores | 2 | |
U.K [Member] | ||
Segment Reporting Information | ||
Number of retail stores | 1 |
Segment Reporting - Segment Ope
Segment Reporting - Segment Operating Income and Income Before Income Taxes and Equity Method Investments (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Segment Reporting Information | ||
Reorganization related costs | $ (7,621) | |
Non-cash compensation | (3,531) | $ (5,858) |
Employer payroll taxes on option exercises | 11,717 | |
Professional fee | (7,184) | |
Asset impairments | (2,475) | (5,923) |
Recall accrual | (560) | |
Income from operations | 99,240 | 205,288 |
Interest expense-net | 39,816 | 20,855 |
Loss on extinguishment of debt | 146,116 | |
Other income-net | (653) | (343) |
Income before income taxes and equity method investments | 60,077 | 38,660 |
Operating Segments [Member] | ||
Segment Reporting Information | ||
Income from operations | 110,392 | 236,530 |
Operating Segments [Member] | RH Segment | ||
Segment Reporting Information | ||
Income from operations | 103,721 | 228,545 |
Operating Segments [Member] | Waterworks | ||
Segment Reporting Information | ||
Income from operations | $ 6,671 | $ 7,985 |
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 | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Segment Reporting Information | ||
Net revenues | $ 739,162 | $ 957,292 |
Gross profit | 347,545 | 498,583 |
Depreciation and amortization | 27,770 | 24,758 |
Share of equity method investments loss | 1,602 | 1,375 |
RH Segment | ||
Segment Reporting Information | ||
Net revenues | 690,516 | 908,948 |
Gross profit | 321,584 | 472,822 |
Depreciation and amortization | 26,425 | 23,524 |
Waterworks | ||
Segment Reporting Information | ||
Net revenues | 48,646 | 48,344 |
Gross profit | 25,961 | 25,761 |
Depreciation and amortization | 1,345 | 1,234 |
Real Estate Investments | ||
Segment Reporting Information | ||
Share of equity method investments loss | $ 1,600 | $ 1,400 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet Metrics Under ASC 280 (Detail) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 |
Segment Reporting Information | ||
Goodwill | $ 141,026 | $ 141,048 |
Tradenames, trademarks and other intangible assets | 75,144 | 74,633 |
Equity method investments | 132,997 | 101,468 |
Total assets | 5,319,830 | 5,309,289 |
RH Segment | ||
Segment Reporting Information | ||
Goodwill | 141,026 | 141,048 |
Tradenames, trademarks and other intangible assets | 58,144 | 57,633 |
Total assets | 4,924,726 | 4,953,610 |
Waterworks | ||
Segment Reporting Information | ||
Tradenames, trademarks and other intangible assets | 17,000 | 17,000 |
Equity method investments | 715 | 623 |
Total assets | 225,551 | 217,228 |
Real Estate | ||
Segment Reporting Information | ||
Equity method investments | 132,282 | 100,845 |
Total assets | $ 169,553 | $ 138,451 |
Segment Reporting - Balance S_2
Segment Reporting - Balance Sheet Metrics Under ASC 280 Footnotes (Detail) - Waterworks - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended |
Apr. 29, 2023 | Jan. 28, 2017 | |
Segment Reporting Information | ||
Goodwill impairment | $ 51 | $ 51 |
Tradename impairment | $ 35 |
Segment Reporting - Net Revenue
Segment Reporting - Net Revenues, Categories (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Segment Reporting Information | ||
Total net revenues | $ 739,162 | $ 957,292 |
Furniture [Member] | ||
Segment Reporting Information | ||
Total net revenues | 496,391 | 662,520 |
Non-furniture [Member] | ||
Segment Reporting Information | ||
Total net revenues | $ 242,771 | $ 294,772 |