Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 03, 2024 | Mar. 22, 2024 | Jul. 28, 2023 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Feb. 03, 2024 | ||
Document Transition Report | false | ||
Entity File Number | 001-35720 | ||
Entity Registrant Name | RH | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 45-3052669 | ||
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 Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
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 | ||
ICFR Auditor Attestation Flag | true | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 18,315,613 | ||
Documents Incorporated by Reference [Text Block] | Portions of the registrant’s Proxy Statement for its 2024 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K where indicated. Such Proxy Statement will be filed with the Securities and Exchange Commission within 120 days of the registrant’s fiscal year ended February 3, 2024 | ||
Entity Public Float | $ 5,785,256,689 | ||
Entity Central Index Key | 0001528849 | ||
Current Fiscal Year End Date | --02-03 | ||
Document Fiscal Year Focus | 2024 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Firm ID | 238 | ||
Auditor Location | San Francisco, California |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 123,688 | $ 1,508,101 |
Restricted cash | 3,662 | |
Accounts receivable-net | 55,058 | 59,763 |
Merchandise inventories | 754,126 | 801,841 |
Prepaid expense and other current assets | 169,030 | 139,297 |
Total current assets | 1,101,902 | 2,512,664 |
Property and equipment-net | 1,685,858 | 1,635,984 |
Operating lease right-of-use assets | 625,801 | 527,246 |
Goodwill | 141,033 | 141,048 |
Tradenames, trademarks and other intangible assets | 75,927 | 74,633 |
Deferred tax assets | 143,986 | 167,039 |
Equity method investments | 128,668 | 101,468 |
Other non-current assets | 240,722 | 149,207 |
Total assets | 4,143,897 | 5,309,289 |
Current liabilities: | ||
Accounts payable and accrued expenses | 366,585 | 374,949 |
Deferred revenue and customer deposits | 282,812 | 325,754 |
Operating lease liabilities | 85,523 | 80,384 |
Other current liabilities | 96,113 | 103,190 |
Total current liabilities | 872,868 | 885,973 |
Real estate loans-net | 17,766 | 17,909 |
Non-current operating lease liabilities | 576,166 | 505,809 |
Non-current finance lease liabilities | 566,829 | 653,050 |
Deferred tax liabilities | 8,442 | 6,315 |
Other non-current obligations | 10,639 | 8,074 |
Total liabilities | 4,441,291 | 4,524,628 |
Commitments and contingencies (Note 19) | ||
Stockholders' equity (deficit): | ||
Preferred stock-$0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of February 3, 2024 and January 28, 2023 | ||
Common stock-$0.0001 par value per share, 180,000,000 shares authorized, 18,315,613 shares issued and outstanding as of February 3, 2024; 22,045,385 shares issued and outstanding as of January 28, 2023 | 2 | 2 |
Additional paid-in capital | 287,806 | 247,076 |
Accumulated other comprehensive loss | (1,938) | (2,403) |
Retained earnings (accumulated deficit) | (583,264) | 539,986 |
Total stockholders' equity (deficit) | (297,394) | 784,661 |
Total liabilities and stockholders' equity (deficit) | 4,143,897 | 5,309,289 |
Term loan B | ||
Current liabilities: | ||
Term loan-net | 1,919,885 | 1,936,529 |
Term loan B-2 | ||
Current liabilities: | ||
Term loan-net | 468,696 | 469,245 |
2024 Notes | ||
Current liabilities: | ||
Convertible senior notes-net | $ 41,835 | |
2023 Notes | ||
Current liabilities: | ||
Convertible senior notes-net | 1,696 | |
2024 Notes | ||
Current liabilities: | ||
Convertible senior notes due-noncurrent | $ 41,724 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Feb. 03, 2024 | Jan. 28, 2023 |
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 | 18,315,613 | 22,045,385 |
Common stock, shares outstanding | 18,315,613 | 22,045,385 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
CONSOLIDATED STATEMENTS OF INCOME | |||
Net revenues | $ 3,029,126 | $ 3,590,477 | $ 3,758,820 |
Cost of goods sold | 1,640,107 | 1,778,492 | 1,903,409 |
Gross profit | 1,389,019 | 1,811,985 | 1,855,411 |
Selling, general and administrative expenses | 1,022,948 | 1,089,828 | 928,230 |
Income from operations | 366,071 | 722,157 | 927,181 |
Other expenses | |||
Interest expense-net | 198,296 | 113,210 | 64,947 |
Loss on extinguishment of debt | 169,578 | 29,138 | |
Other expense-net | 1,078 | 30 | 2,778 |
Total other expenses | 199,374 | 282,818 | 96,863 |
Income before taxes and equity method investments | 166,697 | 439,339 | 830,318 |
Income tax expense (benefit) | 28,261 | (91,358) | 133,558 |
Income before equity method investments | 138,436 | 530,697 | 696,760 |
Share of equity method investments loss | 10,875 | 2,055 | 8,214 |
Net income | $ 127,561 | $ 528,642 | $ 688,546 |
Weighted-average shares used in computing basic net income per share | 19,880,576 | 23,523,065 | 21,270,448 |
Basic net income per share | $ 6.42 | $ 22.47 | $ 32.37 |
Weighted-average shares used in computing diluted net income per share | 21,600,478 | 26,561,988 | 31,113,395 |
Diluted net income per share | $ 5.91 | $ 19.90 | $ 22.13 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income | $ 127,561 | $ 528,642 | $ 688,546 |
Net gain (loss) from foreign currency translation | 465 | (993) | (3,975) |
Comprehensive income | $ 128,026 | $ 527,649 | $ 684,571 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - 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. 30, 2021 | $ 2 | $ 581,897 | $ 2,565 | $ (137,438) | $ 447,026 | ||||
Balances, shares at Jan. 30, 2021 | 20,995,387 | ||||||||
Stock-based compensation | 48,478 | 48,478 | |||||||
Issuance of restricted stock, Shares | 1,260 | ||||||||
Vested and delivered restricted stock units | (20,671) | (20,671) | |||||||
Vested and delivered restricted stock units, Shares | 43,320 | ||||||||
Exercise of stock options | 32,045 | 32,045 | |||||||
Exercise of stock options, Shares | 466,967 | ||||||||
Settlement of convertible senior notes | (901,379) | $ 880,207 | (21,172) | ||||||
Settlement of convertible senior notes, Shares | 1,377,512 | (1,377,479) | |||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes | 880,207 | $ (880,207) | |||||||
Exercise of call option under bond hedge upon settlement of convertible senior notes (in shares) | (1,377,479) | 1,377,479 | |||||||
Net Income (Loss) | 688,546 | 688,546 | |||||||
Net gain (loss) from foreign currency translation | (3,975) | (3,975) | |||||||
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 | 43,546 | 43,546 | |||||||
Issuance of restricted stock, Shares | 3,577 | ||||||||
Vested and delivered restricted stock units | (803) | (803) | |||||||
Vested and delivered restricted stock units, Shares | 5,284 | ||||||||
Exercise of stock options | 231,297 | 231,297 | |||||||
Exercise of stock options, Shares | 4,249,081 | ||||||||
Repurchase of common stock-including excise tax | $ (1,003,700) | (1,003,700) | |||||||
Repurchase of common stock-including excise tax, Shares | (3,719,550) | 3,719,550 | |||||||
Retirement of treasury stock | (444,047) | (559,653) | $ 1,003,700 | ||||||
Retirement of treasury stock, Shares | (3,719,550) | ||||||||
Settlement of convertible senior notes | (14,705) | $ 14,705 | |||||||
Settlement of convertible senior notes, Shares | 36,994 | 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 | |||||||
Non-cash equity compensation related to consolidated variable interest entities | 3,554 | 3,554 | |||||||
Net Income (Loss) | 528,642 | 528,642 | |||||||
Net gain (loss) from foreign currency translation | (993) | (993) | |||||||
Balances at Jan. 28, 2023 | $ 2 | $ (56,390) | 247,076 | (2,403) | $ 19,889 | 539,986 | $ (36,501) | 784,661 | |
Balances, shares at Jan. 28, 2023 | 22,045,385 | ||||||||
Stock-based compensation | 39,384 | 39,384 | |||||||
Issuance of restricted stock, Shares | 2,961 | ||||||||
Vested and delivered restricted stock units | (400) | (400) | |||||||
Vested and delivered restricted stock units, Shares | 2,815 | ||||||||
Exercise of stock options | 12,122 | 12,122 | |||||||
Exercise of stock options, Shares | 150,486 | ||||||||
Repurchase of common stock-including excise tax | $ (1,261,187) | $ (1,261,187) | |||||||
Repurchase of common stock-including excise tax, Shares | (3,887,965) | 3,887,965 | |||||||
Retirement of treasury stock | (10,376) | (1,250,811) | $ 1,261,187 | ||||||
Retirement of treasury stock, Shares | (3,887,965) | (3,887,965) | |||||||
Settlement of convertible senior notes, Shares | 1,931 | ||||||||
Net Income (Loss) | 127,561 | $ 127,561 | |||||||
Net gain (loss) from foreign currency translation | 465 | 465 | |||||||
Balances at Feb. 03, 2024 | $ 2 | $ 287,806 | $ (1,938) | $ (583,264) | $ (297,394) | ||||
Balances, shares at Feb. 03, 2024 | 18,315,613 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income | $ 127,561 | $ 528,642 | $ 688,546 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 118,989 | 108,588 | 96,022 |
Non-cash operating lease cost | 86,699 | 75,185 | 72,479 |
Asset impairments | 8,339 | 24,186 | 9,630 |
Amortization of debt discount | 0 | 0 | 28,816 |
Stock-based compensation expense | 39,384 | 43,546 | 48,478 |
Non-cash compensation related to consolidated variable interest entities | 4,470 | ||
Non-cash finance lease interest expense | 33,822 | 32,051 | 26,412 |
Deferred income taxes | 25,266 | (91,988) | (6,921) |
Loss on extinguishment of debt | 169,578 | 29,138 | |
Share of equity method investments loss | 10,875 | 2,055 | 8,214 |
Other non-cash items | 7,362 | 5,809 | (4,709) |
Cash paid attributable to accretion of debt discount upon settlement of debt | (55,243) | ||
Change in assets and liabilities: | |||
Accounts receivable | 4,690 | (1,846) | 1,564 |
Merchandise inventories | 47,274 | (77,193) | (190,074) |
Prepaid expense and other assets | (65,658) | (102,521) | (49,555) |
Landlord assets under construction-net of tenant allowances | (25,368) | (51,369) | (68,454) |
Accounts payable and accrued expenses | (41,070) | (56,264) | 43,435 |
Deferred revenue and customer deposits | (42,974) | (62,086) | 107,306 |
Other current liabilities | (5,937) | (37,653) | (9,778) |
Current and non-current operating lease liabilities | (95,634) | (76,968) | (77,252) |
Other non-current obligations | (31,406) | (32,535) | (35,940) |
Net cash provided by operating activities | 202,214 | 403,687 | 662,114 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (269,356) | (173,642) | (185,383) |
Equity method investments | (38,075) | (2,713) | (8,970) |
Proceeds from sale of asset | 5,287 | ||
Net cash used in investing activities | (307,431) | (171,068) | (194,353) |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings under term loans | 500,000 | 2,000,000 | |
Repayments under term loans | (25,000) | (21,250) | (5,000) |
Borrowings under real estate loans | 16,000 | ||
Repayments under real estate loans | (26) | (10) | |
Repayments under promissory and equipment security notes | (1,160) | (13,863) | (22,949) |
Repayments of convertible senior notes | (1,696) | (13,064) | (335,729) |
Repayment under convertible senior notes repurchase obligation | (395,372) | ||
Debt extinguishment costs | (8,059) | ||
Debt issuance costs | (28,069) | (26,411) | |
Principal payments under finance lease agreements-net of tenant allowances | (13,972) | (10,146) | (14,158) |
Proceeds from termination of convertible senior note hedges | 231,796 | ||
Payments for termination of common stock warrants | (390,934) | ||
Repurchases of common stock-inclusive of excise taxes paid | (1,252,899) | (1,000,000) | |
Proceeds from exercise of stock options | 12,122 | 231,297 | 32,045 |
Tax withholdings related to issuance of stock-based awards | (400) | (803) | (20,671) |
Net cash provided by (used in) financing activities | (1,283,031) | (902,477) | 1,607,127 |
Effects of foreign currency exchange rate translation | 173 | (243) | (95) |
Net increase (decrease) in cash and cash equivalents, restricted cash and restricted cash equivalents | (1,388,075) | (670,101) | 2,074,793 |
Cash and cash equivalents, restricted cash and restricted cash equivalents | |||
Beginning of period-cash and cash equivalents | 1,508,101 | 2,177,889 | 100,446 |
Beginning of period-restricted cash | 3,662 | ||
Beginning of period-restricted cash equivalents (acquisition related escrow deposits) | 3,975 | 6,625 | |
Beginning of period-cash and cash equivalents, restricted cash and restricted cash equivalents | 1,511,763 | 2,181,864 | 107,071 |
End of period-cash and cash equivalents | 123,688 | 1,508,101 | 2,177,889 |
End of period-restricted cash | 3,662 | ||
End of period-restricted cash equivalents (acquisition related escrow deposits) | 3,975 | ||
End of period-cash and cash equivalents, restricted cash and restricted cash equivalents | 123,688 | 1,511,763 | 2,181,864 |
Cash paid for interest | 246,210 | 133,821 | 39,466 |
Cash paid for taxes | 14,278 | 41,355 | 158,910 |
Non-cash transactions: | |||
Property and equipment additions in accounts payable and accrued expenses at period-end | 40,775 | 17,755 | 14,651 |
Landlord asset additions in accounts payable and accrued expenses at period-end | 3,841 | 1,229 | 13,180 |
Excise tax from share repurchases in accounts payable and accrued expenses at period-end | $ 11,988 | 3,700 | |
Property and equipment additions acquired under real estate loans | 2,000 | ||
Reclassification of assets from landlord assets under construction to finance lease right-of-use assets | 220,236 | 61,900 | |
Extinguishment of convertible senior notes related to repurchase obligation | (261,988) | ||
Financing liability and embedded derivative arising from convertible senior notes repurchase | 405,577 | ||
Shares issued on settlement of convertible senior notes | (14,705) | (901,379) | |
Shares received on exercise of call option under bond hedge upon settlement of convertible senior notes | 14,705 | $ 880,207 | |
Conversion of loan receivables into equity of consolidated variable interest entities | $ 27,096 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Feb. 03, 2024 | |
NATURE OF BUSINESS | |
NATURE OF BUSINESS | NOTE 1—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 Sourcebooks. 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 February 3, 2024, we operated a total of 70 RH Galleries and 42 RH outlet stores, one RH Guesthouse and 14 Waterworks Showrooms throughout the United States, Canada, the United Kingdom and Germany. We also have sourcing operations in Shanghai and Hong Kong. |
ORGANIZATION
ORGANIZATION | 12 Months Ended |
Feb. 03, 2024 | |
ORGANIZATION | |
ORGANIZATION | NOTE 2—ORGANIZATION Our company was formed on August 18, 2011 and capitalized on September 2, 2011 as a holding company for the purpose of facilitating an initial public offering of common equity and was at such time a direct subsidiary of Home Holdings, LLC, a Delaware limited liability company (“Home Holdings”). On November 1, 2012, we acquired all of the outstanding shares of capital stock of Restoration Hardware, Inc., a Delaware corporation, and Restoration Hardware, Inc. became our direct, wholly owned subsidiary. Restoration Hardware, Inc. was a direct, wholly owned subsidiary of Home Holdings prior to our initial public offering. On November 7, 2012, we completed our initial public offering. On December 15, 2016, we filed a Certificate of Amendment to our Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change our name to “RH,” effective January 1, 2017. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Feb. 03, 2024 | |
SIGNIFICANT ACCOUNTING POLICIES | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 3—SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The 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 (refer to Note 7— Variable Interest Entities Fiscal Years Our fiscal year ends on the Saturday closest to January 31. As a result, our fiscal year may include 53 weeks. Our fiscal year ended February 3, 2024 (“fiscal 2023”) consisted of 53 weeks. The fiscal years ended January 28, 2023 (“fiscal 2022”) and January 29, 2022 (“fiscal 2021”) each consisted of 52 weeks. Use of Accounting Estimates The preparation of our 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 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 consolidated financial statements. Cash and Cash Equivalents We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Concentration of Credit Risk We maintain our cash and cash equivalent accounts in high-quality financial institutions. The amount of cash and cash equivalents held with certain financial institutions exceeds government-insured limits. We perform ongoing evaluations of these institutions to limit our concentration of credit risk. Restricted Cash Our restricted cash deposits as of January 28, 2023 represent an escrow balance for one real estate development limited liability company that is a consolidated variable interest entity. Refer to Note 7— Variable Interest Entities Accounts Receivable Accounts receivable consist primarily of receivables from our credit card processors for sales transactions, receivables related to our Contract business and other miscellaneous receivables. Accounts receivable is presented net of allowance for expected credit losses of $3.2 million and $3.4 million as of February 3, 2024 and January 28, 2023, respectively. The allowance for expected credit losses is determined by considering a number of factors, including the length of time amounts are past due and the party’s financial condition and ability to pay the obligations. Merchandise Inventories Our merchandise inventories are comprised of finished goods and are carried at the lower of cost or net realizable value, with cost determined on a weighted-average cost method and net realizable value adjusted periodically for current market conditions. Net realizable value requires judgments that may significantly affect the ending inventory valuation, as well as gross margin. We adjust our inventory reserves for net realizable value and obsolescence (including excess and slow-moving inventory) based on current and anticipated demand trends, merchandise aging reports, specific product identification, estimates of future retail sales prices and historical results. In addition, we estimate and accrue for inventory shrinkage throughout the year as a percentage of shipped sales for the direct channels, and as a percentage of cost of goods sold for the outlet business, based on historical shrinkage results and current inventory levels. Actual shrinkage is recorded throughout the year based upon periodic physical inventory counts. Actual inventory shrinkage and obsolescence can vary from estimates due to various factors, including the volume of inventory movement and execution against loss prevention initiatives in our distribution centers, home delivery center locations, off-site storage locations and with our third-party transportation providers. Our inventory reserves were $46 million and $40 million as of February 3, 2024 and January 28, 2023. Product Recalls When necessary, we initiate product recalls for certain of our products, as well as adjust accruals related to certain product recalls previously initiated due to changes in estimates based on customer response and vendors and insurance recoveries. The product recall accrual was $3.8 million and $6.9 million as of February 3, 2024 and January 28, 2023, respectively, and is included in other current liabilities Advertising Expenses Advertising expenses primarily represent the costs associated with our catalog mailings, which we refer to as Sourcebooks, as well as website and print advertising. Total advertising expense, which is recorded in selling, general and administrative expenses Capitalized Catalog Costs Capitalized catalog costs consist primarily of third-party incremental direct costs to prepare, print and distribute our Sourcebooks, which are capitalized and recognized as expense upon the delivery of the Sourcebooks to the carrier. In the case of multiple printings of a Sourcebook, the creative costs will be expensed in full upon the initial delivery of Sourcebooks to the carrier. We had $28 million and $27 million of capitalized catalog costs as of February 3, 2024 and January 28, 2023, respectively, which are included in prepaid expense and other current assets Website and Print Advertising Website and print advertising expenses, which include e-commerce advertising, web creative content and direct marketing activities, such as print media, radio and other media advertising, are expensed as incurred or upon the release of the content or the initial advertisement. Property and Equipment Property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method, generally using the following useful lives: CATEGORY OF PROPERTY AND EQUIPMENT USEFUL LIFE Building and building improvements 40 to 55 years Machinery, equipment and aircraft 3 to 10 years Furniture, fixtures and equipment 3 to 7 years Computer software 3 to 10 years The cost of leasehold improvements is amortized over the lesser of the useful life of the asset or the reasonably certain lease term. We expense all internal-use software and website development costs incurred in the preliminary project stage and capitalize certain direct costs associated with the development and purchase of internal-use software or website development costs, including external costs of materials and services and internal payroll costs related to the software project, as “computer software” within property and equipment. Interest is capitalized on construction in progress and software projects during the period in which expenditures have been made and activities are in progress to prepare the asset for its intended use. We capitalized interest of $5.6 million, $4.9 million and $12 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively. During fiscal 2021, $10 million of the $12 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. No amortization of the debt discounts was recognized during fiscal 2023 or fiscal 2022, as we recombined the previously outstanding equity component of the 2023 Notes and 2024 Notes upon the adoption of Accounting Standards Update (“ASU”) 2020-06—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Land purchases are recorded at cost and are non-depreciable assets. Cloud Computing Costs We incur costs to implement cloud computing arrangements that are hosted by third parties. Such costs are capitalized during the application development phase and are included in other non-current assets one Lease Accounting We lease nearly all of our retail and outlet locations, corporate headquarters, distribution centers and home delivery center locations, as well as other storage and office space. The initial lease terms of our real estate leases generally range from ten two We account for lease and non-lease components as a single lease component for real estate leases, and for all other asset classes we account for the components separately. We determine the lease classification and begin to recognize lease costs upon lease commencement when we have access to, or control of, the asset, which generally occurs for our newly-constructed Design Galleries upon Gallery opening and upon possession for all other locations. We sublease certain real estate locations to third parties under operating leases and recognize rental income received on a straight-line basis over the lease term, which is recorded as an offset to selling, general and administrative expenses Lease arrangements may require the landlord to provide tenant allowances directly to us. Standard tenant allowances received from landlords are recorded as cash and cash equivalents lease right-of-use assets lease liabilities right-of-use assets In the case of leases with associated construction, tenant allowances are provided for us to design and build the leased asset. Tenant allowances received from landlords during the construction phase of a leased asset and prior to lease commencement are recorded as cash and cash equivalents other non-current assets other current liabilities other non-current assets other current liabilities lease right-of-use assets Lease Classification Certain of our real estate and equipment leases are classified as finance leases. Lease characteristics that we evaluate to determine lease classification include, but are not limited to, the reasonably certain lease term, incremental borrowing rate and fair value of the leased asset. Additionally, the economic life of the leased asset impacts the lease classification, particularly related to historical buildings that tend to have longer lives. Lease related assets under such classification are included in “finance lease right-of-use assets” within property and equipment—net Leases that do not meet the definition of a finance lease are considered operating leases. Lease related assets classified as operating leases are included in operating lease right-of-use assets Reasonably Certain Lease Term In recognizing the lease right-of-use assets and lease liabilities, we utilize the lease term for which we are reasonably certain to use the underlying asset, including consideration of options to extend or terminate the lease. At lease commencement, we evaluate whether we are reasonably certain to exercise available options based on consideration of a variety of economic factors and the circumstances related to the leased asset. Factors considered include, but are not limited to, (i) the contractual terms compared to estimated market rates, (ii) the uniqueness or importance of the asset or its location, (iii) the potential costs of obtaining an alternative asset, (iv) the potential costs of relocating or ceasing use of the asset, including the consideration of leasehold improvements and other invested capital, and (v) any potential tax consequences. The determination of the reasonably certain lease term affects the inclusion of rental payments utilized in the incremental borrowing rate calculations, the results of the lease classification test, and consideration of certain assets held for sale or planned for sale-leaseback. The reasonably certain lease term may materially impact our financial position related to certain Design Galleries or distribution center facilities which typically have greater lease payments. Although the above factors are considered in our analysis, the assessment involves subjectivity considering our strategy, expected future events and market conditions. While we believe our estimates and judgments in determining the lease term are reasonable, future events may occur which may require us to reassess such estimates and judgments. Leases, or lease extensions, with a term of twelve months or less are not recorded on the consolidated balance sheets, and we recognize lease expense as incurred over the lease term. Lease Payments The majority of our real estate lease agreements include minimum rent payments that are subject to stated lease escalations over the lease term and eligible renewal periods. These stated fixed payments, through the reasonably certain lease term, are included in our measurement of the lease right-of-use assets and lease liabilities upon lease commencement. Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels. Additionally, certain lease agreements include rental payments based solely on a percentage of retail sales. Due to the variable and unpredictable nature of such payments, we do not recognize a lease right-of-use asset and lease liability related to such payments. These estimated variable rental payments that are contingent based on a percentage of retail sales are included in accounts payable and accrued expenses cost of goods sold cost of goods sold selling, general and administrative expenses We have a small group of real estate leases that include rental payments periodically adjusted for inflation (e.g., based on the consumer price index). We include these variable payments in the initial measurement of the lease right-of-use asset and lease liability according to the index or rate at the commencement date and incorporate adjustments to rental payments in future periods if such increases have a minimum rent escalation (e.g., floor). Changes due to differences between the variable lease payments estimated at lease commencement and actual amounts incurred are recognized in the consolidated statements of income in the period such costs are incurred. For finance leases this expense is included in interest expense—net cost of goods sold selling, general and administrative expenses Incremental Borrowing Rate As our real estate leases and most of our equipment leases do not include a stated or implicit interest rate, we determine the discount rate for each lease based upon the incremental borrowing rate (“IBR”) in order to calculate the present value of lease payments at the commencement date. The IBR is computed as the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the total lease payments in a similar economic environment. We utilize our outstanding debt facilities, including our asset based credit facility or our Term Loan Credit Agreement, as the basis for determining the applicable IBR for each lease. We estimate the IBR for each lease primarily by reference to yield rates on debt issuances by companies of a similar credit rating, the weighted-average lease term and adjustments for differences between the yield rates and the remaining actual term of the credit facility or Term Loan Credit Agreement. In determining the yield rates, for newly constructed Design Galleries or significant distribution centers we utilize market information on the lease commencement date and, for all other leases, we utilize market information as of the beginning of the quarter in which the lease commences. Fair Value We determine the fair value of the underlying asset, considering lease components such as land and building, for purposes of determining the lease classification and allocating our contractual rental payments to the lease components. The fair value of the underlying asset and lease components also impact the evaluation and accounting for assets held for sale and sale-leaseback transactions. The fair value assessments may materially impact our financial position related to certain Design Galleries or distribution center facilities. The determination of fair value requires subjectivity and estimates, including the use of multiple valuation techniques and uncertain inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable. Where real estate valuation expertise is required, we obtain independent third-party appraisals to determine the fair value of the underlying asset and lease components. Construction Related Activities We are often involved in the construction of leased stores for our new Design Galleries. Upon construction commencement, we evaluate whether or not we, as lessee, control the asset being constructed and, depending on the extent to which we are involved, we may be the “deemed owner” of the leased asset for accounting purposes during the construction period under a build-to-suit arrangement. If we are the “deemed owner” for accounting purposes during the construction period, upon construction commencement we are required to capitalize (i) costs incurred by us and (ii) the cash and non-cash assets contributed by the landlord for construction as property and equipment on our consolidated balance sheets as “build-to-suit property”, with an offsetting financing obligation under build-to-suit lease transactions. The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord for construction, are included as property and equipment additions due to build-to-suit lease transactions Upon completion of the construction project where we are the deemed owner, we perform a sale-leaseback analysis to determine if we can derecognize the build-to-suit asset and corresponding financing obligation. If the asset and liability cannot be derecognized, we account for the agreement as a debt-like financing arrangement. If we are not the “deemed owner” for accounting purposes during the construction period, such lease is classified as either an operating or finance lease upon lease commencement. During the construction period and prior to lease commencement, any capital amounts contributed by us toward the construction of the leased asset (excluding normal leasehold improvements, which are recorded within property and equipment—net) other non-current assets lease right-of-use assets Sale-Leaseback Activities We occasionally enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell the property to a third-party and agree to lease the property back for a certain period of time. To determine whether the transfer of the property should be accounted for as a sale, we evaluate whether we have transferred control to the third-party in accordance with the guidance set forth in Topic 606. If the transfer of the asset is a sale at market terms, we recognize the transaction price for the sale based on the cash proceeds received, derecognize the carrying amount of the underlying asset and recognize a gain or loss in the consolidated statements of income for any difference between the carrying value of the asset and the transaction price. We then account for the leaseback in accordance with our lease accounting policy. If the transfer of the asset is determined not to be a sale, we account for the transaction as a debt-like financing arrangement. We continue to present the asset within property and equipment—net Intangible Assets Intangible assets reflect the value assigned to tradenames, trademarks, domain names and other intangible assets. The cost of purchasing transferable liquor licenses in jurisdictions with a limited number of authorized liquor licenses is capitalized as an intangible asset. We do not amortize our intangible assets as we define the life of these assets as indefinite. Impairment Goodwill Goodwill is initially recorded as of the acquisition date, is measured as any excess of the purchase price over the estimated fair value of the identifiable net assets acquired and is assigned to the applicable reporting unit. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed. As of February 3, 2024 and January 28, 2023, goodwill relates to the RH Segment only. Goodwill is not amortized, but rather is subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset; general economic conditions, such as increasing Treasury rates or unexpected changes in gross domestic product growth; a change in our market share; budget-to-actual performance and consistency of operating margins and capital expenditures; a product recall or an adverse action or assessment by a regulator; or changes in management or key personnel. We perform our annual goodwill impairment testing in the fourth fiscal quarter. We first perform a qualitative assessment to evaluate goodwill for potential impairment by evaluating events and circumstances relevant to the reporting unit to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, based on that assessment, it is more likely than not that the fair value of the reporting unit is below its carrying value, a quantitative impairment test is necessary to determine the fair value of the reporting unit. We will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill of the reporting unit. During fiscal 2023, fiscal 2022 and fiscal 2021, we reviewed the RH Segment reporting unit goodwill for impairment by assessing qualitative factors to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying amount. Based on the qualitative tests performed in each fiscal year, we determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount in any fiscal year, and therefore we did not recognize goodwill impairment. Tradenames, Trademarks and Other Intangible Assets We annually evaluate whether tradenames, trademarks and other intangible assets continue to have an indefinite life. Intangible assets are reviewed for impairment annually in the fourth quarter and may be reviewed more frequently if indicators of impairment are present. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset, a product recall or an adverse action or assessment by a regulator. We qualitatively assess indefinite-lived intangible assets to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount. If tradenames, trademarks and other intangible assets are not qualitatively assessed or if such intangible assets are qualitatively assessed and it is determined it is more likely than not that the asset’s fair value is less than its carrying amount, an impairment review is performed by comparing the carrying value to the estimated fair value, determined using a discounted cash flow methodology, which requires judgments that may significantly affect the ending asset valuation. Factors used in the valuation of intangible assets with indefinite lives include, but are not limited to, our plans for future operations, brand initiatives, recent results of operations and projected future cash flows. In the event we quantitatively assess a reporting unit’s indefinite-lived intangible assets for impairment, we perform an impairment test which utilizes the discounted cash flow methodology under the relief-from-royalty method. Under the relief-from-royalty method, significant assumptions include the forecasted future revenues and the estimated royalty rate, expressed as a percentage of revenues. During fiscal 2023, fiscal 2022 and fiscal 2021, we qualitatively assessed our intangible assets, including the RH Segment indefinite-lived intangible assets and the Waterworks tradename, for impairment and determined it was not more likely than not that the fair value of the assets was less than their carrying amount. Based on the qualitative tests performed in each fiscal year, we did not perform quantitative impairment tests in any year and did not recognize any impairment with respect to the assets. Long-Lived Assets Long-lived assets, such as property and equipment and lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset, change in intended use of an asset, a product recall or an adverse action or assessment by a regulator. If the sum of the estimated undiscounted future cash flows over the remaining life of the primary asset is less than the carrying value, we recognize a loss equal to the difference between the carrying value and the fair value, usually determined by the estimated discounted cash flow analysis of the asset or asset group. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our stores is generally the individual Gallery level. Since there is typically no active market for our long-lived assets, we estimate fair values based on the expected future cash flows of the asset or asset group, using a discount rate commensurate with the related risk. The estimate of fair value requires judgments that may significantly affect the ending asset valuation. Future cash flows are estimated based on Gallery-level historical results, current trends, and operating and cash flow projections. Our estimates are subject to uncertainty and may be affected by a number of factors outside of our control, including general economic conditions and the competitive environment. While we believe our estimates and judgments about future cash flows are reasonable, future impairment charges may be required if the expected cash flow estimates, as projected, do not occur or if events change requiring us to revise our estimates. We also review our capital expenditures for Galleries under construction and recognize impairment charges when there is a change in the intended use of an asset, including asset disposals. We recognized long-lived asset impairment charges related to such construction expenditures of $4.7 million, $13 million and $9.6 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively. From time to time, we record impairment for certain corporate assets and other long-lived assets resulting from changes to the expected use of the assets and an update to both the timing and the amount of future estimated lease related cash flows based on present market conditions. Such impairment charges are included in s elling, general and administrative expenses Variable Interest Entities (VIE) Our consolidated financial statements include the results of operations and the financial position of subsidiaries in which we have a controlling financial interest as if the consolidated group were a single economic entity. When we have a variable interest in another legal entity, we evaluate whether that legal entity is within the scope of the VIE model and, if so, whether we are the primary beneficiary of the VIE. We evaluate a legal entity for consolidation under the VIE model if no scope exceptions apply and, by design, the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack any of the characteristics of a controlling financial interest. We consolidate a VIE if our involvement indicates that we are the primary beneficiary. We are the primary beneficiary of a VIE if we have both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The determination of the power to direct the activities that most significantly impact economic performance requires judgement and is impacted by numerous factors, including the purpose of the VIE, rights and obligations of the variable interest holders, mechanisms for the resolution of disputes among the variable interest holders and other agreements with the legal entity and its variable interest holders. We account for investments in VIEs that are limited liability companies where we are not the primary beneficiary using the equity method of accounting. We evaluate our relationships with our VIEs on an ongoing basis to determine whether we continue to be the primary beneficiary of our consolidated VIEs, or whether we have become the primary beneficiary of the VIEs we do not consolidate. Consolidated Variable Interest Entities and Noncontrolling Interests We consolidate the results of operations, financial condition and cash flows of real estate development limited liability companies (a “Member LLC”) in our consolidated financial statements when we are the primary beneficiary of the VIE. We account for each acquisition of our controlling interest in a Member LLC as an asset acquisition since substantially all of the fair value of the net assets of each VIE is concentrated in its real estate assets. The operating agreements of each Member LLC specify distributions from operations and upon certain events or liquidation that may be disproportionate to the members’ relative ownership percentages. Distributions are made to the members in proportion to, and in repayment of, various categories of capital contributions and certain preferred returns, after which distributions are made to the members in proportion to their membership interests. To reflect the substance of these arrangements, we measure attributions to noncontrolling interests in the consolidated variable interest entities using the distribution provisions set out in the operating agreements for each Member LLC. This is a balance sheet oriented approach that calculates changes in the noncontrolling interest holders’ claim to the net assets of each Member LLC from period to period to determine the income or loss attributable to noncontrolling interests, which are recognized in the consolidated statements of income. In certain instances, we are required to recognize non-cash compensation expense related to equity interests given to the noncontrolling interest holder of consolidated VIEs. There are no explicit or implicit vesting conditions associated with these deemed compensation arrangements. Equity-classified compensation arrangements are measured upon the noncontrolling interest holders being admitted as a member of the VIEs, and liability-classified compensation arrangements are measured at the end of each reporting period. The fair-value-based measure of the equity interests is determined using a Black-Scholes option pricing model that requires the input of subjective assumptions regarding the future cash flows of the VIE, including consideration of future expected debt financing and the expected volatility of the equity interests. We determined these assumptions based on entity specific considerations of (i) the primary expected future cash flows of property rents and expected debt and debt service payments, (ii) discount rates appropriate for the economic environment and anticipated future interest rates and (iii) expected volatility based on historical observed stock prices of publicly traded peer companies, including those involved in real estate development. Equity Method Investments For certain of our investments in VIEs where we are not the managing member and do not have the ability to liquidate the VIE or otherwise remove the managing member, we do not have the power to direct the most significant activities of the VIE and therefore are not the primary beneficiary. We account for such investments using the equity method of accounting. Our investments are presented as equity method investments share of equity method in |
PREPAID EXPENSE AND OTHER ASSET
PREPAID EXPENSE AND OTHER ASSETS | 12 Months Ended |
Feb. 03, 2024 | |
PREPAID EXPENSE AND OTHER ASSETS | |
PREPAID EXPENSE AND OTHER ASSETS | NOTE 4—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Prepaid expenses $ 42,089 $ 24,352 Capitalized catalog costs 27,856 26,522 Vendor deposits 26,409 21,201 Federal and state tax receivable (1) 20,441 12,322 Tenant allowance receivable 8,220 8,336 Value added tax (VAT) receivable 6,532 7,465 Right of return asset for merchandise 5,011 4,983 Promissory notes receivable, including interest (2) 3,292 2,991 Interest income receivable 54 4,878 Other current assets 29,126 26,247 Total prepaid expense and other current assets $ 169,030 $ 139,297 (1) Refer to Note 14— Income Taxes . (2) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs. Refer to Note 7— Variable Interest Entities . Other non-current assets consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Landlord assets under construction—net of tenant allowances $ 118,897 $ 45,511 Initial direct costs prior to lease commencement 66,333 51,249 Capitalized cloud computing costs—net (1) 22,646 21,529 Vendor deposits—non-current 8,862 10,593 Other deposits 7,913 7,143 Deferred financing fees 2,520 3,528 Other non-current assets 13,551 9,654 Total other non-current assets $ 240,722 $ 149,207 (1) Presented net of accumulated amortization of $19 million and $11 million as of February 3, 2024 and January 28, 2023. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Feb. 03, 2024 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 5—PROPERTY AND EQUIPMENT Property and equipment consists of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Finance lease right-of-use assets (1) $ 1,104,365 $ 1,303,133 Leasehold improvements (2) 434,220 391,912 Building and building improvements (3) 334,996 94,508 Computer software 173,378 147,553 Land 106,347 97,670 Furniture, fixtures and equipment 97,990 86,456 Machinery, equipment and aircraft 82,962 79,836 Built-to-suit property (4) 37,057 37,057 Total property and equipment 2,371,315 2,238,125 Less—accumulated depreciation and amortization (5) (685,457) (602,141) Total property and equipment—net $ 1,685,858 $ 1,635,984 (1) Refer to “Lease Accounting” within Note 3— Significant Accounting Policies and Note 10— Leases . (2) Includes construction in progress of $39 million and $8.0 million as of February 3, 2024 and January 28, 2023 , respectively. (3) Includes $ 126 million and $92 million of owned buildings under construction related to future Design Galleries as of February 3, 2024 and January 28, 2023, respectively. Additionally, includes the purchase of the RH Guesthouse New York building in fiscal 2023. Refer to Note 10— Leases . (4) During fiscal 2021, we opened the Dallas Design Gallery. During the construction period of this Design Gallery, we were the “deemed owner” for accounting purposes and classified the construction costs as a build-to-suit asset. Upon construction completion and lease commencement, we performed a sale-leaseback analysis and determined that we cannot derecognize the build-to-suit asset. Therefore, the asset remains classified as a build-to-suit asset and is depreciated over the term of the useful life of the asset. (5) Includes accumulated amortization related to finance lease right-of-use assets of $268 million and $224 million as of February 3, 2024 and January 28, 2023, respectively. Refer to Note 10— Leases. We recorded depreciation of property and equipment, excluding amortization for finance lease right-of-use assets, of $64 million, $56 million and $52 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively. |
GOODWILL, TRADENAMES, TRADEMARK
GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS | 12 Months Ended |
Feb. 03, 2024 | |
GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS | |
GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS | NOTE 6—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS Goodwill, tradenames, trademarks and other intangible assets activity for the RH Segment and Waterworks consists of the following: RH SEGMENT WATERWORKS TRADENAMES, TRADENAMES, TRADEMARKS AND TRADEMARKS AND OTHER INTANGIBLE OTHER INTANGIBLE GOODWILL ASSETS GOODWILL (1) ASSETS (2) (in thousands) January 29, 2022 $ 141,100 $ 56,161 $ — $ 17,000 Additions — 1,472 — — Foreign currency translation (52) — — — January 28, 2023 141,048 57,633 — 17,000 Additions — 1,294 — — Foreign currency translation (15) — — — February 3, 2024 $ 141,033 $ 58,927 $ — $ 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 prior fiscal years. There are no |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 12 Months Ended |
Feb. 03, 2024 | |
VARIABLE INTEREST ENTITIES | |
VARIABLE INTEREST ENTITIES | NOTE 7—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 the same development partner. 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. Six locations represent current and future RH locations and are included in the RH Segment, two of which are operational as of February 3, 2024. Two locations represent properties for the purpose of use by RH or others related to developing, operating and selling such real estate, and are part of the Real Estate segment. In fiscal 2022, we recognized compensation expense of $4.5 million related to the equity interests given to the noncontrolling interest holders of the consolidated VIEs, of which $3.6 million was recorded to additional paid-in capital other non-current obligations additional paid-in capital other non-current obligations 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 February 3, 2024 and January 28, 2023, the noncontrolling interest holders had no claim to the net assets of each Member LLC based upon such distribution provisions. Accordingly, we did not recognize any noncontrolling interests in fiscal 2023 and fiscal 2022 . The carrying amounts and classification of the VIEs’ assets and liabilities included in the consolidated balance sheets were as follows: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) ASSETS Cash and cash equivalents $ 8,918 $ 6,653 Restricted cash (1) — 3,662 Prepaid expense and other current assets 1,876 3,670 Total current assets 10,794 13,985 Property and equipment—net (2) 256,523 187,093 Other non-current assets 6 122 Total assets $ 267,323 $ 201,200 LIABILITIES Accounts payable and accrued expenses $ 8,735 $ 6,685 Other current liabilities 1,041 — Total current liabilities 9,776 6,685 Real estate loans—net (3) 17,766 17,909 Other non-current obligations 947 929 Total liabilities $ 28,489 $ 25,523 (1) Restricted cash deposits as of January 28, 2023 represented amounts held in escrow for one Member LLC representing a portion of the proceeds from the issuance of the Promissory Note (defined below) that were required to be used for tenant allowances specified in a lease agreement between us and the Member LLC. All amounts have been utilized during fiscal 2023 and, accordingly, there is no restricted cash remaining as of February 3, 2024. (2) Includes $77 million and $125 million of construction in progress as of February 3, 2024 and January 28, 2023, respectively, which is included in “building and building improvements” within property and equipment —net . (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. Real estate loans—net exclude $0.1 million of current obligations related to such loans that are included in other current liabilities on the consolidated balance sheets as of February 3, 2024. There was no current obligation under these loans as of January 28, 2023. Equity Method Investments Equity method investments primarily 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 each VIE that most significantly impact the VIE’s economic performance. Accordingly, we account for these investments using the equity method of accounting. As of February 3, 2024 and January 28, 2023 the aggregate balance of the investment in the Aspen LLCs was $125 million and $101 million, respectively. As of February 3, 2024 and January 28, 2023, $3.3 million and $3.0 million, respectively, of a promissory notes receivable, inclusive of accrued interest, was outstanding with the managing member or entities affiliated with the managing member for the Aspen LLCs, which promissory notes were included in prepaid expense and other current assets During fiscal 2023, fiscal 2022 and fiscal 2021, we recorded our proportionate share of equity method investments loss of $11 million, $2.1 million and $8.2 million, respectively, which is included on the consolidated statements of income with a corresponding decrease to the carrying value of equity method investments 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 fiscal 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 February 3, 2024. |
ACCOUNTS PAYABLE, ACCRUED EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Feb. 03, 2024 | |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 8—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accounts payable and accrued expenses consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Accounts payable $ 192,345 $ 166,082 Accrued compensation 43,840 76,650 Accrued occupancy 29,144 28,830 Accrued sales and use tax (1) 26,823 21,950 Accrued legal settlements (1)(2) 16,704 47 Accrued freight and duty 14,333 17,497 Excise tax payable on share repurchases (1) 11,988 3,700 Accrued professional fees 5,754 7,447 Accrued legal contingencies (1)(2) 2,795 8,874 Accrued interest 1,343 14,456 Other accrued expenses (1) 21,516 29,416 Total accounts payable and accrued expenses $ 366,585 $ 374,949 (1) Prior year amounts have been adjusted to conform to the current period presentation. (2) Refer to Note 19 ¾ Commitments and Contingencies . Reorganization We implemented a restructuring on March 24, 2023 that included 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 year ended February 3, 2024, we incurred total charges relating to the reorganization of $7.6 million consisting primarily of severance costs and related taxes. As of February 3, 2024, we had accruals of $0.3 million included in accounts payable and accrued expenses Other current liabilities consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Current portion of term loans $ 25,000 $ 25,000 Unredeemed gift card and merchandise credit liability 24,720 26,733 Allowance for sales returns 19,588 20,747 Finance lease liabilities 14,668 17,007 Federal tax payable 5,561 — Foreign tax payable 249 4,365 Other current liabilities 6,327 9,338 Total other current liabilities $ 96,113 $ 103,190 |
OTHER NON-CURRENT OBLIGATIONS
OTHER NON-CURRENT OBLIGATIONS | 12 Months Ended |
Feb. 03, 2024 | |
OTHER NON-CURRENT OBLIGATIONS. | |
OTHER NON-CURRENT OBLIGATIONS | NOTE 9—OTHER NON-CURRENT OBLIGATIONS Other non-current obligations consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Unrecognized tax benefits $ 3,633 $ 2,962 Other non-current obligations 7,006 5,112 Total other non-current obligations $ 10,639 $ 8,074 |
LEASES
LEASES | 12 Months Ended |
Feb. 03, 2024 | |
LEASES | |
LEASES | NOTE 10—LEASES Lease costs—net consist of the following: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Operating lease cost (1) $ 116,553 $ 100,646 $ 99,985 Finance lease costs Amortization of leased assets (1) 54,596 52,346 43,964 Interest on lease liabilities (2) 33,822 32,051 26,412 Variable lease costs (3) 23,517 27,848 36,914 Sublease income (4) (5,544) (4,455) (4,184) Total lease costs—net $ 222,944 $ 208,436 $ 203,091 (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 consolidated statements of income based on our accounting policy. Refer to Note 3— Significant Accounting Policies . (2) Included in interest expense—net on the 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 $14 million, $19 million and $28 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively, as well as charges associated with common area maintenance of $9.1 million, $9.3 million and $8.8 million in fiscal 2023, fiscal 2022 and fiscal 2021, 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 any period presented. (4) Included in selling, general and administrative expenses on the consolidated statements of income. Lease right-of-use assets and lease liabilities consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 625,801 $ 527,246 Finance leases (1)(2)(3)(4) Property and equipment—net 836,814 1,078,979 Total lease right-of-use assets $ 1,462,615 $ 1,606,225 Liabilities Current (5) Operating leases Operating lease liabilities $ 85,523 $ 80,384 Finance leases (4) Other current liabilities 14,668 17,007 Total lease liabilities—current 100,191 97,391 Non-current Operating leases Non-current operating lease liabilities 576,166 505,809 Finance leases (4) Non-current finance lease liabilities 566,829 653,050 Total lease liabilities—non-current 1,142,995 1,158,859 Total lease liabilities $ 1,243,186 $ 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 $268 million and $224 million as of February 3, 2024 and January 28, 2023, respectively. (3) Includes $37 million and $39 million as of February 3, 2024 and January 28, 2023, respectively, 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 7— Variable Interest Entities . (4) During fiscal 2023, we purchased the building and land of our RH Guesthouse New York location and terminated the lease associated with the property. As a result, the right-of-use asset and lease liability was reclassified to property and equipment—net on the consolidated balance sheets as of the purchase date. Refer to Note 5— Property and Equipment . (5) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months. The maturities of lease liabilities were as follows as of February 3, 2024: OPERATING FINANCE FISCAL YEAR LEASES LEASES TOTAL (in thousands) 2024 $ 117,806 $ 42,887 $ 160,693 2025 117,916 47,942 165,858 2026 110,067 48,709 158,776 2027 102,787 49,516 152,303 2028 69,215 48,551 117,766 Thereafter 330,183 728,022 1,058,205 Total lease payments (1)(2) 847,974 965,627 1,813,601 Less—imputed interest (3) (186,285) (384,130) (570,415) Present value of lease liabilities $ 661,689 $ 581,497 $ 1,243,186 (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 $686 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of February 3, 2024, of which $26 million, $41 million, $38 million, $40 million and $41 million will be paid in fiscal 2024, fiscal 2025, fiscal 2026, fiscal 2027 and fiscal 2028, respectively, and $500 million will be paid subsequent to fiscal 2028. (2) Excludes an immaterial amount of future commitments under short-term lease agreements as of February 3, 2024. (3) Calculated using the discount rate for each lease at lease commencement. Supplemental information related to leases consists of the following: YEAR ENDED FEBRUARY 3, JANUARY 28, 2024 2023 Weighted-average remaining lease term (years) Operating leases 8.7 8.3 Finance leases 19.7 21.9 Weighted-average discount rate Operating leases 5.17% 4.08% Finance leases 5.07% 5.32% Other information related to leases consists of the following: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (122,220) $ (101,513) $ (102,097) Operating cash flows from finance leases (37,819) (32,090) (26,775) Financing cash flows from finance leases—net (1) (13,972) (10,146) (14,158) Total cash outflows from leases $ (174,011) $ (143,749) $ (143,030) Non-cash transactions: Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations Operating leases $ 170,542 $ 49,702 $ 172,393 Finance leases 1,648 109,015 89,617 Reclassification of finance lease right-of-use asset to property and equipment (2) 188,515 — — Reclassification of finance lease liability to property and equipment (2) (71,612) — — (1) Represents the principal portion of finance lease payments offset by tenant allowances received under finance leases subsequent to lease commencement of $2.4 million and $4.7 million in fiscal 2023 and fiscal 2022, respectively. No such tenant allowances were received in fiscal 2021. (2) Represents the reclassification of the right-of-use asset and lease liability upon the purchase of the building and land of our RH Guesthouse New York location and termination of the associated lease agreement. Refer to Note 5— Property and Equipment . |
CONVERTIBLE SENIOR NOTES
CONVERTIBLE SENIOR NOTES | 12 Months Ended |
Feb. 03, 2024 | |
CONVERTIBLE SENIOR NOTES | |
CONVERTIBLE SENIOR NOTES | NOTE 11—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”). In connection with our adoption of ASU 2020-06 in the first quarter of fiscal 2022, we recombined the previously outstanding equity component, which resulted in an increase in the balance of convertible debt outstanding. The outstanding balances under the 2023 Notes and 2024 Notes were as follows: FEBRUARY 3, JANUARY 28, 2024 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) $ — $ — $ — $ 1,696 $ — $ 1,696 Convertible senior notes due 2024 (2) 41,904 (69) 41,835 41,904 (180) 41,724 Total convertible senior notes $ 41,904 $ (69) $ 41,835 $ 43,600 $ (180) $ 43,420 (1) The 2023 Notes outstanding were classified as convertible senior notes due 2023 within current liabilities as of January 28, 2023. The 2023 Notes matured and were repaid in June 2023 and, as of February 3, 2024, the 2023 Notes are no longer outstanding. (2) The 2024 Notes outstanding were classified as convertible seniors notes due 2024—net within current liabilities as of February 3, 2024 and within non-current liabilities as of January 28, 2023. 2023 Notes and 2024 Notes—Bond Hedge and Warrant Terminations and Note Repurchase Bond Hedge and Warrant Terminations During fiscal 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 expense—net During fiscal 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 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 expense—net Notes Repurchase During the first quarter of fiscal 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 expense net During fiscal 2022, we entered into additional 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 $18 million and $39 million in aggregate principal amount of the 2023 Notes and 2024 Notes, respectively (the “Additional Notes Repurchase”). The Additional Notes Repurchase provided for an estimated settlement cost of $80 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 one day volatility weighted-average price measurement period occurring in July 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 $57 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 $80 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 $55 million, with the remaining $25 million classified as debt and recognized at its amortized cost basis. Accordingly, we recognized a loss on extinguishment of debt of $23 million upon the execution of these agreements, inclusive of acceleration of amortization of debt issuance costs of $0.3 million. Upon the remeasurement of the amount owed to the holders in terms of the embedded feature, a total of $82 million was paid in cash to the holders, representing the combined carrying value of the debt liability of $25 million, as well as the fair value of the bifurcated embedded equity derivative upon settlement of $57 million. Accordingly, we recognized a loss on the fair value adjustment of the bifurcated embedded equity derivative of $1.5 million, which is classified within other expense—net $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 June 30, 2023, but was met for the calendar quarter ended September 30, 2023, and as a result, the 2024 Notes were convertible as of September 30, 2023. This condition was not met for the calendar quarter ended December 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 fiscal 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 fiscal 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. During fiscal 2021, holders of $130 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 fiscal 2021, we paid $130 million in cash and delivered 419,182 shares of common stock to settle the early conversion of these 2024 Notes. As a result, we recognized a loss on extinguishment of the liability component of $10 million in fiscal 2021. We also received 419,172 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 as described below, and therefore, on a net basis issued 10 shares of our common stock in respect to such settlement of the converted 2024 Notes. The remaining liability for the 2024 Notes is classified as a current obligation on the consolidated balance sheets as of February 3, 2024 since the settlement date of the outstanding 2024 Notes is in September 2024. The settlement of the outstanding 2024 Notes will be made, at our election, in cash, shares of our common stock, or a combination of cash and shares of our common stock upon settlement. $335 million 0.00% Convertible Senior Notes due 2023 Prior to March 15, 2023, the 2023 Notes were 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. During fiscal 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 fiscal 2022, we paid $9.4 million in cash and delivered 27,234 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 26 shares of our common stock in respect to such settlement of the converted 2023 Notes. During fiscal 2021, holders of $ 261 261 958,330 19 958,307 23 In June 2023, upon the maturity of the 2023 Notes, the remaining $1.7 million in aggregate principal amount of the 2023 Notes settled for $1.7 million in cash. During fiscal 2023 through the maturity of the 2023 Notes, we issued in aggregate 1,931 shares of common stock upon settlement of the 2023 Notes. |
CREDIT FACILITIES
CREDIT FACILITIES | 12 Months Ended |
Feb. 03, 2024 | |
CONVERTIBLE SENIOR NOTES | |
CREDIT FACILITIES | NOTE 12—CREDIT FACILITIES The outstanding balances under our credit facilities were as follows: FEBRUARY 3, JANUARY 28, 2024 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) 6.68% $ — $ — $ — $ — $ — $ — Term loan B (3) 7.95% 1,955,000 (15,115) 1,939,885 1,975,000 (18,471) 1,956,529 Term loan B-2 (4) 8.68% 493,750 (20,054) 473,696 498,750 (24,505) 474,245 Equipment promissory note (5) — — — — 1,160 — 1,160 Total credit facilities $ 2,448,750 $ (35,169) $ 2,413,581 $ 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 February 3, 2024. (2) Deferred financing fees associated with the asset based credit facility as of February 3, 2024 and January 28, 2023 were $2.5 million and $3.5 million, respectively, and are included in other non-current assets on the consolidated balance sheets. The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit, which has a maturity date of July 29, 2026. (3) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $1,935 million and $1,955 million were included in term loan—net on the consolidated balance sheets as of February 3, 2024 and January 28, 2023, respectively, and $20 million was included in other current liabilities on the consolidated balance sheets as of both February 3, 2024 and 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 $489 million and $494 million were included in term loan B-2—net on the consolidated balance sheets as of February 3, 2024 and January 28, 2023, respectively, and $5.0 million was included in other current liabilities on the consolidated balance sheets as of both February 3, 2024 and January 28, 2023. (5) Represents equipment security note secured by certain of our property and equipment, which was included in other current liabilities on the consolidated balance sheets as of January 28, 2023. The equipment security note was repaid in full in April 2023 and, as of February 3, 2024, is no longer outstanding. Asset Based Credit Facility & Term Loan Facilities 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 “11th A&R 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 Original Credit Agreement. 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 11th A&R Credit Agreement. The ABL Credit Agreement has a revolving line of credit with initial availability of up to $600 million, of which $10 million is available to Restoration Hardware Canada, Inc., and includes a $300 million accordion feature under which the revolving line of credit may be expanded by agreement of the parties from $600 million to up to $900 million if and to the extent the lenders revise their credit commitments to encompass a larger facility. The ABL Credit Agreement provides that the $300 million accordion, or a portion thereof, may be added as a first-in, last-out term loan facility if and to the extent the lenders revise their credit commitments for such facility. The ABL Credit Agreement further provides that the borrowers may request a European sub-credit facility under the revolving line of credit or under the accordion feature for borrowing by certain European subsidiaries of RH if certain conditions set out in the ABL Credit Agreement are met. The maturity date of the ABL Credit Agreement is July 29, 2026. 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. 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). 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 February 3, 2024, 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 default and other customary terms and conditions for an asset based credit facility. As of February 3, 2024, the amount available for borrowing under the revolving line of credit under the ABL Credit Agreement was $448 million, net of $45 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 million with a maturity date of October 20, 2028. Through July 31, 2023, the Term Loan B bore 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 was a floating interest rate that reset 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. Effective August 1, 2023, the Term Loan B bears interest at an annual rate based on SOFR subject to a 0.50% SOFR floor plus an interest rate margin of 2.50% plus a credit spread adjustment. 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. We incurred debt issuance costs of $28 million and $26 million in fiscal 2022 and fiscal 2021, respectively, in connection with the issuance of the Term Loan Credit Agreement. No debt issuance costs were incurred in fiscal 2023. 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 default and other customary terms and conditions for a term loan credit agreement. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Feb. 03, 2024 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 13—FAIR VALUE MEASUREMENTS The accounting guidance for fair value measurements establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining the fair value, we utilize market data or assumptions that we believe market participants would use in pricing the asset or liability, which would maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, including assumptions about risk and the risks inherent in the inputs of the valuation technique. Our recurring and non-recurring fair values measurements of financial and non-financial assets and liabilities are classified and disclosed in one of the following categories in accordance with ASC 820— Fair Value Measurements Level 1—Quoted prices are available in active markets for identical investments as of the reporting date. Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. Level 3—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of fair value require significant judgment or estimation. 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 and carrying value of the 2023 Notes, the 2024 Notes, the Term Loan Credit Agreement and the real estate loans were as follows: FEBRUARY 3, JANUARY 28, 2024 2023 PRINCIPAL PRINCIPAL FAIR CARRYING FAIR CARRYING VALUE VALUE (1) VALUE VALUE (1) (in thousands) Convertible senior notes due 2023 $ — $ — $ 1,622 $ 1,696 Convertible senior notes due 2024 39,879 41,904 37,351 41,904 Term loan B 1,917,715 1,955,000 1,961,056 1,975,000 Term loan B-2 490,545 493,750 500,215 498,750 Real estate loans 17,425 17,966 17,909 17,909 (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 real estate loans represent the outstanding principal balance and exclude debt issuance 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, Term Loan B-2 and real estate loans were derived from discounted cash flows using risk-adjusted rates (Level 2). Fair Value Measurements—Non-Recurring The fair value of the non-cash compensation related to noncontrolling interests in the Member LLCs in fiscal 2022, as discussed in “Consolidated Variable Interest Entities and Noncontrolling Interests” within Note 3— Significant Accounting Policies Variable Interest Entities 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 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 | 12 Months Ended |
Feb. 03, 2024 | |
INCOME TAXES | |
INCOME TAXES | NOTE 14—INCOME TAXES The following table presents our income before income taxes, inclusive of our share of equity method investments loss: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Domestic $ 143,509 $ 418,216 $ 821,001 Foreign 12,313 19,068 1,103 Total $ 155,822 $ 437,284 $ 822,104 The following table presents a summary of our income tax expense (benefit): YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Current Federal $ (3,249) $ (6,773) $ 111,975 State 6,032 1,013 28,141 Foreign 179 7,012 363 Total current tax expense 2,962 1,252 140,479 Deferred Federal 22,236 (78,032) (3,841) State (1,339) (18,639) (2,885) Foreign 4,402 4,061 (195) Total deferred tax expense (benefit) 25,299 (92,610) (6,921) Total income tax expense (benefit) $ 28,261 $ (91,358) $ 133,558 A reconciliation of the federal statutory tax rate to our effective tax rate was as follows: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Provision at federal statutory tax rate 21.0 % 21.0 % 21.0 % State income taxes—net of federal tax impact 2.1 (2.8) 2.4 Federal rehabilitation tax credit (1) (7.3) (0.9) — Stock compensation—excess benefits (3.4) (50.0) (8.0) Non-deductible stock-based compensation 1.3 0.9 0.6 U.S. impact of foreign operations (1) 0.8 0.6 (0.2) Valuation allowance 0.2 0.5 — Tax impact of convertible senior notes repurchase 0.1 9.4 — Tax rate adjustments and other (1) 1.0 — — Other permanent items (1) 2.3 0.4 0.4 Effective tax rate 18.1 % (20.9) % 16.2 % (1) Prior year rates have been adjusted to conform to the current period presentation. We have recorded deferred tax assets and liabilities based upon estimates of their realizable value, and such estimates are based upon likely future tax consequences. In assessing the need for a valuation allowance, we consider both positive and negative evidence related to the likelihood of realization of the deferred tax assets. If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, we record a valuation allowance. Significant components of our deferred tax assets and liabilities were as follows: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Non-current deferred tax assets (liabilities) Lease liabilities $ 341,767 $ 339,911 Interest expense carryforwards 72,765 28,584 Net operating loss carryforwards 60,143 120,586 Accrued expenses 25,906 30,108 Stock-based compensation 19,090 14,974 Merchandise inventories 13,881 13,346 Deferred revenue 3,847 3,242 Other — 4,483 Non-current deferred tax assets 537,399 555,234 Valuation allowance (4,442) (4,202) Non-current deferred tax assets—net $ 532,957 $ 551,032 Property and equipment $ (182,580) $ (212,424) Lease right-of-use assets (165,423) (142,199) Prepaid expense and other (29,927) (15,894) Tradename, trademarks and intangibles (11,379) (11,452) State benefit (8,104) (8,339) Non-current deferred tax liabilities (397,413) (390,308) Total non-current deferred tax assets—net $ 135,544 $ 160,724 A reconciliation of our valuation allowance against deferred tax assets in certain state and foreign jurisdictions due to historical losses was as follows: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Balance at beginning of fiscal year $ 4,202 $ 1,959 $ 2,049 Net changes in deferred tax assets and liabilities 240 2,243 (90) Balance at end of fiscal year $ 4,442 $ 4,202 $ 1,959 As of February 3, 2024, we had federal, state and foreign net operating loss carryovers of $204 million, $108 million and $38 million, respectively. The federal net operating losses do not expire. The state net operating loss carryovers will begin to expire in 2024 and continue to expire at various times depending upon individual state carryforward rules. The foreign net operating losses will begin to expire in 2029. Internal Revenue Code Section 382 and similar state rules place a limitation on the amount of taxable income which can be offset by net operating loss carryforwards after a change in ownership (generally greater than 50% change in ownership). We cannot give any assurances that it will not undergo an ownership change in the future resulting in further limitations on utilization of net operating losses. A reconciliation of the exposures related to unrecognized tax benefits was as follows: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Balance at beginning of fiscal year $ 8,151 $ 8,604 $ 8,456 Gross decreases—prior period tax positions — — (143) Gross increases—current period tax positions 515 — 933 Reductions based on the lapse of the applicable statutes of limitations (62) (453) (642) Balance at end of fiscal year $ 8,604 $ 8,151 $ 8,604 As of February 3, 2024, $7.9 million of our unrecognized tax benefits 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. In October 2017, we filed an amended federal tax return claiming a $5.4 million refund, however, no income tax benefit has been recorded in any fiscal year given the technical nature and amount of the refund claim. An income tax benefit related to this refund claim could be recorded in a future period upon settlement with the respective taxing authority. As of February 3, 2024, we have $5.4 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months. We are subject to taxation in the United States and various states and foreign jurisdictions. As of February 3, 2024, we are subject to examination by the tax authorities for fiscal 2020 through fiscal 2023. We have not provided U.S. income or foreign withholding taxes on the undistributed earnings of our foreign subsidiaries as of February 3, 2024 because we intend to permanently reinvest such earnings outside of the U.S. If these foreign earnings were to be repatriated in the future, the related U.S. tax liability is expected to be immaterial, due to the participation exemption put in place in the Tax Cuts and Jobs Act of 2017. Inflation Reduction Act On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law. The IRA includes implementation of a new alternative minimum tax, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions. We have evaluated the provisions included under the IRA and do not expect the provisions to have a material impact on our consolidated financial statements. |
NET INCOME PER SHARE
NET INCOME PER SHARE | 12 Months Ended |
Feb. 03, 2024 | |
NET INCOME PER SHARE | |
NET INCOME PER SHARE | NOTE 15—NET INCOME PER SHARE The weighted-average shares used for net income per share are presented in the table below. YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Weighted-average shares—basic 19,880,576 23,523,065 21,270,448 Effect of dilutive stock-based awards 1,518,408 2,675,660 6,506,399 Effect of dilutive convertible senior notes (1) 201,494 363,263 3,336,548 Weighted-average shares—diluted 21,600,478 26,561,988 31,113,395 (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 2023 Notes terminated in June 2023 and did not have an impact on our diluted share count post-termination. 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 11— Convertible Senior Notes . We adopted ASU 2020-06 in the first quarter of fiscal 2022, and the adoption requires the dilutive impact of the convertible senior notes for diluted net income per share purposes to be determined under the if-converted method which assumes share settlement of the entire convertible debt instrument. Prior to adoption of ASU 2020-06 for fiscal 2021, we applied the treasury stock method to determine the dilutive impact of the 2023 Notes and 2024 Notes for diluted net income per share purposes, and the 2020 Notes, 2023 Notes and the 2024 Notes impact our dilutive share count beginning at stock prices of $118.13 per share, $193.65 per share and $211.40 per share, respectively. 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: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Options 1,316,836 1,096,269 102,374 Restricted stock units 15,313 19,154 1,379 Convertible senior notes — 231,618 — |
SHARE REPURCHASE PROGRAM AND SH
SHARE REPURCHASE PROGRAM AND SHARE RETIREMENT | 12 Months Ended |
Feb. 03, 2024 | |
SHARE REPURCHASE PROGRAM AND SHARE RETIREMENT | |
SHARE REPURCHASE PROGRAM AND SHARE RETIREMENT | NOTE 16—SHARE REPURCHASE PROGRAM AND SHARE RETIREMENT 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”). In fiscal 2022, we repurchased 3,719,550 shares of our common stock under the Share Repurchase Program at an average price of $268.83 per share, for an aggregate repurchase amount of approximately $1,004 million, inclusive of $3.7 million of excise taxes. In fiscal 2023, we repurchased 3,887,965 shares of our common stock under the Share Repurchase Program at an average price of $321.28 per share, for an aggregate repurchase amount of approximately $1,261 million, inclusive of $12 million of excise taxes. The excise tax liability is recorded in accounts payable and accrued expenses As of February 3, 2024, $201 million remains available for future share repurchases under this program. Share Retirements In fiscal 2022, we retired 3,719,550 shares of common stock related to shares we repurchased under the Share Repurchase Program. As a result of this retirement, we reclassified a total of $444 million and $560 million from treasury stock additional paid-in capital retained earnings (accumulated deficit) In fiscal 2023, we retired 3,887,965 shares of common stock related to shares we repurchased under the Share Repurchase Program. As a result of this retirement, we reclassified a total of $10 million and $1,251 million from treasury stock additional paid-in capital retained earnings (accumulated deficit) There was no impact on the consolidated statements of income or cash flows related to the share retirement activity. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Feb. 03, 2024 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | NOTE 17—STOCK-BASED COMPENSATION The Restoration Hardware 2012 Stock Incentive Plan (the “Stock Incentive Plan”) was adopted on November 1, 2012. The Stock Incentive Plan provides for the grant of incentive stock options to our employees, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, cash-based awards and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants. The Restoration Hardware 2012 Stock Option Plan (the “Option Plan”) was adopted on November 1, 2012 and on such date 6,829,041 fully vested options were granted under this plan to certain of our employees and advisors. Aside from these options granted on November 1, 2012, no other awards were granted under the Option Plan. On November 1, 2022, both the Stock Incentive Plan and Option Plan expired. Upon expiration of the Stock Incentive Plan, a total of 1,607,508 shares that were available for future issuance under the plan were cancelled and were no longer available for the grant of awards under the plan. The RH 2023 Stock Incentive Plan (the “2023 Stock Incentive Plan”, together with the Stock Incentive Plan and Option Plan, “the Plans”) 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 Stock Incentive Plan 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. As of February 3, 2024, a total of 2,677,311 shares were available for future issuance under the 2023 Stock Incentive Plan. Stock Options Under the Plans A summary of stock option activity was as follows: WEIGHTED-AVERAGE OPTIONS EXERCISE PRICE Outstanding—January 28, 2023 3,415,952 $ 180.03 Granted 385,750 267.90 Exercised (150,486) 80.56 Cancelled (74,660) 215.91 Outstanding—February 3, 2024 3,576,556 $ 192.94 The fair value of stock options granted was estimated on the date of grant using the following assumptions: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Expected volatility 54.3 % 62.4 % 64.2 % Expected life (years) 7.3 7.3 7.3 Risk-free interest rate 3.9 % 3.8 % 1.4 % Dividend yield — — — A summary of additional information about stock options was as follows: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands, except per share amounts) Weighted-average fair value per share of stock options granted $ 160.57 $ 171.78 $ 392.65 Aggregate intrinsic value of stock options exercised 34,556 1,102,657 280,060 Fair value of stock options vested 19,113 18,071 22,665 Information about stock options outstanding, vested or expected to vest, and exercisable as of February 3, 2024 is as follows: OPTIONS OUTSTANDING OPTIONS EXERCISABLE WEIGHTED- AVERAGE WEIGHTED- WEIGHTED- REMAINING AVERAGE AVERAGE NUMBER OF CONTRACTUAL EXERCISE NUMBER OF EXERCISE RANGE OF EXERCISE PRICES OPTIONS LIFE (IN YEARS) PRICE OPTIONS PRICE $25.39 — $45.82 252,984 2.3 $ 35.81 252,984 $ 35.81 $50.00 — $50.00 1,000,000 3.2 50.00 1,000,000 50.00 $53.47 — $154.82 812,042 4.9 123.11 397,422 106.93 $159.00 — $266.91 502,800 8.9 254.93 40,560 204.22 $278.81 — $352.66 192,530 6.9 328.10 51,640 325.82 $385.30 — $385.30 700,000 6.7 385.30 700,000 385.30 $389.34 — $713.52 116,200 7.4 602.21 24,860 594.40 Total 3,576,556 $ 192.94 2,467,466 $ 166.63 Vested or expected to vest 3,306,511 $ 187.02 The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of February 3, 2024 was $373 million, $366 million and $323 million, respectively. Stock options exercisable as of February 3, 2024 had a weighted-average remaining contractual life of 4.4 years. Stock-based compensation expense related to stock options, which is included in selling, general and administrative expenses YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Stock-based compensation expense (1) $ 36,509 $ 40,583 $ 45,461 (1) 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 Stock Incentive Plan. The option will result in aggregate non-cash stock compensation expense of $174 million, of which $9.6 million, $18 million and $24 million was recognized during fiscal 2023, fiscal 2022 and fiscal 2021, respectively. As of February 3, 2024, the total unrecognized compensation expense related to unvested options was $99 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 4.4 years. In addition, as of February 3, 2024, the total unrecognized compensation expense related to the fully vested option grant made to Mr. Friedman in October 2020 was $5.4 million, which will be recognized on an accelerated basis through May 2025. Restricted Stock Awards Under the Plans We grant restricted stock awards, which include restricted stock and restricted stock units, to our employees and members of our Board of Directors. A summary of restricted stock award activity is as follows: WEIGHTED- AVERAGE INTRINSIC GRANT DATE FAIR VALUE AWARDS VALUE (in thousands) Outstanding—January 28, 2023 20,920 $ 443.92 Granted 2,961 322.24 Released (7,181) 396.34 Cancelled (760) 564.19 Outstanding—February 3, 2024 15,940 $ 437.02 $ 4,081 A summary of additional information about restricted stock awards is as follows: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Weighted-average fair value per share of awards granted $ 322.24 $ 318.86 $ 582.79 Grant date fair value of awards released (in thousands) 2,846 2,694 4,257 Stock-based compensation expense related to restricted stock awards, which is included in selling, general and administrative expenses YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Stock-based compensation expense $ 2,874 $ 2,962 $ 3,018 As of February 3, 2024, the total unrecognized compensation expense related to unvested restricted stock awards was $5.4 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 3.3 years. Compensation Related to Consolidated VIEs Refer to Note 7— Variable Interest Entities |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 12 Months Ended |
Feb. 03, 2024 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | NOTE 18—EMPLOYEE BENEFIT PLANS We have a 401(k) plan for our employees who meet certain service and age requirements. Participants may contribute up to 50% of their salaries limited to the maximum allowed by the Internal Revenue Service regulations. We, at our discretion, may contribute funds to the 401(k) plan. We made no contributions to the 401(k) plan during fiscal 2023, fiscal 2022 or fiscal 2021. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Feb. 03, 2024 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 19—COMMITMENTS AND CONTINGENCIES Commitments We had no material off balance sheet commitments as of February 3, 2024. 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, including cases related to our employment practices, the application of state wage-and-hour laws and other causes of action. We have faced similar litigation in the past, including class action cases. Due to the inherent difficulty of predicting the course of legal actions related to complex legal matters, including 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 based upon the discovery of facts that are not presently known or developments during the course of the litigation. We have settled certain class action cases, but continue to defend a variety of legal actions and our estimates of our exposure in such cases may evolve over time. Accordingly, the ultimate costs to resolve litigation, including class action 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 | 12 Months Ended |
Feb. 03, 2024 | |
SEGMENT REPORTING | |
SEGMENT REPORTING | NOTE 20—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, Sourcebooks, and the Trade and Contract channels. The Real Estate segment represents operations associated with certain of our equity method investments and consolidated variable interest entities that are non-wholly-owned subsidiaries and have operations that are not directly related to RH’s operations. 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 expense—net, income tax expense (benefit) and our share of equity method investments loss. Segment operating income excludes (i) non-cash compensation amortization related to an option grant made to Mr. Friedman in October 2020, (ii) legal settlements, (iii) severance costs associated with a reorganization, (iv) asset impairments, (v) product recalls, (vi) employer payroll tax expense related to option exercises by Mr. Friedman, (vii) professional fees related to the 2023 Notes and 2024 Notes transactions (refer to Note 11— Convertible Senior Notes Variable Interest Entities The following table presents segment operating income and a reconciliation to income from operations income before taxes and equity method investments YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Operating income: RH Segment $ 369,458 $ 761,544 $ 944,881 Waterworks 24,329 28,282 17,747 Total segment operating income 393,787 789,826 962,628 Non-cash compensation (9,640) (18,072) (23,428) Legal settlements (8,500) 4,188 — Reorganization related costs (7,621) — (449) Asset impairments (3,531) (24,186) (9,630) Recall accrual 1,576 (560) (1,940) Employer payroll taxes on option exercises — (14,392) — Professional fees — (7,469) — Non-cash compensation related to consolidated VIEs — (4,470) — Compensation settlements — (3,483) — Gain on sale of building and land — 775 — Income from operations 366,071 722,157 927,181 Interest expense—net 198,296 113,210 64,947 Loss on extinguishment of debt — 169,578 29,138 Other expense—net 1,078 30 2,778 Income before taxes and equity method investments $ 166,697 $ 439,339 $ 830,318 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 YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 RH SEGMENT WATERWORKS TOTAL RH SEGMENT WATERWORKS TOTAL RH SEGMENT WATERWORKS TOTAL (in thousands) Net revenues $ 2,835,617 $ 193,509 $ 3,029,126 $ 3,398,638 $ 191,839 $ 3,590,477 $ 3,593,842 $ 164,978 $ 3,758,820 Gross profit 1,286,107 102,912 1,389,019 1,708,444 103,541 1,811,985 1,772,668 82,743 1,855,411 Depreciation and amortization 113,695 5,294 118,989 103,221 5,367 108,588 91,252 4,770 96,022 In fiscal 2023, fiscal 2022 and fiscal 2021, the Real Estate segment share of equity method investments loss was $11 million, $2.1 million and $8.2 million, respectively. Our share of income from equity method investments for the Waterworks segment was immaterial in all periods presented. The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting FEBRUARY 3, JANUARY 28, 2024 2023 RH SEGMENT WATERWORKS REAL ESTATE TOTAL RH SEGMENT WATERWORKS REAL ESTATE TOTAL (in thousands) Goodwill (1) $ 141,033 $ — $ — $ 141,033 $ 141,048 $ — $ — $ 141,048 Tradenames, trademarks and other intangible assets (2) 58,927 17,000 — 75,927 57,633 17,000 — 74,633 Equity method investments (3) — 3,609 125,059 128,668 — 623 100,845 101,468 Total assets 3,798,572 183,804 161,521 4,143,897 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 prior fiscal years. (3) The Waterworks segment balance represents membership interests in two European entities, whereby we hold a 50 percent membership interest in one entity and an approximately 25 percent membership interest in the other, and we are not the primary beneficiary of these VIEs. Refer to Note 7— Variable Interest Entities related to the Real Estate segment equity method investments. 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: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Furniture $ 2,039,902 $ 2,492,514 $ 2,599,540 Non-furniture 989,224 1,097,963 1,159,280 Total net revenues $ 3,029,126 $ 3,590,477 $ 3,758,820 We are domiciled in the United States and primarily operate our retail locations and outlets in the United States. As of February 3, 2024 we operated four retail locations and one outlet in Canada, two retail locations and one outlet in the United Kingdom and two retail locations in Germany. Geographic revenues in Canada, the United Kingdom and Germany are based upon revenues recognized at the retail locations in the respective country and were not material in any fiscal period presented. The following table presents our long-lived assets by geographic location: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) North America $ 2,359,839 $ 2,261,615 All other countries 313,134 184,414 Total long-lived assets $ 2,672,973 $ 2,446,029 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Feb. 03, 2024 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The 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 (refer to Note 7— Variable Interest Entities |
Fiscal Years | Fiscal Years Our fiscal year ends on the Saturday closest to January 31. As a result, our fiscal year may include 53 weeks. Our fiscal year ended February 3, 2024 (“fiscal 2023”) consisted of 53 weeks. The fiscal years ended January 28, 2023 (“fiscal 2022”) and January 29, 2022 (“fiscal 2021”) each consisted of 52 weeks. |
Use of Accounting Estimates | Use of Accounting Estimates The preparation of our 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 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 consolidated financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk We maintain our cash and cash equivalent accounts in high-quality financial institutions. The amount of cash and cash equivalents held with certain financial institutions exceeds government-insured limits. We perform ongoing evaluations of these institutions to limit our concentration of credit risk. |
Restricted Cash | Restricted Cash Our restricted cash deposits as of January 28, 2023 represent an escrow balance for one real estate development limited liability company that is a consolidated variable interest entity. Refer to Note 7— Variable Interest Entities |
Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables from our credit card processors for sales transactions, receivables related to our Contract business and other miscellaneous receivables. Accounts receivable is presented net of allowance for expected credit losses of $3.2 million and $3.4 million as of February 3, 2024 and January 28, 2023, respectively. The allowance for expected credit losses is determined by considering a number of factors, including the length of time amounts are past due and the party’s financial condition and ability to pay the obligations. |
Merchandise Inventories | Merchandise Inventories Our merchandise inventories are comprised of finished goods and are carried at the lower of cost or net realizable value, with cost determined on a weighted-average cost method and net realizable value adjusted periodically for current market conditions. Net realizable value requires judgments that may significantly affect the ending inventory valuation, as well as gross margin. We adjust our inventory reserves for net realizable value and obsolescence (including excess and slow-moving inventory) based on current and anticipated demand trends, merchandise aging reports, specific product identification, estimates of future retail sales prices and historical results. In addition, we estimate and accrue for inventory shrinkage throughout the year as a percentage of shipped sales for the direct channels, and as a percentage of cost of goods sold for the outlet business, based on historical shrinkage results and current inventory levels. Actual shrinkage is recorded throughout the year based upon periodic physical inventory counts. Actual inventory shrinkage and obsolescence can vary from estimates due to various factors, including the volume of inventory movement and execution against loss prevention initiatives in our distribution centers, home delivery center locations, off-site storage locations and with our third-party transportation providers. Our inventory reserves were $46 million and $40 million as of February 3, 2024 and January 28, 2023. |
Product Recalls | Product Recalls When necessary, we initiate product recalls for certain of our products, as well as adjust accruals related to certain product recalls previously initiated due to changes in estimates based on customer response and vendors and insurance recoveries. The product recall accrual was $3.8 million and $6.9 million as of February 3, 2024 and January 28, 2023, respectively, and is included in other current liabilities |
Advertising Expenses | Advertising Expenses Advertising expenses primarily represent the costs associated with our catalog mailings, which we refer to as Sourcebooks, as well as website and print advertising. Total advertising expense, which is recorded in selling, general and administrative expenses Capitalized Catalog Costs Capitalized catalog costs consist primarily of third-party incremental direct costs to prepare, print and distribute our Sourcebooks, which are capitalized and recognized as expense upon the delivery of the Sourcebooks to the carrier. In the case of multiple printings of a Sourcebook, the creative costs will be expensed in full upon the initial delivery of Sourcebooks to the carrier. We had $28 million and $27 million of capitalized catalog costs as of February 3, 2024 and January 28, 2023, respectively, which are included in prepaid expense and other current assets Website and Print Advertising Website and print advertising expenses, which include e-commerce advertising, web creative content and direct marketing activities, such as print media, radio and other media advertising, are expensed as incurred or upon the release of the content or the initial advertisement. |
Property and Equipment | Property and Equipment Property and equipment is recorded at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method, generally using the following useful lives: CATEGORY OF PROPERTY AND EQUIPMENT USEFUL LIFE Building and building improvements 40 to 55 years Machinery, equipment and aircraft 3 to 10 years Furniture, fixtures and equipment 3 to 7 years Computer software 3 to 10 years The cost of leasehold improvements is amortized over the lesser of the useful life of the asset or the reasonably certain lease term. We expense all internal-use software and website development costs incurred in the preliminary project stage and capitalize certain direct costs associated with the development and purchase of internal-use software or website development costs, including external costs of materials and services and internal payroll costs related to the software project, as “computer software” within property and equipment. Interest is capitalized on construction in progress and software projects during the period in which expenditures have been made and activities are in progress to prepare the asset for its intended use. We capitalized interest of $5.6 million, $4.9 million and $12 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively. During fiscal 2021, $10 million of the $12 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. No amortization of the debt discounts was recognized during fiscal 2023 or fiscal 2022, as we recombined the previously outstanding equity component of the 2023 Notes and 2024 Notes upon the adoption of Accounting Standards Update (“ASU”) 2020-06—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity Land purchases are recorded at cost and are non-depreciable assets. |
Cloud Computing Costs | Cloud Computing Costs We incur costs to implement cloud computing arrangements that are hosted by third parties. Such costs are capitalized during the application development phase and are included in other non-current assets one |
Lease Accounting | Lease Accounting We lease nearly all of our retail and outlet locations, corporate headquarters, distribution centers and home delivery center locations, as well as other storage and office space. The initial lease terms of our real estate leases generally range from ten two We account for lease and non-lease components as a single lease component for real estate leases, and for all other asset classes we account for the components separately. We determine the lease classification and begin to recognize lease costs upon lease commencement when we have access to, or control of, the asset, which generally occurs for our newly-constructed Design Galleries upon Gallery opening and upon possession for all other locations. We sublease certain real estate locations to third parties under operating leases and recognize rental income received on a straight-line basis over the lease term, which is recorded as an offset to selling, general and administrative expenses Lease arrangements may require the landlord to provide tenant allowances directly to us. Standard tenant allowances received from landlords are recorded as cash and cash equivalents lease right-of-use assets lease liabilities right-of-use assets In the case of leases with associated construction, tenant allowances are provided for us to design and build the leased asset. Tenant allowances received from landlords during the construction phase of a leased asset and prior to lease commencement are recorded as cash and cash equivalents other non-current assets other current liabilities other non-current assets other current liabilities lease right-of-use assets Lease Classification Certain of our real estate and equipment leases are classified as finance leases. Lease characteristics that we evaluate to determine lease classification include, but are not limited to, the reasonably certain lease term, incremental borrowing rate and fair value of the leased asset. Additionally, the economic life of the leased asset impacts the lease classification, particularly related to historical buildings that tend to have longer lives. Lease related assets under such classification are included in “finance lease right-of-use assets” within property and equipment—net Leases that do not meet the definition of a finance lease are considered operating leases. Lease related assets classified as operating leases are included in operating lease right-of-use assets Reasonably Certain Lease Term In recognizing the lease right-of-use assets and lease liabilities, we utilize the lease term for which we are reasonably certain to use the underlying asset, including consideration of options to extend or terminate the lease. At lease commencement, we evaluate whether we are reasonably certain to exercise available options based on consideration of a variety of economic factors and the circumstances related to the leased asset. Factors considered include, but are not limited to, (i) the contractual terms compared to estimated market rates, (ii) the uniqueness or importance of the asset or its location, (iii) the potential costs of obtaining an alternative asset, (iv) the potential costs of relocating or ceasing use of the asset, including the consideration of leasehold improvements and other invested capital, and (v) any potential tax consequences. The determination of the reasonably certain lease term affects the inclusion of rental payments utilized in the incremental borrowing rate calculations, the results of the lease classification test, and consideration of certain assets held for sale or planned for sale-leaseback. The reasonably certain lease term may materially impact our financial position related to certain Design Galleries or distribution center facilities which typically have greater lease payments. Although the above factors are considered in our analysis, the assessment involves subjectivity considering our strategy, expected future events and market conditions. While we believe our estimates and judgments in determining the lease term are reasonable, future events may occur which may require us to reassess such estimates and judgments. Leases, or lease extensions, with a term of twelve months or less are not recorded on the consolidated balance sheets, and we recognize lease expense as incurred over the lease term. Lease Payments The majority of our real estate lease agreements include minimum rent payments that are subject to stated lease escalations over the lease term and eligible renewal periods. These stated fixed payments, through the reasonably certain lease term, are included in our measurement of the lease right-of-use assets and lease liabilities upon lease commencement. Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels. Additionally, certain lease agreements include rental payments based solely on a percentage of retail sales. Due to the variable and unpredictable nature of such payments, we do not recognize a lease right-of-use asset and lease liability related to such payments. These estimated variable rental payments that are contingent based on a percentage of retail sales are included in accounts payable and accrued expenses cost of goods sold cost of goods sold selling, general and administrative expenses We have a small group of real estate leases that include rental payments periodically adjusted for inflation (e.g., based on the consumer price index). We include these variable payments in the initial measurement of the lease right-of-use asset and lease liability according to the index or rate at the commencement date and incorporate adjustments to rental payments in future periods if such increases have a minimum rent escalation (e.g., floor). Changes due to differences between the variable lease payments estimated at lease commencement and actual amounts incurred are recognized in the consolidated statements of income in the period such costs are incurred. For finance leases this expense is included in interest expense—net cost of goods sold selling, general and administrative expenses Incremental Borrowing Rate As our real estate leases and most of our equipment leases do not include a stated or implicit interest rate, we determine the discount rate for each lease based upon the incremental borrowing rate (“IBR”) in order to calculate the present value of lease payments at the commencement date. The IBR is computed as the rate of interest that we would have to pay to borrow on a collateralized basis over a similar term an amount equal to the total lease payments in a similar economic environment. We utilize our outstanding debt facilities, including our asset based credit facility or our Term Loan Credit Agreement, as the basis for determining the applicable IBR for each lease. We estimate the IBR for each lease primarily by reference to yield rates on debt issuances by companies of a similar credit rating, the weighted-average lease term and adjustments for differences between the yield rates and the remaining actual term of the credit facility or Term Loan Credit Agreement. In determining the yield rates, for newly constructed Design Galleries or significant distribution centers we utilize market information on the lease commencement date and, for all other leases, we utilize market information as of the beginning of the quarter in which the lease commences. Fair Value We determine the fair value of the underlying asset, considering lease components such as land and building, for purposes of determining the lease classification and allocating our contractual rental payments to the lease components. The fair value of the underlying asset and lease components also impact the evaluation and accounting for assets held for sale and sale-leaseback transactions. The fair value assessments may materially impact our financial position related to certain Design Galleries or distribution center facilities. The determination of fair value requires subjectivity and estimates, including the use of multiple valuation techniques and uncertain inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable. Where real estate valuation expertise is required, we obtain independent third-party appraisals to determine the fair value of the underlying asset and lease components. Construction Related Activities We are often involved in the construction of leased stores for our new Design Galleries. Upon construction commencement, we evaluate whether or not we, as lessee, control the asset being constructed and, depending on the extent to which we are involved, we may be the “deemed owner” of the leased asset for accounting purposes during the construction period under a build-to-suit arrangement. If we are the “deemed owner” for accounting purposes during the construction period, upon construction commencement we are required to capitalize (i) costs incurred by us and (ii) the cash and non-cash assets contributed by the landlord for construction as property and equipment on our consolidated balance sheets as “build-to-suit property”, with an offsetting financing obligation under build-to-suit lease transactions. The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord for construction, are included as property and equipment additions due to build-to-suit lease transactions Upon completion of the construction project where we are the deemed owner, we perform a sale-leaseback analysis to determine if we can derecognize the build-to-suit asset and corresponding financing obligation. If the asset and liability cannot be derecognized, we account for the agreement as a debt-like financing arrangement. If we are not the “deemed owner” for accounting purposes during the construction period, such lease is classified as either an operating or finance lease upon lease commencement. During the construction period and prior to lease commencement, any capital amounts contributed by us toward the construction of the leased asset (excluding normal leasehold improvements, which are recorded within property and equipment—net) other non-current assets lease right-of-use assets Sale-Leaseback Activities We occasionally enter into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which we sell the property to a third-party and agree to lease the property back for a certain period of time. To determine whether the transfer of the property should be accounted for as a sale, we evaluate whether we have transferred control to the third-party in accordance with the guidance set forth in Topic 606. If the transfer of the asset is a sale at market terms, we recognize the transaction price for the sale based on the cash proceeds received, derecognize the carrying amount of the underlying asset and recognize a gain or loss in the consolidated statements of income for any difference between the carrying value of the asset and the transaction price. We then account for the leaseback in accordance with our lease accounting policy. If the transfer of the asset is determined not to be a sale, we account for the transaction as a debt-like financing arrangement. We continue to present the asset within property and equipment—net |
Intangible Assets | Intangible Assets Intangible assets reflect the value assigned to tradenames, trademarks, domain names and other intangible assets. The cost of purchasing transferable liquor licenses in jurisdictions with a limited number of authorized liquor licenses is capitalized as an intangible asset. We do not amortize our intangible assets as we define the life of these assets as indefinite. |
Impairment | Impairment Goodwill Goodwill is initially recorded as of the acquisition date, is measured as any excess of the purchase price over the estimated fair value of the identifiable net assets acquired and is assigned to the applicable reporting unit. A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed. As of February 3, 2024 and January 28, 2023, goodwill relates to the RH Segment only. Goodwill is not amortized, but rather is subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that the asset may be impaired. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset; general economic conditions, such as increasing Treasury rates or unexpected changes in gross domestic product growth; a change in our market share; budget-to-actual performance and consistency of operating margins and capital expenditures; a product recall or an adverse action or assessment by a regulator; or changes in management or key personnel. We perform our annual goodwill impairment testing in the fourth fiscal quarter. We first perform a qualitative assessment to evaluate goodwill for potential impairment by evaluating events and circumstances relevant to the reporting unit to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, based on that assessment, it is more likely than not that the fair value of the reporting unit is below its carrying value, a quantitative impairment test is necessary to determine the fair value of the reporting unit. We will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill of the reporting unit. During fiscal 2023, fiscal 2022 and fiscal 2021, we reviewed the RH Segment reporting unit goodwill for impairment by assessing qualitative factors to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying amount. Based on the qualitative tests performed in each fiscal year, we determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount in any fiscal year, and therefore we did not recognize goodwill impairment. Tradenames, Trademarks and Other Intangible Assets We annually evaluate whether tradenames, trademarks and other intangible assets continue to have an indefinite life. Intangible assets are reviewed for impairment annually in the fourth quarter and may be reviewed more frequently if indicators of impairment are present. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset, a product recall or an adverse action or assessment by a regulator. We qualitatively assess indefinite-lived intangible assets to determine whether it is more likely than not that the fair value of the asset is less than its carrying amount. If tradenames, trademarks and other intangible assets are not qualitatively assessed or if such intangible assets are qualitatively assessed and it is determined it is more likely than not that the asset’s fair value is less than its carrying amount, an impairment review is performed by comparing the carrying value to the estimated fair value, determined using a discounted cash flow methodology, which requires judgments that may significantly affect the ending asset valuation. Factors used in the valuation of intangible assets with indefinite lives include, but are not limited to, our plans for future operations, brand initiatives, recent results of operations and projected future cash flows. In the event we quantitatively assess a reporting unit’s indefinite-lived intangible assets for impairment, we perform an impairment test which utilizes the discounted cash flow methodology under the relief-from-royalty method. Under the relief-from-royalty method, significant assumptions include the forecasted future revenues and the estimated royalty rate, expressed as a percentage of revenues. During fiscal 2023, fiscal 2022 and fiscal 2021, we qualitatively assessed our intangible assets, including the RH Segment indefinite-lived intangible assets and the Waterworks tradename, for impairment and determined it was not more likely than not that the fair value of the assets was less than their carrying amount. Based on the qualitative tests performed in each fiscal year, we did not perform quantitative impairment tests in any year and did not recognize any impairment with respect to the assets. Long-Lived Assets Long-lived assets, such as property and equipment and lease right-of-use assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that may indicate impairment include, but are not limited to, a significant adverse change in customer demand or business climate that could affect the value of an asset, change in intended use of an asset, a product recall or an adverse action or assessment by a regulator. If the sum of the estimated undiscounted future cash flows over the remaining life of the primary asset is less than the carrying value, we recognize a loss equal to the difference between the carrying value and the fair value, usually determined by the estimated discounted cash flow analysis of the asset or asset group. The asset group is defined as the lowest level for which identifiable cash flows are available and largely independent of the cash flows of other groups of assets, which for our stores is generally the individual Gallery level. Since there is typically no active market for our long-lived assets, we estimate fair values based on the expected future cash flows of the asset or asset group, using a discount rate commensurate with the related risk. The estimate of fair value requires judgments that may significantly affect the ending asset valuation. Future cash flows are estimated based on Gallery-level historical results, current trends, and operating and cash flow projections. Our estimates are subject to uncertainty and may be affected by a number of factors outside of our control, including general economic conditions and the competitive environment. While we believe our estimates and judgments about future cash flows are reasonable, future impairment charges may be required if the expected cash flow estimates, as projected, do not occur or if events change requiring us to revise our estimates. We also review our capital expenditures for Galleries under construction and recognize impairment charges when there is a change in the intended use of an asset, including asset disposals. We recognized long-lived asset impairment charges related to such construction expenditures of $4.7 million, $13 million and $9.6 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively. From time to time, we record impairment for certain corporate assets and other long-lived assets resulting from changes to the expected use of the assets and an update to both the timing and the amount of future estimated lease related cash flows based on present market conditions. Such impairment charges are included in s elling, general and administrative expenses |
Variable Interest Entities (VIE) | Variable Interest Entities (VIE) Our consolidated financial statements include the results of operations and the financial position of subsidiaries in which we have a controlling financial interest as if the consolidated group were a single economic entity. When we have a variable interest in another legal entity, we evaluate whether that legal entity is within the scope of the VIE model and, if so, whether we are the primary beneficiary of the VIE. We evaluate a legal entity for consolidation under the VIE model if no scope exceptions apply and, by design, the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack any of the characteristics of a controlling financial interest. We consolidate a VIE if our involvement indicates that we are the primary beneficiary. We are the primary beneficiary of a VIE if we have both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The determination of the power to direct the activities that most significantly impact economic performance requires judgement and is impacted by numerous factors, including the purpose of the VIE, rights and obligations of the variable interest holders, mechanisms for the resolution of disputes among the variable interest holders and other agreements with the legal entity and its variable interest holders. We account for investments in VIEs that are limited liability companies where we are not the primary beneficiary using the equity method of accounting. We evaluate our relationships with our VIEs on an ongoing basis to determine whether we continue to be the primary beneficiary of our consolidated VIEs, or whether we have become the primary beneficiary of the VIEs we do not consolidate. Consolidated Variable Interest Entities and Noncontrolling Interests We consolidate the results of operations, financial condition and cash flows of real estate development limited liability companies (a “Member LLC”) in our consolidated financial statements when we are the primary beneficiary of the VIE. We account for each acquisition of our controlling interest in a Member LLC as an asset acquisition since substantially all of the fair value of the net assets of each VIE is concentrated in its real estate assets. The operating agreements of each Member LLC specify distributions from operations and upon certain events or liquidation that may be disproportionate to the members’ relative ownership percentages. Distributions are made to the members in proportion to, and in repayment of, various categories of capital contributions and certain preferred returns, after which distributions are made to the members in proportion to their membership interests. To reflect the substance of these arrangements, we measure attributions to noncontrolling interests in the consolidated variable interest entities using the distribution provisions set out in the operating agreements for each Member LLC. This is a balance sheet oriented approach that calculates changes in the noncontrolling interest holders’ claim to the net assets of each Member LLC from period to period to determine the income or loss attributable to noncontrolling interests, which are recognized in the consolidated statements of income. In certain instances, we are required to recognize non-cash compensation expense related to equity interests given to the noncontrolling interest holder of consolidated VIEs. There are no explicit or implicit vesting conditions associated with these deemed compensation arrangements. Equity-classified compensation arrangements are measured upon the noncontrolling interest holders being admitted as a member of the VIEs, and liability-classified compensation arrangements are measured at the end of each reporting period. The fair-value-based measure of the equity interests is determined using a Black-Scholes option pricing model that requires the input of subjective assumptions regarding the future cash flows of the VIE, including consideration of future expected debt financing and the expected volatility of the equity interests. We determined these assumptions based on entity specific considerations of (i) the primary expected future cash flows of property rents and expected debt and debt service payments, (ii) discount rates appropriate for the economic environment and anticipated future interest rates and (iii) expected volatility based on historical observed stock prices of publicly traded peer companies, including those involved in real estate development. Equity Method Investments For certain of our investments in VIEs where we are not the managing member and do not have the ability to liquidate the VIE or otherwise remove the managing member, we do not have the power to direct the most significant activities of the VIE and therefore are not the primary beneficiary. We account for such investments using the equity method of accounting. Our investments are presented as equity method investments share of equity method investments loss As of our initial investment date, we determine the fair value of the underlying assets and liabilities held by our equity method investments for purposes of determining whether or not we have basis differences arising in connection with our investment. The determination of fair value of the underlying real estate assets requires subjectivity and estimates, including the use of various valuation techniques and Level 3 inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable. If specialized expertise is required we obtain independent third-party appraisals to determine the fair value of the underlying assets and liabilities. The operating agreements for each equity method investment specify distributions from operations and upon liquidation that may be disproportionate to the members’ relative ownership percentages. Distributions are made to the members in proportion to, and in repayment of, various categories of capital contributions plus certain preferred returns, after which distributions are made to the members in proportion to their membership interests. To reflect the substance of these arrangements, we measure our proportionate share of the earnings or losses of each equity method investment using the hypothetical liquidation at book value (“HLBV”) method, which is a balance sheet oriented approach to determine our share of earnings or losses that reflects changes in our claims to the net assets of each equity method investment. Due to the presence of basis differences and liquidation preferences, we use the recast financial statements approach in applying the HLBV method whereby we recast the financial statements of each entity to reflect our perspective or basis (thus eliminating the basis differences) when determining our share of the earnings or losses. Our proportionate share of earnings or losses of the equity method investments follow the entities’ distribution priorities, which may change upon the achievement of certain investment return thresholds. Our equity method investment balance is subsequently adjusted for our share of earnings and losses, cash contributions and distributions. We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The difference between the carrying value of the equity method investment and its estimated fair value is recognized as an impairment charge when the loss in value is deemed other than temporary. |
Deferred Financing Fees and Debt Issuance Costs | Deferred Financing Fees and Debt Issuance Costs Deferred financing fees related to the asset based credit facility are included in other non-current assets interest expense—net |
Revenue Recognition | Revenue Recognition We recognize revenue and the related cost of goods sold when a customer obtains control of the merchandise, which is when the customer has the ability to direct the use of and obtain the benefits from the merchandise. Revenue recognized for merchandise delivered via the home delivery channel is recognized upon delivery. Revenue recognized for merchandise delivered via all other delivery channels is recognized upon shipment. Revenue from “cash-and-carry” store sales are recognized at the point of sale. Discounts or other accommodations provided to customers are accounted for as a reduction of net revenues We recognize shipping and handling fees as activities to fulfill the promise to transfer the merchandise to customers. We apply this policy consistently across all of our distribution channels. The related costs of shipping and handling activities are accrued for in the same period as revenue is recognized. Costs of shipping and handling are included in cost of goods sold Sales tax or value added tax (VAT) collected is not recognized as revenue but is included in accounts payable and accrued expenses Our customers may return purchased items for a refund in accordance with our policies. Projected merchandise returns, which are often resalable merchandise, are reserved on a gross basis based on historical return rates. The allowance for sales returns is presented within other current liabilities prepaid expense and other assets Merchandise exchanges of the same product and price are not considered merchandise returns and, therefore, are excluded when calculating the sales returns reserve. A summary of the allowance for sales returns is as follows: YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Balance at beginning of fiscal year $ 20,747 $ 25,256 $ 25,559 Provision for sales returns 148,237 150,366 161,876 Actual sales returns (149,396) (154,875) (162,179) Balance at end of fiscal year $ 19,588 $ 20,747 $ 25,256 |
Deferred Revenue and Customer Deposits | Deferred Revenue and Customer Deposits We defer revenue associated with merchandise delivered via the home delivery channel, which is included as deferred revenue and customer deposits Customer deposits represent payments made by customers on custom orders. At the time of order placement we collect deposits for all custom orders equivalent to 50% of the purchase price. Custom order deposits are recognized as revenue when the customer obtains control of the merchandise. We expect that substantially all of the deferred revenue and customer deposits as of February 3, 2024 will be recognized within the next six months as the performance obligations are satisfied, and membership fees will be recognized over the membership period. |
Gift Cards | Gift Cards We sell gift cards to our customers in our Galleries and through our websites and Sourcebooks. Such gift cards and merchandise credits do not have expiration dates. We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards. During fiscal 2023, fiscal 2022 and fiscal 2021, we recognized $24 million, $21 million and $20 million, respectively, of revenue related to previous deferrals related to our gift cards. Customer liabilities related to gift cards was $25 million and $27 million as of February 3, 2024 and January 28, 2023, respectively. We recognize breakage income associated with gift cards proportional to actual gift card redemptions in net revenues We expect that approximately 75 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers. |
Self-Insurance | Self-Insurance We maintain insurance coverage for significant exposures as well as those risks that, by law, must be insured. In the case of our health care coverage for our employees, we have a managed self-insurance program related to claims filed. Expenses related to this self-insured program are computed on an actuarial basis, based on claims experience, regulatory requirements, an estimate of claims incurred but not yet reported (“IBNR”) and other relevant factors. The projections involved in this process are subject to uncertainty related to the timing and amount of claims filed, levels of IBNR, fluctuations in health care costs and changes to regulatory requirements. We had liabilities of $3.2 million and $3.6 million related to health care coverage as of February 3, 2024 and January 28, 2023, respectively. We carry workers’ compensation insurance subject to a deductible amount for which we are responsible on each claim. We had liabilities of $5.6 million related to workers’ compensation claims, primarily for claims that do not meet the per-incident deductible, as of both February 3, 2024 and January 28, 2023. |
Stock-Based Compensation | Stock-Based Compensation We recognize the fair value of stock-based awards as compensation expense over the requisite service period within selling, general and administrative expenses For service-only awards, compensation expense is recognized on a straight-line basis, net of forfeitures, over the requisite service period for the fair value of awards that actually vest. Fair value for restricted stock units is valued using the closing price of our stock on the date of grant. The fair value of each option award granted under our award plan is estimated on the date of grant using a Black-Scholes Merton option pricing model (“OPM”) which requires the input of assumptions regarding the expected term, expected volatility, dividend yield and risk-free interest rate. We elected to calculate the expected term of the option awards using the “simplified method.” This election was made based on the lack of sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Under the “simplified” calculation method, the expected term is calculated as an average of the vesting period and the contractual life of the options. We calculate expected volatility using a blended approach based on equal weighting of historical volatility and implied volatility. For awards with performance-based criteria, compensation expense is recognized on an accelerated basis over the requisite service period. The fair value of each performance-based option award granted is estimated on the date of grant using a Monte Carlo simulation option pricing model that requires the input of subjective assumptions regarding the future exercise behavior, expected volatility and a discount for illiquidity. We determined these assumptions based on consideration of (i) future exercise behavior based on the historical observed exercise pattern of the award recipient, (ii) expected volatility based on our historical observed common stock prices measured over the full trading history of our common stock and implied volatility based on 180-day average trading prices of our common stock and (iii) a discount for illiquidity estimated using the Finnerty method. Refer to Note 3— Consolidated Variable Interest Entities and Noncontrolling Interests |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold includes the direct cost of purchased merchandise; inventory shrinkage, inventory reserves and write-downs and lower of cost or net realizable value reserves; inbound freight; all freight costs to get merchandise to our retail locations and outlets; design, buying and allocation costs; occupancy costs related to retail and outlet operations and our supply chain, such as rent and common area maintenance for our leases; depreciation and amortization of leasehold improvements, equipment and other assets in our retail locations, outlets and distribution centers. In addition, cost of goods sold includes all logistics costs associated with shipping product to our customers. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses include all operating costs not included in cost of goods sold. These expenses include payroll and payroll-related expenses, retail related expenses other than occupancy, and expenses related to the operations at our corporate headquarters, including rent, utilities, depreciation and amortization, credit card fees and marketing expense, which primarily includes Sourcebook production, mailing and print advertising costs. All retail pre-opening costs are included in selling, general and administrative expenses and are expensed as incurred. |
Interest Expense - Net | Interest Expense—Net Interest expense primarily relates to interest incurred on our term loans and finance lease arrangements. Refer to Note 12— Credit Facilities Leases. Interest expense—net YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Interest expense $ 237,899 $ 151,730 $ 66,883 Interest income (39,603) (38,520) (1,936) Total interest expense—net $ 198,296 $ 113,210 $ 64,947 |
Net Income Per Share | Net Income Per Share Basic net income per share is computed as net income divided by the weighted-average number of common shares outstanding for the period. Diluted net income per share is computed as net income divided by the weighted-average number of common shares outstanding for the period, including additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for convertible senior notes and the treasury stock method for all other instruments. Potential dilutive securities are excluded from the computation of diluted net income per share if their effect is anti-dilutive. The if-converted method is applicable for the convertible senior notes beginning in fiscal 2022 due to the adoption of ASU 2020-06. The treasury stock method was applied in fiscal 2021 prior to the adoption of ASU 2020-06. |
Treasury Stock | Treasury Stock We record our purchases of treasury stock at cost as a separate component of stockholders’ equity in the consolidated financial statements. Upon retirement of treasury stock, we allocate the excess of the purchase price over par value to additional paid-in capital retained earnings (accumulated deficit) accounts payable and accrued expenses |
Income Taxes | Income Taxes We account for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. In estimating future tax consequences, we generally take into account all expected future events then known to it, other than changes in the tax law or rates which have not yet been enacted and which are not permitted to be considered. Accordingly, we may record a valuation allowance to reduce our net deferred tax assets to the amount that is more likely than not to be realized. The determination as to whether a deferred tax asset will be realized is made on a jurisdictional basis and is based upon our best estimate of the recoverability of our net deferred tax assets. Future taxable income and ongoing prudent and feasible tax planning are considered in determining the amount of the valuation allowance, and the amount of the allowance is subject to adjustment in the future. Specifically, in the event we were to determine that it is not more likely than not able to realize our net deferred tax assets in the future, an adjustment to the valuation allowance would decrease income in the period such determination is made. This allowance does not alter our ability to utilize the underlying tax net operating loss and credit carryforwards in the future, the utilization of which is limited to achieving future taxable income. The accounting standard for uncertainty in income taxes prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. Differences between tax positions taken in a tax return and amounts recognized in the financial statements generally result in an increase in liability for income taxes payable or a reduction of an income tax refund receivable, or a reduction in a deferred tax asset or an increase in a deferred tax liability, or both. We recognize interest and penalties related to unrecognized tax benefits in income tax expense (benefit) |
Foreign Currency Matters | Foreign Currency Matters The functional currency of our foreign subsidiaries is generally the local currency of the country in which the subsidiary operates. Assets and liabilities of the foreign subsidiaries denominated in non-U.S. dollar currencies are translated at the rate of exchange prevailing on the date of the consolidated balance sheets, and revenues and expenses are translated at average rates of exchange for the period. The related translation gains and losses are reflected in the accumulated other comprehensive loss net gain (loss) from foreign currency translation accumulated other comprehensive loss Foreign currency gains and losses resulting from foreign currency transactions denominated in a currency other than the subsidiary’s functional currency are included in other expense—net |
Recently Issued Accounting Standards | 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 Accounting Standards Update (“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 between 30 days and 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 New Accounting Standards or Updates Not Yet Adopted Joint Venture Formations: Recognition and Initial Measurement In August 2023, the FASB issued ASU 2023-05—Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement Segment Reporting: Improvements to Reportable Segment Disclosures In November 2023, the FASB issued ASU 2023-07—Improvements to Reportable Segment Disclosures Income Taxes: Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09 — Improvements to Income Tax Disclosures . This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring consistent categories and greater disaggregation of information in the rate reconciliation as well as income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements. |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of property and equipment useful lives | CATEGORY OF PROPERTY AND EQUIPMENT USEFUL LIFE Building and building improvements 40 to 55 years Machinery, equipment and aircraft 3 to 10 years Furniture, fixtures and equipment 3 to 7 years Computer software 3 to 10 years |
Schedule of allowance for sales returns | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Balance at beginning of fiscal year $ 20,747 $ 25,256 $ 25,559 Provision for sales returns 148,237 150,366 161,876 Actual sales returns (149,396) (154,875) (162,179) Balance at end of fiscal year $ 19,588 $ 20,747 $ 25,256 |
Schedule of interest expense - net | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Interest expense $ 237,899 $ 151,730 $ 66,883 Interest income (39,603) (38,520) (1,936) Total interest expense—net $ 198,296 $ 113,210 $ 64,947 |
PREPAID EXPENSE AND OTHER ASS_2
PREPAID EXPENSE AND OTHER ASSETS (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
PREPAID EXPENSE AND OTHER ASSETS | |
Schedule of prepaid expense and other current assets | Prepaid expense and other current assets consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Prepaid expenses $ 42,089 $ 24,352 Capitalized catalog costs 27,856 26,522 Vendor deposits 26,409 21,201 Federal and state tax receivable (1) 20,441 12,322 Tenant allowance receivable 8,220 8,336 Value added tax (VAT) receivable 6,532 7,465 Right of return asset for merchandise 5,011 4,983 Promissory notes receivable, including interest (2) 3,292 2,991 Interest income receivable 54 4,878 Other current assets 29,126 26,247 Total prepaid expense and other current assets $ 169,030 $ 139,297 (1) Refer to Note 14— Income Taxes . (2) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs. Refer to Note 7— Variable Interest Entities . |
Schedule of other non-current assets | Other non-current assets consist of the following: FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Landlord assets under construction—net of tenant allowances $ 118,897 $ 45,511 Initial direct costs prior to lease commencement 66,333 51,249 Capitalized cloud computing costs—net (1) 22,646 21,529 Vendor deposits—non-current 8,862 10,593 Other deposits 7,913 7,143 Deferred financing fees 2,520 3,528 Other non-current assets 13,551 9,654 Total other non-current assets $ 240,722 $ 149,207 (1) Presented net of accumulated amortization of $19 million and $11 million as of February 3, 2024 and January 28, 2023. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Finance lease right-of-use assets (1) $ 1,104,365 $ 1,303,133 Leasehold improvements (2) 434,220 391,912 Building and building improvements (3) 334,996 94,508 Computer software 173,378 147,553 Land 106,347 97,670 Furniture, fixtures and equipment 97,990 86,456 Machinery, equipment and aircraft 82,962 79,836 Built-to-suit property (4) 37,057 37,057 Total property and equipment 2,371,315 2,238,125 Less—accumulated depreciation and amortization (5) (685,457) (602,141) Total property and equipment—net $ 1,685,858 $ 1,635,984 (1) Refer to “Lease Accounting” within Note 3— Significant Accounting Policies and Note 10— Leases . (2) Includes construction in progress of $39 million and $8.0 million as of February 3, 2024 and January 28, 2023 , respectively. (3) Includes $ 126 million and $92 million of owned buildings under construction related to future Design Galleries as of February 3, 2024 and January 28, 2023, respectively. Additionally, includes the purchase of the RH Guesthouse New York building in fiscal 2023. Refer to Note 10— Leases . (4) During fiscal 2021, we opened the Dallas Design Gallery. During the construction period of this Design Gallery, we were the “deemed owner” for accounting purposes and classified the construction costs as a build-to-suit asset. Upon construction completion and lease commencement, we performed a sale-leaseback analysis and determined that we cannot derecognize the build-to-suit asset. Therefore, the asset remains classified as a build-to-suit asset and is depreciated over the term of the useful life of the asset. (5) Includes accumulated amortization related to finance lease right-of-use assets of $268 million and $224 million as of February 3, 2024 and January 28, 2023, respectively. Refer to Note 10— Leases. |
GOODWILL, TRADENAMES, TRADEMA_2
GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS | |
Schedule of goodwill, tradenames, trademarks and other intangible assets | RH SEGMENT WATERWORKS TRADENAMES, TRADENAMES, TRADEMARKS AND TRADEMARKS AND OTHER INTANGIBLE OTHER INTANGIBLE GOODWILL ASSETS GOODWILL (1) ASSETS (2) (in thousands) January 29, 2022 $ 141,100 $ 56,161 $ — $ 17,000 Additions — 1,472 — — Foreign currency translation (52) — — — January 28, 2023 141,048 57,633 — 17,000 Additions — 1,294 — — Foreign currency translation (15) — — — February 3, 2024 $ 141,033 $ 58,927 $ — $ 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 prior fiscal years. |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
VARIABLE INTEREST ENTITIES | |
Schedule of variable interest entities | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) ASSETS Cash and cash equivalents $ 8,918 $ 6,653 Restricted cash (1) — 3,662 Prepaid expense and other current assets 1,876 3,670 Total current assets 10,794 13,985 Property and equipment—net (2) 256,523 187,093 Other non-current assets 6 122 Total assets $ 267,323 $ 201,200 LIABILITIES Accounts payable and accrued expenses $ 8,735 $ 6,685 Other current liabilities 1,041 — Total current liabilities 9,776 6,685 Real estate loans—net (3) 17,766 17,909 Other non-current obligations 947 929 Total liabilities $ 28,489 $ 25,523 (1) Restricted cash deposits as of January 28, 2023 represented amounts held in escrow for one Member LLC representing a portion of the proceeds from the issuance of the Promissory Note (defined below) that were required to be used for tenant allowances specified in a lease agreement between us and the Member LLC. All amounts have been utilized during fiscal 2023 and, accordingly, there is no restricted cash remaining as of February 3, 2024. (2) Includes $77 million and $125 million of construction in progress as of February 3, 2024 and January 28, 2023, respectively, which is included in “building and building improvements” within property and equipment —net . (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) | 12 Months Ended |
Feb. 03, 2024 | |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of accounts payable and accrued expenses | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Accounts payable $ 192,345 $ 166,082 Accrued compensation 43,840 76,650 Accrued occupancy 29,144 28,830 Accrued sales and use tax (1) 26,823 21,950 Accrued legal settlements (1)(2) 16,704 47 Accrued freight and duty 14,333 17,497 Excise tax payable on share repurchases (1) 11,988 3,700 Accrued professional fees 5,754 7,447 Accrued legal contingencies (1)(2) 2,795 8,874 Accrued interest 1,343 14,456 Other accrued expenses (1) 21,516 29,416 Total accounts payable and accrued expenses $ 366,585 $ 374,949 (1) Prior year amounts have been adjusted to conform to the current period presentation. (2) Refer to Note 19 ¾ Commitments and Contingencies . |
Schedule of other current liabilities | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Current portion of term loans $ 25,000 $ 25,000 Unredeemed gift card and merchandise credit liability 24,720 26,733 Allowance for sales returns 19,588 20,747 Finance lease liabilities 14,668 17,007 Federal tax payable 5,561 — Foreign tax payable 249 4,365 Other current liabilities 6,327 9,338 Total other current liabilities $ 96,113 $ 103,190 |
OTHER NON-CURRENT OBLIGATIONS (
OTHER NON-CURRENT OBLIGATIONS (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
OTHER NON-CURRENT OBLIGATIONS. | |
Schedule of other non-current obligations | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Unrecognized tax benefits $ 3,633 $ 2,962 Other non-current obligations 7,006 5,112 Total other non-current obligations $ 10,639 $ 8,074 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
LEASES | |
Summary of lease costs-net | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Operating lease cost (1) $ 116,553 $ 100,646 $ 99,985 Finance lease costs Amortization of leased assets (1) 54,596 52,346 43,964 Interest on lease liabilities (2) 33,822 32,051 26,412 Variable lease costs (3) 23,517 27,848 36,914 Sublease income (4) (5,544) (4,455) (4,184) Total lease costs—net $ 222,944 $ 208,436 $ 203,091 (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 consolidated statements of income based on our accounting policy. Refer to Note 3— Significant Accounting Policies . (2) Included in interest expense—net on the 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 $14 million, $19 million and $28 million in fiscal 2023, fiscal 2022 and fiscal 2021, respectively, as well as charges associated with common area maintenance of $9.1 million, $9.3 million and $8.8 million in fiscal 2023, fiscal 2022 and fiscal 2021, 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 any period presented. (4) Included in selling, general and administrative expenses on the consolidated statements of income. |
Summary of lease right-of-use assets and lease liabilities | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 625,801 $ 527,246 Finance leases (1)(2)(3)(4) Property and equipment—net 836,814 1,078,979 Total lease right-of-use assets $ 1,462,615 $ 1,606,225 Liabilities Current (5) Operating leases Operating lease liabilities $ 85,523 $ 80,384 Finance leases (4) Other current liabilities 14,668 17,007 Total lease liabilities—current 100,191 97,391 Non-current Operating leases Non-current operating lease liabilities 576,166 505,809 Finance leases (4) Non-current finance lease liabilities 566,829 653,050 Total lease liabilities—non-current 1,142,995 1,158,859 Total lease liabilities $ 1,243,186 $ 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 $268 million and $224 million as of February 3, 2024 and January 28, 2023, respectively. (3) Includes $37 million and $39 million as of February 3, 2024 and January 28, 2023, respectively, 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 7— Variable Interest Entities . (4) During fiscal 2023, we purchased the building and land of our RH Guesthouse New York location and terminated the lease associated with the property. As a result, the right-of-use asset and lease liability was reclassified to property and equipment—net on the consolidated balance sheets as of the purchase date. Refer to Note 5— Property and Equipment . (5) 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 were as follows as of February 3, 2024: OPERATING FINANCE FISCAL YEAR LEASES LEASES TOTAL (in thousands) 2024 $ 117,806 $ 42,887 $ 160,693 2025 117,916 47,942 165,858 2026 110,067 48,709 158,776 2027 102,787 49,516 152,303 2028 69,215 48,551 117,766 Thereafter 330,183 728,022 1,058,205 Total lease payments (1)(2) 847,974 965,627 1,813,601 Less—imputed interest (3) (186,285) (384,130) (570,415) Present value of lease liabilities $ 661,689 $ 581,497 $ 1,243,186 (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 $686 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of February 3, 2024, of which $26 million, $41 million, $38 million, $40 million and $41 million will be paid in fiscal 2024, fiscal 2025, fiscal 2026, fiscal 2027 and fiscal 2028, respectively, and $500 million will be paid subsequent to fiscal 2028. (2) Excludes an immaterial amount of future commitments under short-term lease agreements as of February 3, 2024. (3) Calculated using the discount rate for each lease at lease commencement. |
Summary of supplemental information related to leases | YEAR ENDED FEBRUARY 3, JANUARY 28, 2024 2023 Weighted-average remaining lease term (years) Operating leases 8.7 8.3 Finance leases 19.7 21.9 Weighted-average discount rate Operating leases 5.17% 4.08% Finance leases 5.07% 5.32% |
Summary of other information related to leases | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (122,220) $ (101,513) $ (102,097) Operating cash flows from finance leases (37,819) (32,090) (26,775) Financing cash flows from finance leases—net (1) (13,972) (10,146) (14,158) Total cash outflows from leases $ (174,011) $ (143,749) $ (143,030) Non-cash transactions: Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations Operating leases $ 170,542 $ 49,702 $ 172,393 Finance leases 1,648 109,015 89,617 Reclassification of finance lease right-of-use asset to property and equipment (2) 188,515 — — Reclassification of finance lease liability to property and equipment (2) (71,612) — — (1) Represents the principal portion of finance lease payments offset by tenant allowances received under finance leases subsequent to lease commencement of $2.4 million and $4.7 million in fiscal 2023 and fiscal 2022, respectively. No such tenant allowances were received in fiscal 2021. (2) Represents the reclassification of the right-of-use asset and lease liability upon the purchase of the building and land of our RH Guesthouse New York location and termination of the associated lease agreement. Refer to Note 5— Property and Equipment . |
CONVERTIBLE SENIOR NOTES (Table
CONVERTIBLE SENIOR NOTES (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
CONVERTIBLE SENIOR NOTES | |
Outstanding balances under our 2023 Notes and 2024 Notes | FEBRUARY 3, JANUARY 28, 2024 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) $ — $ — $ — $ 1,696 $ — $ 1,696 Convertible senior notes due 2024 (2) 41,904 (69) 41,835 41,904 (180) 41,724 Total convertible senior notes $ 41,904 $ (69) $ 41,835 $ 43,600 $ (180) $ 43,420 (1) The 2023 Notes outstanding were classified as convertible senior notes due 2023 within current liabilities as of January 28, 2023. The 2023 Notes matured and were repaid in June 2023 and, as of February 3, 2024, the 2023 Notes are no longer outstanding. (2) The 2024 Notes outstanding were classified as convertible seniors notes due 2024—net within current liabilities as of February 3, 2024 and within non-current liabilities as of January 28, 2023. |
CREDIT FACILITIES (Tables)
CREDIT FACILITIES (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
CONVERTIBLE SENIOR NOTES | |
Schedule of Outstanding Balances Under our Credit Facilities | FEBRUARY 3, JANUARY 28, 2024 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) 6.68% $ — $ — $ — $ — $ — $ — Term loan B (3) 7.95% 1,955,000 (15,115) 1,939,885 1,975,000 (18,471) 1,956,529 Term loan B-2 (4) 8.68% 493,750 (20,054) 473,696 498,750 (24,505) 474,245 Equipment promissory note (5) — — — — 1,160 — 1,160 Total credit facilities $ 2,448,750 $ (35,169) $ 2,413,581 $ 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 February 3, 2024. (2) Deferred financing fees associated with the asset based credit facility as of February 3, 2024 and January 28, 2023 were $2.5 million and $3.5 million, respectively, and are included in other non-current assets on the consolidated balance sheets. The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit, which has a maturity date of July 29, 2026. (3) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $1,935 million and $1,955 million were included in term loan—net on the consolidated balance sheets as of February 3, 2024 and January 28, 2023, respectively, and $20 million was included in other current liabilities on the consolidated balance sheets as of both February 3, 2024 and 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 $489 million and $494 million were included in term loan B-2—net on the consolidated balance sheets as of February 3, 2024 and January 28, 2023, respectively, and $5.0 million was included in other current liabilities on the consolidated balance sheets as of both February 3, 2024 and January 28, 2023. (5) Represents equipment security note secured by certain of our property and equipment, which was included in other current liabilities on the consolidated balance sheets as of January 28, 2023. The equipment security note was repaid in full in April 2023 and, as of February 3, 2024, is no longer outstanding. |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
FAIR VALUE MEASUREMENTS | |
Estimated Fair Value and Carrying Value of Notes, Term Loan Credit Agreement and the Real Estate Loans | FEBRUARY 3, JANUARY 28, 2024 2023 PRINCIPAL PRINCIPAL FAIR CARRYING FAIR CARRYING VALUE VALUE (1) VALUE VALUE (1) (in thousands) Convertible senior notes due 2023 $ — $ — $ 1,622 $ 1,696 Convertible senior notes due 2024 39,879 41,904 37,351 41,904 Term loan B 1,917,715 1,955,000 1,961,056 1,975,000 Term loan B-2 490,545 493,750 500,215 498,750 Real estate loans 17,425 17,966 17,909 17,909 (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 real estate loans represent the outstanding principal balance and exclude debt issuance costs. |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
INCOME TAXES | |
Summary of Income Before Income Taxes | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Domestic $ 143,509 $ 418,216 $ 821,001 Foreign 12,313 19,068 1,103 Total $ 155,822 $ 437,284 $ 822,104 |
Summary of Income Tax Expense (Benefit) | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Current Federal $ (3,249) $ (6,773) $ 111,975 State 6,032 1,013 28,141 Foreign 179 7,012 363 Total current tax expense 2,962 1,252 140,479 Deferred Federal 22,236 (78,032) (3,841) State (1,339) (18,639) (2,885) Foreign 4,402 4,061 (195) Total deferred tax expense (benefit) 25,299 (92,610) (6,921) Total income tax expense (benefit) $ 28,261 $ (91,358) $ 133,558 |
Schedule of Reconciliation of Federal Statutory Tax Rate to Company's Effective Tax Rate | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Provision at federal statutory tax rate 21.0 % 21.0 % 21.0 % State income taxes—net of federal tax impact 2.1 (2.8) 2.4 Federal rehabilitation tax credit (1) (7.3) (0.9) — Stock compensation—excess benefits (3.4) (50.0) (8.0) Non-deductible stock-based compensation 1.3 0.9 0.6 U.S. impact of foreign operations (1) 0.8 0.6 (0.2) Valuation allowance 0.2 0.5 — Tax impact of convertible senior notes repurchase 0.1 9.4 — Tax rate adjustments and other (1) 1.0 — — Other permanent items (1) 2.3 0.4 0.4 Effective tax rate 18.1 % (20.9) % 16.2 % (1) Prior year rates have been adjusted to conform to the current period presentation. |
Components of Deferred Tax Assets and Liabilities | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) Non-current deferred tax assets (liabilities) Lease liabilities $ 341,767 $ 339,911 Interest expense carryforwards 72,765 28,584 Net operating loss carryforwards 60,143 120,586 Accrued expenses 25,906 30,108 Stock-based compensation 19,090 14,974 Merchandise inventories 13,881 13,346 Deferred revenue 3,847 3,242 Other — 4,483 Non-current deferred tax assets 537,399 555,234 Valuation allowance (4,442) (4,202) Non-current deferred tax assets—net $ 532,957 $ 551,032 Property and equipment $ (182,580) $ (212,424) Lease right-of-use assets (165,423) (142,199) Prepaid expense and other (29,927) (15,894) Tradename, trademarks and intangibles (11,379) (11,452) State benefit (8,104) (8,339) Non-current deferred tax liabilities (397,413) (390,308) Total non-current deferred tax assets—net $ 135,544 $ 160,724 |
Schedule of Reconciliation of Valuation Allowance | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Balance at beginning of fiscal year $ 4,202 $ 1,959 $ 2,049 Net changes in deferred tax assets and liabilities 240 2,243 (90) Balance at end of fiscal year $ 4,442 $ 4,202 $ 1,959 |
Schedule of reconciliation of the exposures related to unrecognized tax benefits | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Balance at beginning of fiscal year $ 8,151 $ 8,604 $ 8,456 Gross decreases—prior period tax positions — — (143) Gross increases—current period tax positions 515 — 933 Reductions based on the lapse of the applicable statutes of limitations (62) (453) (642) Balance at end of fiscal year $ 8,604 $ 8,151 $ 8,604 |
NET INCOME PER SHARE (Tables)
NET INCOME PER SHARE (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
NET INCOME PER SHARE | |
Schedule of weighted-average shares used for net income (loss) per share | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Weighted-average shares—basic 19,880,576 23,523,065 21,270,448 Effect of dilutive stock-based awards 1,518,408 2,675,660 6,506,399 Effect of dilutive convertible senior notes (1) 201,494 363,263 3,336,548 Weighted-average shares—diluted 21,600,478 26,561,988 31,113,395 (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 2023 Notes terminated in June 2023 and did not have an impact on our diluted share count post-termination. 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 11— Convertible Senior Notes . We adopted ASU 2020-06 in the first quarter of fiscal 2022, and the adoption requires the dilutive impact of the convertible senior notes for diluted net income per share purposes to be determined under the if-converted method which assumes share settlement of the entire convertible debt instrument. Prior to adoption of ASU 2020-06 for fiscal 2021, we applied the treasury stock method to determine the dilutive impact of the 2023 Notes and 2024 Notes for diluted net income per share purposes, and the 2020 Notes, 2023 Notes and the 2024 Notes impact our dilutive share count beginning at stock prices of $118.13 per share, $193.65 per share and $211.40 per share, respectively. |
Anti-Dilutive Securities Excluded from Diluted Net Income (loss) per Share | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Options 1,316,836 1,096,269 102,374 Restricted stock units 15,313 19,154 1,379 Convertible senior notes — 231,618 — |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
STOCK-BASED COMPENSATION | |
Summary of Stock Option Activity | WEIGHTED-AVERAGE OPTIONS EXERCISE PRICE Outstanding—January 28, 2023 3,415,952 $ 180.03 Granted 385,750 267.90 Exercised (150,486) 80.56 Cancelled (74,660) 215.91 Outstanding—February 3, 2024 3,576,556 $ 192.94 |
Schedule of Assumptions Used to Estimate Fair Value of Stock Options Issued | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Expected volatility 54.3 % 62.4 % 64.2 % Expected life (years) 7.3 7.3 7.3 Risk-free interest rate 3.9 % 3.8 % 1.4 % Dividend yield — — — |
Summary of Additional Information about Stock Options | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands, except per share amounts) Weighted-average fair value per share of stock options granted $ 160.57 $ 171.78 $ 392.65 Aggregate intrinsic value of stock options exercised 34,556 1,102,657 280,060 Fair value of stock options vested 19,113 18,071 22,665 |
Schedule of stock-based compensation expense | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Stock-based compensation expense (1) $ 36,509 $ 40,583 $ 45,461 (1) 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 Stock Incentive Plan. The option will result in aggregate non-cash stock compensation expense of $174 million, of which $9.6 million, $18 million and $24 million was recognized during fiscal 2023, fiscal 2022 and fiscal 2021, respectively. |
Stock options outstanding, vested or expected to vest, and exercisable | OPTIONS OUTSTANDING OPTIONS EXERCISABLE WEIGHTED- AVERAGE WEIGHTED- WEIGHTED- REMAINING AVERAGE AVERAGE NUMBER OF CONTRACTUAL EXERCISE NUMBER OF EXERCISE RANGE OF EXERCISE PRICES OPTIONS LIFE (IN YEARS) PRICE OPTIONS PRICE $25.39 — $45.82 252,984 2.3 $ 35.81 252,984 $ 35.81 $50.00 — $50.00 1,000,000 3.2 50.00 1,000,000 50.00 $53.47 — $154.82 812,042 4.9 123.11 397,422 106.93 $159.00 — $266.91 502,800 8.9 254.93 40,560 204.22 $278.81 — $352.66 192,530 6.9 328.10 51,640 325.82 $385.30 — $385.30 700,000 6.7 385.30 700,000 385.30 $389.34 — $713.52 116,200 7.4 602.21 24,860 594.40 Total 3,576,556 $ 192.94 2,467,466 $ 166.63 Vested or expected to vest 3,306,511 $ 187.02 |
Summary of Restricted Stock Award Activity | WEIGHTED- AVERAGE INTRINSIC GRANT DATE FAIR VALUE AWARDS VALUE (in thousands) Outstanding—January 28, 2023 20,920 $ 443.92 Granted 2,961 322.24 Released (7,181) 396.34 Cancelled (760) 564.19 Outstanding—February 3, 2024 15,940 $ 437.02 $ 4,081 |
Summary of Additional Information about Restricted Stock Awards | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 Weighted-average fair value per share of awards granted $ 322.24 $ 318.86 $ 582.79 Grant date fair value of awards released (in thousands) 2,846 2,694 4,257 |
Summary of stock-based compensation expense related to restricted stock awards | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Stock-based compensation expense $ 2,874 $ 2,962 $ 3,018 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Feb. 03, 2024 | |
SEGMENT REPORTING | |
Schedule of Segment Operating Income and Income Before Income Taxes and Equity Method Investments | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Operating income: RH Segment $ 369,458 $ 761,544 $ 944,881 Waterworks 24,329 28,282 17,747 Total segment operating income 393,787 789,826 962,628 Non-cash compensation (9,640) (18,072) (23,428) Legal settlements (8,500) 4,188 — Reorganization related costs (7,621) — (449) Asset impairments (3,531) (24,186) (9,630) Recall accrual 1,576 (560) (1,940) Employer payroll taxes on option exercises — (14,392) — Professional fees — (7,469) — Non-cash compensation related to consolidated VIEs — (4,470) — Compensation settlements — (3,483) — Gain on sale of building and land — 775 — Income from operations 366,071 722,157 927,181 Interest expense—net 198,296 113,210 64,947 Loss on extinguishment of debt — 169,578 29,138 Other expense—net 1,078 30 2,778 Income before taxes and equity method investments $ 166,697 $ 439,339 $ 830,318 |
Summary of Statements of Income Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 RH SEGMENT WATERWORKS TOTAL RH SEGMENT WATERWORKS TOTAL RH SEGMENT WATERWORKS TOTAL (in thousands) Net revenues $ 2,835,617 $ 193,509 $ 3,029,126 $ 3,398,638 $ 191,839 $ 3,590,477 $ 3,593,842 $ 164,978 $ 3,758,820 Gross profit 1,286,107 102,912 1,389,019 1,708,444 103,541 1,811,985 1,772,668 82,743 1,855,411 Depreciation and amortization 113,695 5,294 118,989 103,221 5,367 108,588 91,252 4,770 96,022 |
Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting | FEBRUARY 3, JANUARY 28, 2024 2023 RH SEGMENT WATERWORKS REAL ESTATE TOTAL RH SEGMENT WATERWORKS REAL ESTATE TOTAL (in thousands) Goodwill (1) $ 141,033 $ — $ — $ 141,033 $ 141,048 $ — $ — $ 141,048 Tradenames, trademarks and other intangible assets (2) 58,927 17,000 — 75,927 57,633 17,000 — 74,633 Equity method investments (3) — 3,609 125,059 128,668 — 623 100,845 101,468 Total assets 3,798,572 183,804 161,521 4,143,897 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 prior fiscal years. (3) The Waterworks segment balance represents membership interests in two European entities, whereby we hold a 50 percent membership interest in one entity and an approximately 25 percent membership interest in the other, and we are not the primary beneficiary of these VIEs. Refer to Note 7— Variable Interest Entities related to the Real Estate segment equity method investments. |
Summary of net revenues | YEAR ENDED FEBRUARY 3, JANUARY 28, JANUARY 29, 2024 2023 2022 (in thousands) Furniture $ 2,039,902 $ 2,492,514 $ 2,599,540 Non-furniture 989,224 1,097,963 1,159,280 Total net revenues $ 3,029,126 $ 3,590,477 $ 3,758,820 |
Summary of long-lived assets by geography information | FEBRUARY 3, JANUARY 28, 2024 2023 (in thousands) North America $ 2,359,839 $ 2,261,615 All other countries 313,134 184,414 Total long-lived assets $ 2,672,973 $ 2,446,029 |
NATURE OF BUSINESS (Detail)
NATURE OF BUSINESS (Detail) | Feb. 03, 2024 store |
RH Galleries | |
NATURE OF BUSINESS | |
Number of Stores | 70 |
RH outlet stores | |
NATURE OF BUSINESS | |
Number of Stores | 42 |
RH Guesthouse | |
NATURE OF BUSINESS | |
Number of Stores | 1 |
Waterworks Showrooms | |
NATURE OF BUSINESS | |
Number of Stores | 14 |
SIGNIFICANT ACCOUNTING POLICI_4
SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable (Detail) - USD ($) $ in Millions | Feb. 03, 2024 | Jan. 28, 2023 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Allowance for doubtful accounts | $ 3.2 | $ 3.4 |
SIGNIFICANT ACCOUNTING POLICI_5
SIGNIFICANT ACCOUNTING POLICIES - Merchandise Inventories (Detail) - USD ($) $ in Millions | Feb. 03, 2024 | Jan. 28, 2023 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Inventory reserve balances | $ 46 | $ 40 |
SIGNIFICANT ACCOUNTING POLICI_6
SIGNIFICANT ACCOUNTING POLICIES - Product Recalls (Detail) - USD ($) $ in Millions | Feb. 03, 2024 | Jan. 28, 2023 |
Other current liabilities | ||
Product recalls | ||
Product recall accrual | $ 3.8 | $ 6.9 |
SIGNIFICANT ACCOUNTING POLICI_7
SIGNIFICANT ACCOUNTING POLICIES - Advertising Expenses (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Advertising expense | $ 107,000 | $ 71,000 | $ 40,000 |
Capitalized catalog costs and other current assets | $ 27,856 | $ 26,522 |
SIGNIFICANT ACCOUNTING POLICI_8
SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Capitalized interest | |||
Capitalized Interest | $ 5,600 | $ 4,900 | $ 12,000 |
Capitalized interest related to amortization of Convertible Notes debt discount | 10,000 | ||
Amortization of debt discount | $ 0 | $ 0 | $ 28,816 |
Minimum | Building and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 40 years | ||
Minimum | Machinery, equipment and aircraft | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 3 years | ||
Minimum | Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 3 years | ||
Minimum | Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 3 years | ||
Maximum | Building and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 55 years | ||
Maximum | Machinery, equipment and aircraft | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 10 years | ||
Maximum | Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 7 years | ||
Maximum | Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life (in years) | 10 years |
SIGNIFICANT ACCOUNTING POLICI_9
SIGNIFICANT ACCOUNTING POLICIES - Cloud Computing Costs (Detail) | Feb. 03, 2024 |
Minimum | |
Cloud Computing Costs | |
Useful life | 1 year |
Maximum | |
Cloud Computing Costs | |
Useful life | 7 years |
SIGNIFICANT ACCOUNTING POLIC_10
SIGNIFICANT ACCOUNTING POLICIES - Lease Accounting (Detail) | 12 Months Ended |
Feb. 03, 2024 | |
Lessee, Lease, Description [Line Items] | |
Lessee, Operating Lease, Existence of Option to Extend [true false] | true |
Lessee, Finance Lease, Existence of Option to Extend [true false] | true |
Renewal option term (in years) | 25 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial lease term (in years) | 10 years |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial lease term (in years) | 15 years |
Finance leased Equipment | Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial lease term (in years) | 2 years |
Finance leased Equipment | Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial lease term (in years) | 7 years |
SIGNIFICANT ACCOUNTING POLIC_11
SIGNIFICANT ACCOUNTING POLICIES - Impairment (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Impairment | |||
Impairment, Long-Lived Asset, Held-for-Use, Statement of Income or Comprehensive Income [Extensible Enumeration] | Selling General And Administrative Expense | Selling General And Administrative Expense | Selling General And Administrative Expense |
Construction expenditures | |||
Impairment | |||
Impairment charge on long-lived assets | $ 4.7 | $ 13 | $ 9.6 |
SIGNIFICANT ACCOUNTING POLIC_12
SIGNIFICANT ACCOUNTING POLICIES - Summary of Allowance for Sales Returns (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Balance at beginning of fiscal year | $ 20,747 | $ 25,256 | $ 25,559 |
Provision for sales returns | 148,237 | 150,366 | 161,876 |
Actual sales returns | (149,396) | (154,875) | (162,179) |
Balance at end of fiscal year | $ 19,588 | $ 20,747 | $ 25,256 |
SIGNIFICANT ACCOUNTING POLIC_13
SIGNIFICANT ACCOUNTING POLICIES - Deferred Revenue, Customer Deposits and Gift Cards and Merchandise Credits (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Recently Issued Accounting Standards | |||
Revenue recognition period of membership renewal fees (in years) | 1 year | ||
Deposit collection percentage at time of order placement (in %) | 50% | ||
Gift Card and Merchandise Credit | |||
Recently Issued Accounting Standards | |||
Revenue related to previous deferrals related to gift cards | $ 24 | $ 21 | $ 20 |
Customer liabilities related to gift cards | $ 25 | $ 27 | |
Percentage of remaining revenue recognized on gift card liabilities (in %) | 75% |
SIGNIFICANT ACCOUNTING POLIC_14
SIGNIFICANT ACCOUNTING POLICIES - Self Insurance (Detail) - USD ($) $ in Millions | Feb. 03, 2024 | Jan. 28, 2023 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Liabilities related to health care coverage | $ 3.2 | $ 3.6 |
Liabilities related to workers' compensation | $ 5.6 | $ 5.6 |
SIGNIFICANT ACCOUNTING POLIC_15
SIGNIFICANT ACCOUNTING POLICIES - Interest expense, net (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
SIGNIFICANT ACCOUNTING POLICIES | |||
Interest expense | $ 237,899 | $ 151,730 | $ 66,883 |
Interest income | (39,603) | (38,520) | (1,936) |
Total interest expense-net | $ 198,296 | $ 113,210 | $ 64,947 |
SIGNIFICANT ACCOUNTING POLIC_16
SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Standards (Detail) - USD ($) $ in Millions | Feb. 03, 2024 | Jan. 28, 2023 |
SIGNIFICANT ACCOUNTING POLICIES | ||
Financing Program included in accounts payable and accrued expenses | $ 28 | $ 26 |
Supplier Finance Program, Obligation, Current, Statement of Financial Position [Extensible Enumeration] | Accounts Payable And Accrued Liabilities Current | Accounts Payable And Accrued Liabilities Current |
PREPAID EXPENSE AND OTHER ASS_3
PREPAID EXPENSE AND OTHER ASSETS - Total (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
PREPAID EXPENSE AND OTHER ASSETS | ||
Prepaid expenses | $ 42,089 | $ 24,352 |
Capitalized catalog costs | 27,856 | 26,522 |
Vendor deposits | 26,409 | 21,201 |
Federal and state tax receivable | 20,441 | 12,322 |
Tenant allowance receivable | 8,220 | 8,336 |
Value added tax (VAT) receivable | 6,532 | 7,465 |
Right of return asset for merchandise | 5,011 | 4,983 |
Promissory notes receivable, including interest | 3,292 | 2,991 |
Interest income receivable | 54 | 4,878 |
Other current assets | 29,126 | 26,247 |
Total prepaid expense and other current assets | $ 169,030 | $ 139,297 |
PREPAID EXPENSE AND OTHER ASS_4
PREPAID EXPENSE AND OTHER ASSETS - Other non-current assets (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 03, 2024 | Jan. 28, 2023 | |
PREPAID EXPENSE AND OTHER ASSETS | ||
Landlord assets under construction-net of tenant allowances | $ 118,897 | $ 45,511 |
Initial direct costs prior to lease commencement | 66,333 | 51,249 |
Capitalized cloud computing costs-net | 22,646 | 21,529 |
Vendor deposits-non-current | 8,862 | 10,593 |
Other deposits | 7,913 | 7,143 |
Deferred financing fees | 2,520 | 3,528 |
Other non-current assets | 13,551 | 9,654 |
Total other non-current assets | 240,722 | 149,207 |
Accumulated amortization | $ 19,000 | $ 11,000 |
PROPERTY AND EQUIPMENT - Proper
PROPERTY AND EQUIPMENT - Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 2,371,315 | $ 2,238,125 |
Less-accumulated depreciation and amortization | (685,457) | (602,141) |
Total property and equipment-net | 1,685,858 | 1,635,984 |
Finance lease right-of-use assets | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 1,104,365 | 1,303,133 |
Less-accumulated depreciation and amortization | (268,000) | (224,000) |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 434,220 | 391,912 |
Building and building improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 334,996 | 94,508 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 173,378 | 147,553 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 106,347 | 97,670 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 97,990 | 86,456 |
Machinery, equipment and aircraft | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 82,962 | 79,836 |
Built-to-suit property | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 37,057 | $ 37,057 |
PROPERTY AND EQUIPMENT - Narrat
PROPERTY AND EQUIPMENT - Narratives (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Property Plant And Equipment [Line Items] | |||
Property Plant And Equipment Gross | $ 2,371,315 | $ 2,238,125 | |
Accumulated amortization | 685,457 | 602,141 | |
Depreciation expense | 64,000 | 56,000 | $ 52,000 |
Construction in Progress | |||
Property Plant And Equipment [Line Items] | |||
Property Plant And Equipment Gross | 39,000 | 8,000 | |
Building and building improvements | |||
Property Plant And Equipment [Line Items] | |||
Property Plant And Equipment Gross | 334,996 | 94,508 | |
Building and building improvements | Future Design Galleries | |||
Property Plant And Equipment [Line Items] | |||
Property Plant And Equipment Gross | 126,000 | 92,000 | |
Finance lease right-of-use assets | |||
Property Plant And Equipment [Line Items] | |||
Property Plant And Equipment Gross | 1,104,365 | 1,303,133 | |
Accumulated amortization | $ 268,000 | $ 224,000 |
GOODWILL, TRADENAMES, TRADEMA_3
GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 28, 2017 | |
GOODWILL ACTIVITY | |||
Goodwill, Beginning balance | $ 141,048 | ||
Goodwill, Ending balance | 141,033 | $ 141,048 | |
TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS ACTIVITY | |||
Indefinite-lived intangible assets, Beginning balance | 74,633 | ||
Indefinite-lived intangible assets, Ending balance | 75,927 | 74,633 | |
RH Segment | |||
GOODWILL ACTIVITY | |||
Goodwill, Beginning balance | 141,048 | 141,100 | |
Goodwill, Foreign currency translation | (15) | (52) | |
Goodwill, Ending balance | 141,033 | 141,048 | |
TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS ACTIVITY | |||
Indefinite-lived intangible assets, Beginning balance | 57,633 | ||
Indefinite-lived intangible assets, Ending balance | 58,927 | 57,633 | |
RH Segment | TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS | |||
TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS ACTIVITY | |||
Indefinite-lived intangible assets, Beginning balance | 57,633 | 56,161 | |
Indefinite-lived intangible assets, Additions | 1,294 | 1,472 | |
Indefinite-lived intangible assets, Ending balance | 58,927 | 57,633 | |
Waterworks | |||
GOODWILL ACTIVITY | |||
Goodwill impairment charge | $ 51,000 | ||
TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS ACTIVITY | |||
Indefinite-lived intangible assets, Beginning balance | 17,000 | ||
Indefinite-lived intangible assets, Ending balance | 17,000 | 17,000 | |
Impairment of intangible assets indefinite lived | 35,000 | 35,000 | |
Waterworks | TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS | |||
TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS ACTIVITY | |||
Indefinite-lived intangible assets, Beginning balance | 17,000 | 17,000 | |
Indefinite-lived intangible assets, Ending balance | 17,000 | 17,000 | |
Real Estate segment | |||
GOODWILL ACTIVITY | |||
Goodwill, Beginning balance | 0 | ||
Goodwill, Ending balance | $ 0 | $ 0 |
VARIABLE INTEREST ENTITIES - Co
VARIABLE INTEREST ENTITIES - Consolidated Variable Interest Entities and Noncontrolling Interests (Detail) $ in Millions | 12 Months Ended | |||
Sep. 09, 2022 USD ($) | Feb. 03, 2024 USD ($) location | Jan. 28, 2023 USD ($) entity | Aug. 03, 2022 USD ($) | |
Variable Interest Entity [Line Items] | ||||
Number of privately-held limited liability companies | entity | 8 | |||
Number of locations in segments | location | 6 | |||
Number of operational locations | location | 2 | |||
Number of locations represent properties | location | 2 | |||
Compensation expense related to equity interests | $ 4.5 | |||
One Member LLC | ||||
Variable Interest Entity [Line Items] | ||||
Percentage of non-controlling interest (in %) | 50% | |||
Seven Member LLC | ||||
Variable Interest Entity [Line Items] | ||||
Percentage of non-controlling interest (in %) | 25% | |||
One Member LLC | ||||
Variable Interest Entity [Line Items] | ||||
Ownership percentage | 75% | |||
Number of real estate development limited liability companies | entity | 1 | |||
Seven Member LLC | ||||
Variable Interest Entity [Line Items] | ||||
Ownership percentage | 50% | |||
Number of real estate development limited liability companies | entity | 7 | |||
Secured Promissory Note | One Member LLC | ||||
Variable Interest Entity [Line Items] | ||||
Principal amount | $ 2 | |||
Interest rate (in %) | 6% | |||
Promissory Note | One Member LLC | ||||
Variable Interest Entity [Line Items] | ||||
Principal amount | $ 16 | |||
Interest rate (in %) | 5.37% | |||
Interest rate basis added to the five-year treasury rate (in %) | 2% | |||
Interest rate, floor (in %) | 3% | |||
Additional Paid-In Capital | ||||
Variable Interest Entity [Line Items] | ||||
Compensation expense related to equity interests | $ 3.6 | |||
Other non-current obligations | ||||
Variable Interest Entity [Line Items] | ||||
Compensation expense related to equity interests | $ 0.9 | $ 0.9 |
VARIABLE INTEREST ENTITIES - Cl
VARIABLE INTEREST ENTITIES - Classification of VIEs Assets and Liabilities (Details) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | Jan. 30, 2021 |
ASSETS | ||||
Cash and cash equivalents | $ 123,688 | $ 1,508,101 | $ 2,177,889 | $ 100,446 |
Restricted cash | 3,662 | |||
Prepaid expense and other current assets | 169,030 | 139,297 | ||
Total current assets | 1,101,902 | 2,512,664 | ||
Property and equipment-net | 1,685,858 | 1,635,984 | ||
Other non-current assets | 240,722 | 149,207 | ||
Total assets | 4,143,897 | 5,309,289 | ||
LIABILITIES | ||||
Accounts payable and accrued expenses | 366,585 | 374,949 | ||
Other current liabilities | 96,113 | 103,190 | ||
Total current liabilities | 872,868 | 885,973 | ||
Real estate loans-net | 17,766 | 17,909 | ||
Other non-current obligations | 10,639 | 8,074 | ||
Total liabilities | 4,441,291 | 4,524,628 | ||
Member LLCs | ||||
ASSETS | ||||
Cash and cash equivalents | 8,918 | 6,653 | ||
Restricted cash | 0 | 3,662 | ||
Prepaid expense and other current assets | 1,876 | 3,670 | ||
Total current assets | 10,794 | 13,985 | ||
Property and equipment-net | 256,523 | 187,093 | ||
Other non-current assets | 6 | 122 | ||
Total assets | 267,323 | 201,200 | ||
LIABILITIES | ||||
Accounts payable and accrued expenses | 8,735 | 6,685 | ||
Other current liabilities | 1,041 | |||
Total current liabilities | 9,776 | 6,685 | ||
Real estate loans-net | 17,766 | 17,909 | ||
Other non-current obligations | 947 | 929 | ||
Total liabilities | 28,489 | 25,523 | ||
Real estate loans | ||||
LIABILITIES | ||||
Other current liabilities | 100 | 0 | ||
Construction in Progress | Member LLCs | ||||
ASSETS | ||||
Property and equipment-net | $ 77,000 | $ 125,000 |
VARIABLE INTEREST ENTITIES - Eq
VARIABLE INTEREST ENTITIES - Equity Method Investments (Detail) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2023 USD ($) | Feb. 28, 2023 USD ($) | Feb. 03, 2024 USD ($) entity | Jan. 28, 2023 USD ($) entity | Jan. 29, 2022 USD ($) | |
Variable Interest Entity [Line Items] | |||||
Number of privately-held limited liability companies | entity | 8 | ||||
Share of equity method investments loss | $ 10,875 | $ 2,055 | $ 8,214 | ||
Equity contributions | $ 38,075 | 2,713 | 8,970 | ||
Aspen LLCs | |||||
Variable Interest Entity [Line Items] | |||||
Number of privately-held limited liability companies | entity | 3 | ||||
Ownership percentage | 50% | ||||
Aggregate balance of the investment | $ 125,000 | 101,000 | |||
Share of equity method investments loss | 11,000 | 2,100 | 8,200 | ||
Distributions received or undistributed earnings of equity method investments | 0 | 0 | $ 0 | ||
Aggregate contractually required contributions | 105,000 | ||||
Equity contributions | 135,000 | ||||
Aspen LLCs | Prepaid expenses and other current assets | |||||
Variable Interest Entity [Line Items] | |||||
Promissory notes receivable | $ 3,300 | $ 3,000 | |||
Two of the three Aspen LLCs | |||||
Variable Interest Entity [Line Items] | |||||
Ownership percentage | 50% | ||||
Number of real estate development limited liability companies | entity | 2 | ||||
Equity contributions | $ 31,000 | ||||
One Aspen LLC | |||||
Variable Interest Entity [Line Items] | |||||
Ownership percentage | 70% | ||||
Equity contributions | $ 1,800 |
ACCOUNTS PAYABLE, ACCRUED EXP_3
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accounts payable | $ 192,345 | $ 166,082 |
Accrued compensation | 43,840 | 76,650 |
Accrued occupancy | 29,144 | 28,830 |
Accrued sales and use tax | 26,823 | 21,950 |
Accrued legal settlements | 16,704 | 47 |
Accrued freight and duty | 14,333 | 17,497 |
Excise tax payable on share repurchases | 11,988 | 3,700 |
Accrued professional fees | 5,754 | 7,447 |
Accrued legal contingencies | 2,795 | 8,874 |
Accrued interest | 1,343 | 14,456 |
Other accrued expenses | 21,516 | 29,416 |
Total accounts payable and accrued expenses | $ 366,585 | $ 374,949 |
ACCOUNTS PAYABLE, ACCRUED EXP_4
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Reorganization Related Costs (Detail) $ in Millions | 12 Months Ended |
Feb. 03, 2024 USD ($) item | |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Number of roles affected due to reorganization | item | 440 |
Restructuring charges | $ 7.6 |
Restructuring reserve | $ 0.3 |
ACCOUNTS PAYABLE, ACCRUED EXP_5
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES - Other Current Liabilities (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | Jan. 30, 2021 |
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||||
Current portion of term loans | $ 25,000 | $ 25,000 | ||
Unredeemed gift card and merchandise credit liability | 24,720 | 26,733 | ||
Allowance for sales returns | 19,588 | 20,747 | $ 25,256 | $ 25,559 |
Finance lease liabilities | 14,668 | 17,007 | ||
Federal tax payable | 5,561 | |||
Foreign tax payable | 249 | 4,365 | ||
Other current liabilities | 6,327 | 9,338 | ||
Total other current liabilities | $ 96,113 | $ 103,190 |
OTHER NON-CURRENT OBLIGATIONS_2
OTHER NON-CURRENT OBLIGATIONS (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
OTHER NON-CURRENT OBLIGATIONS. | ||
Unrecognized tax benefits | $ 3,633 | $ 2,962 |
Other non-current obligations | 7,006 | 5,112 |
Total other non-current obligations | $ 10,639 | $ 8,074 |
LEASES - Lease Costs-Net (Detai
LEASES - Lease Costs-Net (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Lease costs-net: | |||
Operating lease cost | $ 116,553 | $ 100,646 | $ 99,985 |
Finance lease costs | |||
Amortization of leased assets | 54,596 | 52,346 | 43,964 |
Interest on lease liabilities | 33,822 | 32,051 | 26,412 |
Variable lease costs | 23,517 | 27,848 | 36,914 |
Sublease income | (5,544) | (4,455) | (4,184) |
Total lease costs-net | 222,944 | 208,436 | 203,091 |
Variable lease payments | 14,000 | 19,000 | 28,000 |
Common area maintenance | $ 9,100 | $ 9,300 | $ 8,800 |
LEASES - Lease Right-of-Use Ass
LEASES - Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating leases | $ 625,801 | $ 527,246 |
Balance Sheet Classification, Operating lease right-of-use assets | Operating leases | Operating leases |
Finance leases | $ 836,814 | $ 1,078,979 |
Balance Sheet Classification, Property and equipment-net | Property and equipment-net | Property and equipment-net |
Total lease right-of-use assets | $ 1,462,615 | $ 1,606,225 |
Liabilities, Current | ||
Operating leases, current | $ 85,523 | $ 80,384 |
Balance Sheet Classification, Operating lease liabilities | Operating leases, current | Operating leases, current |
Finance leases, current | $ 14,668 | $ 17,007 |
Balance Sheet Classification, Other current liabilities | Other current liabilities | Other current liabilities |
Total lease liabilities-current | $ 100,191 | $ 97,391 |
Liabilities, Non-current | ||
Operating leases, noncurrent | $ 576,166 | $ 505,809 |
Balance Sheet Classification, Non-current operating lease liabilities | Operating leases, noncurrent | Operating leases, noncurrent |
Finance leases, noncurrent | $ 566,829 | $ 653,050 |
Balance Sheet Classification, Non-current finance lease liabilities | Finance leases, noncurrent | Finance leases, noncurrent |
Total lease liabilities-non-current | $ 1,142,995 | $ 1,158,859 |
Total lease liabilities | 1,243,186 | 1,256,250 |
Finance lease right-of-use assets, accumulated amortization | 268,000 | 224,000 |
RH Galleries | ||
Assets and Liabilities, Lessee [Abstract] | ||
Finance leases | $ 37,000 | $ 39,000 |
LEASES - Maturities of Lease Li
LEASES - Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Maturities of lease liabilities, Operating Leases | ||
2024 | $ 117,806 | |
2025 | 117,916 | |
2026 | 110,067 | |
2027 | 102,787 | |
2028 | 69,215 | |
Thereafter | 330,183 | |
Total lease payments | 847,974 | |
Less-imputed interest | (186,285) | |
Present value of lease liabilities | 661,689 | |
Maturities of lease liabilities, Finance Leases | ||
2024 | 42,887 | |
2025 | 47,942 | |
2026 | 48,709 | |
2027 | 49,516 | |
2028 | 48,551 | |
Thereafter | 728,022 | |
Total lease payments | 965,627 | |
Less-imputed interest | (384,130) | |
Present value of lease liabilities | 581,497 | |
Total maturities of lease liabilities | ||
2024 | 160,693 | |
2025 | 165,858 | |
2026 | 158,776 | |
2027 | 152,303 | |
2028 | 117,766 | |
Thereafter | 1,058,205 | |
Total lease payments | 1,813,601 | |
Less-imputed interest | (570,415) | |
Present value of lease liabilities | 1,243,186 | $ 1,256,250 |
Legally binding payments for leases signed but not yet commenced | 686,000 | |
2024 | 26,000 | |
2025 | 41,000 | |
2026 | 38,000 | |
2027 | 40,000 | |
2028 | 41,000 | |
Thereafter | $ 500,000 |
LEASES - Supplemental Informati
LEASES - Supplemental Information Related to Leases (Detail) | Feb. 03, 2024 | Jan. 28, 2023 |
Weighted-average remaining lease term (years) | ||
Operating leases, years | 8 years 8 months 12 days | 8 years 3 months 18 days |
Finance leases, years | 19 years 8 months 12 days | 21 years 10 months 24 days |
Weighted-average discount rate | ||
Operating leases, percent | 5.17% | 4.08% |
Finance leases, percent | 5.07% | 5.32% |
LEASES - Other Information Rela
LEASES - Other Information Related to Leases (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Cash paid for amounts included in the measurement of lease liabilities | |||
Operating cash flows from operating leases | $ (122,220) | $ (101,513) | $ (102,097) |
Operating cash flows from finance leases | (37,819) | (32,090) | (26,775) |
Financing cash flows from finance leases | (13,972) | (10,146) | (14,158) |
Total cash outflows from leases | (174,011) | (143,749) | (143,030) |
Lease right-of-use assets obtained in exchange for lease obligations-net of lease terminations (non-cash) | |||
Operating leases | 170,542 | 49,702 | 172,393 |
Finance leases | 1,648 | 109,015 | 89,617 |
Reclassification of finance lease right-of-use asset to property and equipment | 188,515 | ||
Reclassification of finance lease liability to property and equipment | (71,612) | ||
Lease payments offset by tenant allowances received | $ 2,400 | $ 4,700 | $ 0 |
CONVERTIBLE SENIOR NOTES - Narr
CONVERTIBLE SENIOR NOTES - Narrative (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jun. 30, 2023 | Jan. 28, 2023 | Jan. 29, 2022 | Sep. 30, 2019 | Jun. 30, 2018 |
2024 Notes | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 3,600 | $ 130,000 | ||||
2023 Notes | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 1,700 | 9,400 | $ 261,000 | |||
Private Offering | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 300,000 | |||||
Long term debt | $ 41,835 | 43,420 | ||||
Private Offering | 2024 Notes | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 350,000 | |||||
Debt instrument, interest rate | 0% | |||||
Long term debt | $ 41,835 | 41,724 | ||||
Private Offering | 2023 Notes | ||||||
Debt Instrument | ||||||
Debt instrument, principal amount | $ 335,000 | |||||
Debt instrument, interest rate | 0% | |||||
Long term debt | $ 1,696 | |||||
Overallotment option | 2023 Notes | ||||||
Debt Instrument | ||||||
Long term debt | $ 35,000 |
CONVERTIBLE SENIOR NOTES - Outs
CONVERTIBLE SENIOR NOTES - Outstanding Balances under 2023 Notes and 2024 Notes (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Debt Instrument | ||
Principal amount | $ 2,448,750 | $ 2,474,910 |
Private Offering | ||
Debt Instrument | ||
Principal amount | 41,904 | 43,600 |
Unamortized Debt Issuance Cost | (69) | (180) |
Net Carrying Amount | 41,835 | 43,420 |
Private Offering | 2023 Notes | ||
Debt Instrument | ||
Principal amount | 1,696 | |
Net Carrying Amount | 1,696 | |
Private Offering | 2024 Notes | ||
Debt Instrument | ||
Principal amount | 41,904 | 41,904 |
Unamortized Debt Issuance Cost | (69) | (180) |
Net Carrying Amount | $ 41,835 | $ 41,724 |
CONVERTIBLE SENIOR NOTES - Bond
CONVERTIBLE SENIOR NOTES - Bond Hedge and Warrant Terminations and Notes Repurchases (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2022 | Jan. 28, 2023 | Jan. 29, 2022 | Feb. 03, 2024 | |
Debt Instrument | ||||
Estimated settlement cost | $ 405,577 | |||
Loss on extinguishment of debt | 169,578 | $ 29,138 | ||
Outstanding Amount | 2,474,910 | $ 2,448,750 | ||
Convertible note bond hedges | ||||
Debt Instrument | ||||
Aggregate amount received (paid) in cash to terminate warrants or bond hedges | $ 232,000 | |||
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 | |||
2023 Notes | ||||
Debt Instrument | ||||
Loss on extinguishment of debt | (19,000) | |||
2023 Notes | Convertible note bond hedges | ||||
Debt Instrument | ||||
Aggregate closing price received | 56,000 | |||
2024 Notes | ||||
Debt Instrument | ||||
Loss on extinguishment of debt | $ (10,000) | |||
2024 Notes | Convertible note bond hedges | ||||
Debt Instrument | ||||
Aggregate closing price received | 180,000 | |||
Private Offering | ||||
Debt Instrument | ||||
Outstanding Amount | 43,600 | 41,904 | ||
Private Offering | 2023 Notes | ||||
Debt Instrument | ||||
Outstanding Amount | 1,696 | |||
Private Offering | 2024 Notes | ||||
Debt Instrument | ||||
Outstanding Amount | $ 41,904 | $ 41,904 | ||
Private Offering | Notes Repurchase | ||||
Debt Instrument | ||||
Trading days used to determine the conversion value | 5 days | |||
Aggregate notes repurchased and derecognized | $ 180,000 | |||
Financing liability, fair value | 278,000 | |||
Loss on extinguishment of debt | 146,000 | |||
Outstanding Amount | 47,000 | |||
Amortization of debt issuance costs | 1,000 | |||
Cash paid to holders | 314,000 | |||
Fair value of the bifurcated embedded equity derivative | 267,000 | |||
Private Offering | Notes Repurchase | Other expense-net | ||||
Debt Instrument | ||||
Gain on the fair value adjustment of the bifurcated embedded equity derivative | 11,000 | |||
Private Offering | Additional Notes Repurchase | ||||
Debt Instrument | ||||
Trading days used to determine the conversion value | 1 day | |||
Aggregate notes repurchased and derecognized | $ 57,000 | |||
Financing liability, fair value | 55,000 | |||
Loss on extinguishment of debt | 23,000 | |||
Outstanding Amount | 25,000 | |||
Amortization of debt issuance costs | 300 | |||
Cash paid to holders | 82,000 | |||
Fair value of the bifurcated embedded equity derivative | 57,000 | |||
Private Offering | Additional Notes Repurchase | Other expense-net | ||||
Debt Instrument | ||||
Loss on the fair value adjustment of the bifurcated embedded equity derivative | 1,500 | |||
Private Offering | 2023 Notes | Notes Repurchase | ||||
Debt Instrument | ||||
Aggregate purchase price | 45,000 | |||
Private Offering | 2023 Notes | Additional Notes Repurchase | ||||
Debt Instrument | ||||
Aggregate purchase price | 18,000 | |||
Private Offering | 2024 Notes | Notes Repurchase | ||||
Debt Instrument | ||||
Aggregate purchase price | 135,000 | |||
Private Offering | 2024 Notes | Additional Notes Repurchase | ||||
Debt Instrument | ||||
Aggregate purchase price | 39,000 | |||
Private Offering | Financing liability | Notes Repurchase | ||||
Debt Instrument | ||||
Estimated settlement cost | $ 325,000 | |||
Private Offering | Financing liability | Additional Notes Repurchase | ||||
Debt Instrument | ||||
Estimated settlement cost | 80,000 | |||
Warrants | ||||
Debt Instrument | ||||
Aggregate amount received (paid) in cash to terminate warrants or bond hedges | 391,000 | |||
Warrants | 2023 and 2024 Notes | Other expense-net | ||||
Debt Instrument | ||||
Net loss on the fair value adjustment of the warrants | 4,200 | |||
Warrants | 2023 Notes | ||||
Debt Instrument | ||||
Aggregate purchase price | 184,000 | |||
Warrants | 2024 Notes | ||||
Debt Instrument | ||||
Aggregate purchase price | $ 203,000 | |||
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 | 12 Months Ended | |||
Sep. 30, 2019 USD ($) | Feb. 03, 2024 USD ($) | Jan. 28, 2023 USD ($) shares | Jan. 29, 2022 USD ($) shares | Jun. 30, 2018 USD ($) | |
Debt Instrument | |||||
Debt amount settled in cash | $ 1,696,000 | $ 13,064,000 | $ 335,729,000 | ||
Loss on extinguishment of debt | (169,578,000) | (29,138,000) | |||
Private Offering | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 300,000,000 | ||||
2024 Notes | |||||
Debt Instrument | |||||
Debt instrument, conversion principal amount | $ 1,000 | ||||
Debt amount settled in cash | $ 3,600,000 | $ 130,000,000 | |||
Shares issued upon conversion | shares | 9,760 | 419,182 | |||
Shares acquired from notes settlement | shares | 9,760 | 419,172 | |||
Debt instrument, principal amount | $ 3,600,000 | $ 130,000,000 | |||
Debt instrument, convertible earliest date | Jun. 15, 2024 | ||||
Loss on extinguishment of debt | $ 10,000,000 | ||||
2024 Notes | Convertible note bond hedges | |||||
Debt Instrument | |||||
Shares issued upon conversion | shares | 10 | ||||
2024 Notes | Private Offering | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 350,000,000 | ||||
Debt instrument, interest rate | 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 |
CONVERTIBLE SENIOR NOTES - No_2
CONVERTIBLE SENIOR NOTES - Notes Due 2023 (Detail) | 1 Months Ended | 12 Months Ended | |||
Jun. 30, 2023 USD ($) | Jun. 30, 2018 USD ($) | Feb. 03, 2024 USD ($) shares | Jan. 28, 2023 USD ($) shares | Jan. 29, 2022 USD ($) shares | |
Debt Instrument | |||||
Debt amount settled in cash | $ 1,696,000 | $ 13,064,000 | $ 335,729,000 | ||
Loss on extinguishment of debt | (169,578,000) | (29,138,000) | |||
Private Offering | |||||
Debt Instrument | |||||
Debt instrument, principal amount | $ 300,000,000 | ||||
2023 Notes | |||||
Debt Instrument | |||||
Debt amount settled in cash | $ 1,700,000 | 9,400,000 | $ 261,000,000 | ||
Shares issued upon conversion | shares | 1,931 | 958,330 | |||
Shares acquired from notes settlement | shares | 958,307 | ||||
Debt instrument, principal amount | $ 1,700,000 | $ 9,400,000 | $ 261,000,000 | ||
Debt instrument, convertible earliest date | Mar. 15, 2023 | ||||
Loss on extinguishment of debt | $ 19,000,000 | ||||
2023 Notes | Common Stock | |||||
Debt Instrument | |||||
Shares issued upon conversion | shares | 27,234 | ||||
2023 Notes | Convertible note bond hedges | |||||
Debt Instrument | |||||
Shares issued upon conversion | shares | 23 | ||||
2023 Notes | Convertible note bond hedges | Common Stock | |||||
Debt Instrument | |||||
Shares issued upon conversion | shares | 26 | ||||
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 | 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 | 12 Months Ended | |
Feb. 03, 2024 | Jan. 28, 2023 | |
Line of Credit Facility | ||
Outstanding Amount | $ 2,448,750 | $ 2,474,910 |
Unamortized Debt Issuance Costs | (35,169) | (42,976) |
Net Carrying Amount | 2,413,581 | 2,431,934 |
Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Long term debt | $ 1,935,000 | 1,955,000 |
RHI | Term loan B | ||
Line of Credit Facility | ||
Interest Rate | 7.95% | |
Outstanding Amount | $ 1,955,000 | 1,975,000 |
Unamortized Debt Issuance Costs | (15,115) | (18,471) |
Net Carrying Amount | $ 1,939,885 | 1,956,529 |
RHI | Equipment promissory notes | ||
Line of Credit Facility | ||
Outstanding Amount | 1,160 | |
Net Carrying Amount | 1,160 | |
RHI | Term loan B-2 | ||
Line of Credit Facility | ||
Interest Rate | 8.68% | |
Outstanding Amount | $ 493,750 | 498,750 |
Unamortized Debt Issuance Costs | (20,054) | (24,505) |
Net Carrying Amount | $ 473,696 | 474,245 |
RHI, Canadian subsidiary and other subsidiaries | Asset Based Credit Facility [Member] | ||
Line of Credit Facility | ||
Interest Rate | 6.68% | |
RHI, Canadian subsidiary and other subsidiaries | Term loan B-2 | ||
Line of Credit Facility | ||
Long term debt | $ 489,000 | 494,000 |
RHI, Canadian subsidiary and other subsidiaries | Other non-current assets | Asset Based Credit Facility [Member] | ||
Line of Credit Facility | ||
Deferred financing fees | 2,500 | 3,500 |
RHI, Canadian subsidiary and other subsidiaries | Other current liabilities | Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Short term debt | 20,000 | 20,000 |
RHI, Canadian subsidiary and other subsidiaries | Other current liabilities | Term loan B-2 | Secured Debt [Member] | ||
Line of Credit Facility | ||
Short term debt | $ 5,000 | $ 5,000 |
CREDIT FACILITIES - Outstandi_2
CREDIT FACILITIES - Outstanding Balances Footnotes (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Line of Credit Facility | ||
Net carrying amount | $ 2,413,581 | $ 2,431,934 |
Term loan B | Secured Debt [Member] | ||
Line of Credit Facility | ||
Long term debt | 1,935,000 | 1,955,000 |
RHI | Term loan B | ||
Line of Credit Facility | ||
Net carrying amount | 1,939,885 | 1,956,529 |
RHI | Equipment promissory notes | ||
Line of Credit Facility | ||
Net carrying amount | 1,160 | |
RHI | Term loan B-2 | ||
Line of Credit Facility | ||
Net carrying amount | 473,696 | 474,245 |
RHI, Canadian subsidiary and other subsidiaries | Term loan B-2 | ||
Line of Credit Facility | ||
Long term debt | 489,000 | 494,000 |
RHI, Canadian subsidiary and other subsidiaries | Other non-current assets | Asset Based Credit Facility [Member] | ||
Line of Credit Facility | ||
Deferred financing fees | $ 2,500 | $ 3,500 |
CREDIT FACILITIES - Asset Based
CREDIT FACILITIES - Asset Based Credit Facility (Detail) $ in Millions | 12 Months Ended | ||
Jul. 29, 2021 USD ($) | Feb. 03, 2024 USD ($) | Jan. 28, 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. As of February 3, 2024, RHI was in compliance with the FCCR Covenant. | ||
Debt Instrument, Covenant Compliance | As of February 3, 2024, 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 | $ 448 | ||
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 | ||
Term loan B-2 | RHI, Canadian subsidiary and other subsidiaries | |||
Line of Credit Facility | |||
Long-term Debt | $ 489 | $ 494 | |
Letter of credit | |||
Line of Credit Facility | |||
Outstanding letters of credit | $ 45 |
CREDIT FACILITIES - Term Loan C
CREDIT FACILITIES - Term Loan Credit Agreement (Detail) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||
Aug. 01, 2023 | May 13, 2022 | Jul. 31, 2023 | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | Oct. 20, 2021 | |
Line of Credit Facility | |||||||
Debt issuance costs | $ 28,069 | $ 26,411 | |||||
RHI | 2022 Incremental Amendment | |||||||
Line of Credit Facility | |||||||
Debt issuance costs | $ 0 | $ 28,000 | $ 26,000 | ||||
RHI | SOFR | 2022 Incremental Amendment | |||||||
Line of Credit Facility | |||||||
Credit spread adjustment | 0.10% | ||||||
Debt instrument, interest rate | 0.50% | ||||||
Debt instrument, basis spread on variable rate | 3.25% | ||||||
RHI | Term Loan Credit Agreement | |||||||
Line of Credit Facility | |||||||
Principal amount | $ 2,000,000 | ||||||
Debt instrument, basis spread on variable rate | 2.50% | 2.50% | |||||
Debt instrument, effective interest rate | 0.50% | ||||||
Percentage of prepayment premium | 1% | ||||||
RHI | Term Loan Credit Agreement | 2022 Incremental Amendment | |||||||
Line of Credit Facility | |||||||
Principal amount | $ 500,000 | ||||||
RHI | Term Loan Credit Agreement | LIBOR | |||||||
Line of Credit Facility | |||||||
Debt instrument, interest rate | 0.50% | ||||||
RHI | Term Loan Credit Agreement | SOFR | |||||||
Line of Credit Facility | |||||||
Debt instrument, interest rate | 0.50% |
FAIR VALUE MEASUREMENTS - Estim
FAIR VALUE MEASUREMENTS - Estimated Fair Value and Carrying Value of Notes, Term Loan Credit Agreement and the Real Estate Loans (Detail) - Recurring - Level 2 - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
2023 Notes | Fair Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | $ 1,622 | |
2023 Notes | Principal Carrying Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | 1,696 | |
2024 Notes | Fair Value | Observable market data | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes | $ 39,879 | 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 | 1,917,715 | 1,961,056 |
Term loan B | Principal Carrying Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 1,955,000 | 1,975,000 |
Term loan B-2 | Fair Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 490,545 | 500,215 |
Term loan B-2 | Principal Carrying Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 493,750 | 498,750 |
Real estate loans | Fair Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | 17,425 | 17,909 |
Real estate loans | Principal Carrying Value | Discounted cash flows | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Term Loan Credit Agreement | $ 17,966 | $ 17,909 |
INCOME TAXES - Income Before In
INCOME TAXES - Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
INCOME TAXES | |||
Domestic | $ 143,509 | $ 418,216 | $ 821,001 |
Foreign | 12,313 | 19,068 | 1,103 |
Income before income taxes | $ 155,822 | $ 437,284 | $ 822,104 |
INCOME TAXES - Income Tax Expen
INCOME TAXES - Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Current | |||
Current, Federal | $ (3,249) | $ (6,773) | $ 111,975 |
Current, State | 6,032 | 1,013 | 28,141 |
Current, Foreign | 179 | 7,012 | 363 |
Total current tax expense | 2,962 | 1,252 | 140,479 |
Deferred | |||
Deferred, Federal | 22,236 | (78,032) | (3,841) |
Deferred, State | (1,339) | (18,639) | (2,885) |
Deferred, Foreign | 4,402 | 4,061 | (195) |
Total deferred tax expense (benefit) | 25,299 | (92,610) | (6,921) |
Total income tax expense (benefit) | $ 28,261 | $ (91,358) | $ 133,558 |
INCOME TAXES - Reconciliation o
INCOME TAXES - Reconciliation of Federal Statutory Tax Rate to Company's Effective Tax Rate (Detail) | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
INCOME TAXES | |||
Provision at federal statutory tax rate | 21% | 21% | 21% |
State income taxes-net of federal tax impact | 2.10% | (2.80%) | 2.40% |
Federal rehabilitation tax credit | 7.30% | 0.90% | |
Stock compensation-excess benefits | (3.40%) | (50.00%) | (8.00%) |
Non-deductible stock-based compensation | 1.30% | 0.90% | 0.60% |
U.S. impact of foreign operations | 0.80% | 0.60% | (0.20%) |
Valuation allowance | 0.20% | 0.50% | |
Tax impact of convertible senior notes repurchase | 0.10% | 9.40% | |
Tax rate adjustments and other | 1% | ||
Other permanent items | 2.30% | 0.40% | 0.40% |
Effective Income Tax Rate Reconciliation, Percent, Total | 18.10% | (20.90%) | 16.20% |
INCOME TAXES - Components of De
INCOME TAXES - Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | Jan. 30, 2021 |
Non-current deferred tax assets (liabilities) | ||||
Lease liabilities | $ 341,767 | $ 339,911 | ||
Interest expense carryforwards | 72,765 | 28,584 | ||
Net operating loss carryforwards | 60,143 | 120,586 | ||
Accrued expense | 25,906 | 30,108 | ||
Stock-based compensation | 19,090 | 14,974 | ||
Merchandise inventories | 13,881 | 13,346 | ||
Deferred revenue | 3,847 | 3,242 | ||
Other | 4,483 | |||
Non-current deferred tax assets | 537,399 | 555,234 | ||
Valuation allowance | (4,442) | (4,202) | $ (1,959) | $ (2,049) |
Non-current deferred tax assets-net | 532,957 | 551,032 | ||
Property and equipment | (182,580) | (212,424) | ||
Lease right-of-use assets | (165,423) | (142,199) | ||
Prepaid expense and other | (29,927) | (15,894) | ||
Tradenames, trademarks and intangibles | (11,379) | (11,452) | ||
State benefit | (8,104) | (8,339) | ||
Non-current deferred tax liabilities | (397,413) | (390,308) | ||
Total non-current deferred tax assets-net | $ 135,544 | $ 160,724 |
INCOME TAXES - Reconciliation_2
INCOME TAXES - Reconciliation of Valuation Allowance (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
INCOME TAXES | |||
Balance at beginning of fiscal year | $ 4,202 | $ 1,959 | $ 2,049 |
Net changes in deferred tax assets and liabilities | 240 | 2,243 | (90) |
Balance at end of fiscal year | $ 4,442 | $ 4,202 | $ 1,959 |
INCOME TAXES - Reconciliation_3
INCOME TAXES - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
INCOME TAXES | |||
Balance at beginning of fiscal year | $ 8,151 | $ 8,604 | $ 8,456 |
Gross decreases-prior period tax positions | (143) | ||
Gross increases-current period tax positions | 515 | 933 | |
Reductions based on the lapse of the applicable statutes of limitations | (62) | (453) | (642) |
Balance at end of fiscal year | $ 8,604 | $ 8,151 | $ 8,604 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Detail) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Oct. 31, 2017 | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Income tax expense (benefit) | $ 28,261 | $ (91,358) | $ 133,558 | |
Effective income tax rate | 18.10% | (20.90%) | 16.20% | |
Tax expense and the effective tax rate, if recognized | $ 7,900 | |||
Exposures related to unrecognized tax benefits | $ 5,400 | |||
Period of unrecognized tax benefits change | 12 months | |||
Tax year open to examination in United States and various states and foreign jurisdictions | 2020 2021 2022 2023 | |||
Income tax benefit from amended tax return | $ 0 | $ 0 | $ 0 | |
Federal net operating loss carryovers | 204,000 | |||
State net operating loss carryovers | 108,000 | |||
Foreign net operating loss carryovers | $ 38,000 | |||
Amended federal tax return claiming refund | $ 5,400 | |||
Expiration of federal and state net operating loss carryovers | The federal net operating losses do not expire. The state net operating loss carryovers will begin to expire in 2024 and continue to expire at various times depending upon individual state carryforward rules. | |||
Aspen LLCs | ||||
Ownership percentage | 50% |
NET INCOME PER SHARE -Schedule
NET INCOME PER SHARE -Schedule of Weighted-Average Shares Used for Net Income per Share (Detail) - shares | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
NET INCOME PER SHARE | |||
Weighted-average shares-basic | 19,880,576 | 23,523,065 | 21,270,448 |
Effect of dilutive stock-based awards | 1,518,408 | 2,675,660 | 6,506,399 |
Effect of dilutive convertible senior notes | 201,494 | 363,263 | 3,336,548 |
Weighted-average shares-diluted | 21,600,478 | 26,561,988 | 31,113,395 |
NET INCOME PER SHARE - Schedule
NET INCOME PER SHARE - Schedule of Weighted-Average Shares Used for Net Income per Share Footnotes (Detail) - $ / shares | Apr. 30, 2022 | Jan. 29, 2022 |
2023 and 2024 Notes | ||
Earnings Per Share Diluted | ||
Warrant instruments outstanding | 0 | |
2020 Notes | ||
Earnings Per Share Diluted | ||
Conversion price per share | $ 118.13 | |
2023 Notes | ||
Earnings Per Share Diluted | ||
Conversion price per share | 193.65 | |
2023 Notes | Warrants | ||
Earnings Per Share Diluted | ||
Conversion price per share | $ 309.84 | |
2024 Notes | ||
Earnings Per Share Diluted | ||
Conversion price per share | $ 211.40 | |
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 | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive securities excluded from diluted net income per share | 1,316,836 | 1,096,269 | 102,374 |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive securities excluded from diluted net income per share | 15,313 | 19,154 | 1,379 |
Convertible senior notes | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Anti-dilutive securities excluded from diluted net income per share | 231,618 |
SHARE REPURCHASE PROGRAM AND _2
SHARE REPURCHASE PROGRAM AND SHARE RETIREMENT (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jun. 02, 2022 | |
Share Repurchase Program and Equity Plans | |||
Share repurchase program authorized amount | $ 2,450,000 | ||
Repurchase of common stock - including excise tax | $ 1,261,187 | $ 1,003,700 | |
Amount of shares available under repurchase program | $ 201,000 | ||
Treasury stock, shares retired | 3,887,965 | ||
Accounts payable and accrued expenses | |||
Share Repurchase Program and Equity Plans | |||
Excise tax payable on share repurchase | $ 12,000 | 3,700 | |
Additional amount authorized | |||
Share Repurchase Program and Equity Plans | |||
Share repurchase program authorized amount | $ 2,000,000 | ||
Additional Paid-In Capital | |||
Share Repurchase Program and Equity Plans | |||
Treasury stock reclassified, amount | 10,376 | 444,047 | |
Retained Earnings (Accumulated Deficit) | |||
Share Repurchase Program and Equity Plans | |||
Treasury stock reclassified, amount | 1,250,811 | 559,653 | |
Treasury Stock | |||
Share Repurchase Program and Equity Plans | |||
Repurchase of common stock - including excise tax | $ 1,261,187 | $ 1,003,700 | |
Repurchase of common stock-including excise tax, Shares | 3,887,965 | 3,719,550 | |
Repurchase of common stock-including excise tax, Shares | 3,887,965 | 3,719,550 | |
Shares of common stock purchased at an average price per share under repurchase program | $ 321.28 | $ 268.83 | |
Treasury stock, shares retired | 3,887,965 | 3,719,550 | |
Excise tax payable on share repurchase | $ 12,000 | $ 3,700 | |
Treasury stock reclassified, amount | $ (1,261,187) | $ (1,003,700) |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Detail) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||
Nov. 01, 2022 | Oct. 18, 2020 | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | Apr. 04, 2023 | |
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Stock-based compensation expense | $ 39,384 | $ 43,546 | $ 48,478 | |||
Unvested restricted stock and restricted stock units | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Unrecognized compensation expense with weighted-average period | 3 years 3 months 18 days | |||||
Option Plan | Employee Stock Option [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Options granted | 0 | |||||
Option Plan | Employee Stock Option [Member] | Employees and advisors | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Outstanding shares | 6,829,041 | |||||
2012 Stock Incentive Plan | Restricted Stock Units | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Unrecognized compensation expense related to unvested restricted stock awards | $ 5,400 | |||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Options cancelled upon expiration of plans | 1,607,508 | |||||
2023 Stock Incentive Plan | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Shares available for future issuance | 2,677,311 | 3,000,000 | ||||
Profit interest expected life | 10 years | |||||
2023 Stock Incentive Plan | Chairman and Chief Executive Officer | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Stock-based compensation expense | $ 9,600 | $ 18,000 | $ 24,000 | |||
Options granted | 700,000 | |||||
Aggregate non-cash stock compensation expense | $ 174,000 | |||||
Exercise price of option granted | $ 385.30 | |||||
2023 Stock Incentive Plan | Employee Stock Option [Member] | ||||||
Share Based Compensation Arrangement By Share Based Payment Award | ||||||
Options granted | 385,750 | |||||
Options cancelled upon expiration of plans | 74,660 | |||||
Exercise price of option granted | $ 267.90 | |||||
Outstanding shares | 3,576,556 | 3,415,952 | ||||
Unrecognized compensation expense with weighted-average period | 4 years 4 months 24 days | |||||
Weighted-average remaining contractual life of options exercisable | 4 years 4 months 24 days | |||||
Aggregate intrinsic value of options outstanding | $ 373,000 | |||||
Aggregate intrinsic value of options exercisable | 323,000 | |||||
Aggregate intrinsic value of options vested or expected to vest | $ 366,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Option Activity (Detail) - $ / shares | 12 Months Ended | |
Nov. 01, 2022 | Feb. 03, 2024 | |
2012 Stock Incentive Plan and 2012 Stock Option Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options, Cancelled | (1,607,508) | |
2023 Stock Incentive Plan | Employee Stock Option [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | 3,415,952 | |
Options, Granted | 385,750 | |
Options, Exercised | (150,486) | |
Options, Cancelled | (74,660) | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | 3,576,556 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ 180.03 | |
Weighted-Average Exercise Price, Granted | 267.90 | |
Weighted-Average Exercise Price, Exercised | 80.56 | |
Weighted-Average Exercise Price, Cancelled | 215.91 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ 192.94 |
STOCK-BASED COMPENSATION - Assu
STOCK-BASED COMPENSATION - Assumptions Used to Estimate Fair Value of Stock Options Issued (Detail) - 2023 Stock Incentive Plan | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Expected volatility | 54.30% | 62.40% | 64.20% |
Expected life (years) | 7 years 3 months 18 days | 7 years 3 months 18 days | 7 years 3 months 18 days |
Risk-free interest rate | 3.90% | 3.80% | 1.40% |
Dividend yield | 0% | 0% | 0% |
STOCK-BASED COMPENSATION - Addi
STOCK-BASED COMPENSATION - Additional Information about Stock Options (Detail) - 2023 Stock Incentive Plan - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Weighted-average fair value per share of stock options granted | $ 160.57 | $ 171.78 | $ 392.65 |
Aggregate intrinsic value of stock options exercised | $ 34,556 | $ 1,102,657 | $ 280,060 |
Fair value of stock options vested | $ 19,113 | $ 18,071 | $ 22,665 |
STOCK-BASED COMPENSATION - Opti
STOCK-BASED COMPENSATION - Options outstanding, vested or expected to vest, and exercisable (Details) - 2023 Stock Incentive Plan - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Feb. 03, 2024 | Jan. 28, 2023 | |
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options vested or expected to vest, Shares | 3,306,511 | |
Options vested or expected to vest, Weighted average exercise price | $ 187.02 | |
Options exercisable, Weighted average exercise price | $ 166.63 | |
Employee Stock Option [Member] | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options outstanding, Shares | 3,576,556 | 3,415,952 |
Options outstanding, Weighted average exercise price | $ 192.94 | $ 180.03 |
Options outstanding, Aggregate intrinsic value | $ 373 | |
Options vested or expected to vest, Aggregate intrinsic value | 366 | |
Options exercisable, Aggregate intrinsic value | $ 323 | |
$25.39 - $45.82 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 35.81 | |
Options outstanding, Weighted average remaining term (In years) | 2 years 3 months 18 days | |
$50.00 - $50.00 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 50 | |
Options outstanding, Weighted average remaining term (In years) | 3 years 2 months 12 days | |
$53.47 - $154.82 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 106.93 | |
Options outstanding, Weighted average remaining term (In years) | 4 years 10 months 24 days | |
$159.00 - $266.91 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 204.22 | |
Options outstanding, Weighted average remaining term (In years) | 8 years 10 months 24 days | |
$278.81 - $352.66 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 325.82 | |
Options outstanding, Weighted average remaining term (In years) | 6 years 10 months 24 days | |
$385.30 - $385.30 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 385.30 | |
Options outstanding, Weighted average remaining term (In years) | 6 years 8 months 12 days | |
$389.34 - $713.52 | ||
Share Based Compensation Arrangement By Share Based Payment Award | ||
Options exercisable, Weighted average exercise price | $ 594.40 | |
Options outstanding, Weighted average remaining term (In years) | 7 years 4 months 24 days |
STOCK-BASED COMPENSATION - St_2
STOCK-BASED COMPENSATION - Stock-based compensation expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
2023 Stock Incentive Plan | Selling, general and administrative expenses | |||
Share Based Compensation Arrangement By Share Based Payment Award | |||
Stock-based compensation expense | $ 36,509 | $ 40,583 | $ 45,461 |
STOCK-BASED COMPENSATION - Unre
STOCK-BASED COMPENSATION - Unrecognized compensation expense and weighted average remaining term (Details) $ in Millions | 12 Months Ended |
Feb. 03, 2024 USD ($) | |
Employee Stock Option [Member] | 2023 Stock Incentive Plan | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Unrecognized compensation expense with weighted-average period | 4 years 4 months 24 days |
Unrecognized compensation expense | $ 99 |
Employee Stock Option [Member] | 2023 Stock Incentive Plan | Chairman and Chief Executive Officer | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Unrecognized compensation expense | $ 5.4 |
Unvested restricted stock and restricted stock units | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Unrecognized compensation expense with weighted-average period | 3 years 3 months 18 days |
STOCK-BASED COMPENSATION - Rest
STOCK-BASED COMPENSATION - Restricted Stock Award Activity (Detail) - Restricted Stock And Restricted Stock Unit [Member] - Two Thousand Twelve Stock Incentive Plan [Member] - USD ($) | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Awards, Outstanding - Beginning balance | 20,920 | ||
Awards, Granted | 2,961 | ||
Awards, Released | (7,181) | ||
Awards, Cancelled | (760) | ||
Awards, Outstanding - Ending balance | 15,940 | 20,920 | |
Weighted-Average Grant Date Fair Value, Outstanding - Beginning balance | $ 443.92 | ||
Weighted-Average Grant Date Fair Value, Granted | 322.24 | $ 318.86 | $ 582.79 |
Weighted-average Grant Date Fair Value, Released | 396.34 | ||
Weighted-Average Grant Date Fair Value, Cancelled | 564.19 | ||
Weighted-Average Grant Date Fair Value, Outstanding - Ending balance | $ 437.02 | $ 443.92 | |
Intrinsic Value, Outstanding | $ 4,081 |
STOCK-BASED COMPENSATION - Ad_2
STOCK-BASED COMPENSATION - Additional Information about Restricted Stock Awards (Detail) - Two Thousand Twelve Stock Incentive Plan [Member] - Restricted Stock And Restricted Stock Unit [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Restricted stock units, Weighted-average fair value per share of awards granted | $ 322.24 | $ 318.86 | $ 582.79 |
Grant date fair value of awards released | $ 2,846 | $ 2,694 | $ 4,257 |
STOCK-BASED COMPENSATION - St_3
STOCK-BASED COMPENSATION - Stock-based Compensation Expense Related to Restricted Stock Awards (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Unvested restricted stock and restricted stock units | |||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||
Stock-based compensation expense | $ 2,874 | $ 2,962 | $ 3,018 |
STOCK-BASED COMPENSATION - St_4
STOCK-BASED COMPENSATION - Stock Options Outstanding, Vested or Expected to Vest, and Exercisable (Detail) | 12 Months Ended |
Feb. 03, 2024 $ / shares shares | |
Employee Stock Option [Member] | $25.39 - $45.82 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | $ 25.39 |
Range of Exercise Prices, Upper | 45.82 |
Employee Stock Option [Member] | $50.00 - $50.00 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | 50 |
Range of Exercise Prices, Upper | 50 |
Employee Stock Option [Member] | $53.47 - $154.82 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | 53.47 |
Range of Exercise Prices, Upper | 154.82 |
Employee Stock Option [Member] | $159.00 - $266.91 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | 159 |
Range of Exercise Prices, Upper | 266.91 |
Employee Stock Option [Member] | $278.81 - $352.66 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | 278.81 |
Range of Exercise Prices, Upper | 352.66 |
Employee Stock Option [Member] | $385.30 - $385.30 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | 385.30 |
Range of Exercise Prices, Upper | 385.30 |
Employee Stock Option [Member] | $389.34 - $713.52 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Range of Exercise Prices, Lower | 389.34 |
Range of Exercise Prices, Upper | $ 713.52 |
2023 Stock Incentive Plan | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 3,576,556 |
Options Outstanding, Weighted-Average Exercise Price | $ 192.94 |
Options Exercisable, Number of Options | shares | 2,467,466 |
Options Exercisable, Weighted-Average Exercise Price | $ 166.63 |
Vested or expected to vest, Number of Options | shares | 3,306,511 |
Vested or expected to vest, Weighted-Average Exercise Price | $ 187.02 |
2023 Stock Incentive Plan | $25.39 - $45.82 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 252,984 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 2 years 3 months 18 days |
Options Outstanding, Weighted-Average Exercise Price | $ 35.81 |
Options Exercisable, Number of Options | shares | 252,984 |
Options Exercisable, Weighted-Average Exercise Price | $ 35.81 |
2023 Stock Incentive Plan | $50.00 - $50.00 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 1,000,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 3 years 2 months 12 days |
Options Outstanding, Weighted-Average Exercise Price | $ 50 |
Options Exercisable, Number of Options | shares | 1,000,000 |
Options Exercisable, Weighted-Average Exercise Price | $ 50 |
2023 Stock Incentive Plan | $53.47 - $154.82 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 812,042 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 4 years 10 months 24 days |
Options Outstanding, Weighted-Average Exercise Price | $ 123.11 |
Options Exercisable, Number of Options | shares | 397,422 |
Options Exercisable, Weighted-Average Exercise Price | $ 106.93 |
2023 Stock Incentive Plan | $159.00 - $266.91 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 502,800 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 8 years 10 months 24 days |
Options Outstanding, Weighted-Average Exercise Price | $ 254.93 |
Options Exercisable, Number of Options | shares | 40,560 |
Options Exercisable, Weighted-Average Exercise Price | $ 204.22 |
2023 Stock Incentive Plan | $278.81 - $352.66 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 192,530 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 6 years 10 months 24 days |
Options Outstanding, Weighted-Average Exercise Price | $ 328.10 |
Options Exercisable, Number of Options | shares | 51,640 |
Options Exercisable, Weighted-Average Exercise Price | $ 325.82 |
2023 Stock Incentive Plan | $385.30 - $385.30 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 700,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 6 years 8 months 12 days |
Options Outstanding, Weighted-Average Exercise Price | $ 385.30 |
Options Exercisable, Number of Options | shares | 700,000 |
Options Exercisable, Weighted-Average Exercise Price | $ 385.30 |
2023 Stock Incentive Plan | $389.34 - $713.52 | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 116,200 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 7 years 4 months 24 days |
Options Outstanding, Weighted-Average Exercise Price | $ 602.21 |
Options Exercisable, Number of Options | shares | 24,860 |
Options Exercisable, Weighted-Average Exercise Price | $ 594.40 |
EMPLOYEE BENEFIT PLANS (Detail)
EMPLOYEE BENEFIT PLANS (Detail) - USD ($) | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
EMPLOYEE BENEFIT PLANS | |||
Employee's contribution to 401(k) plan | 50% | ||
Contributions to the 401(k) plan | $ 0 | $ 0 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Detail) | Feb. 03, 2024 USD ($) |
COMMITMENTS AND CONTINGENCIES | |
Material off balance sheet commitments | $ 0 |
SEGMENT REPORTING - Narrative (
SEGMENT REPORTING - Narrative (Detail) | 12 Months Ended |
Feb. 03, 2024 store segment | |
Segment Reporting Information | |
Number of operating segments | segment | 3 |
RH Galleries | |
Segment Reporting Information | |
Number of Stores | 70 |
RH outlet stores | |
Segment Reporting Information | |
Number of Stores | 42 |
RH Guesthouse | |
Segment Reporting Information | |
Number of Stores | 1 |
Waterworks Showrooms | |
Segment Reporting Information | |
Number of Stores | 14 |
Canada [Member] | RH Galleries | |
Segment Reporting Information | |
Number of Stores | 4 |
Canada [Member] | RH outlet stores | |
Segment Reporting Information | |
Number of Stores | 1 |
U.K [Member] | RH Galleries | |
Segment Reporting Information | |
Number of Stores | 2 |
U.K [Member] | RH outlet stores | |
Segment Reporting Information | |
Number of Stores | 1 |
Germany | RH Galleries | |
Segment Reporting Information | |
Number of Stores | 2 |
SEGMENT REPORTING - Segment Ope
SEGMENT REPORTING - Segment Operating Income and Reconciliation to Income from Operations and Income Before Income Taxes and Equity Method Investments (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Segment Reporting Information | |||
Reorganization related costs | $ (7,600) | ||
Asset impairments | (8,339) | $ (24,186) | $ (9,630) |
Non-cash compensation related to consolidated VIEs | 4,470 | ||
Income from operations | 366,071 | 722,157 | 927,181 |
Interest expense-net | 198,296 | 113,210 | 64,947 |
Loss on extinguishment of debt | 169,578 | 29,138 | |
Other expense-net | 1,078 | 30 | 2,778 |
Income before taxes and equity method investments | 166,697 | 439,339 | 830,318 |
Other expense-net | 1,078 | 30 | 2,778 |
Segment operating income | |||
Segment Reporting Information | |||
Income from operations | 393,787 | 789,826 | 962,628 |
Segment operating income | RH Segment | |||
Segment Reporting Information | |||
Income from operations | 369,458 | 761,544 | 944,881 |
Segment operating income | Waterworks | |||
Segment Reporting Information | |||
Income from operations | 24,329 | 28,282 | 17,747 |
Excluded from segment operating income | |||
Segment Reporting Information | |||
Non-cash compensation | (9,640) | (18,072) | (23,428) |
Legal settlements | (8,500) | 4,188 | |
Reorganization related costs | (7,621) | (449) | |
Asset impairments | (3,531) | (24,186) | (9,630) |
Recall accrual | $ 1,576 | (560) | $ (1,940) |
Employer payroll taxes on option exercises | (14,392) | ||
Professional fees | (7,469) | ||
Non-cash compensation related to consolidated VIEs | 4,470 | ||
Compensation settlements | (3,483) | ||
Gain on sale of building and land | $ 775 |
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 | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Segment Reporting Information | |||
Net revenues | $ 3,029,126 | $ 3,590,477 | $ 3,758,820 |
Gross profit | 1,389,019 | 1,811,985 | 1,855,411 |
Depreciation and amortization | 118,989 | 108,588 | 96,022 |
Share of equity method investments loss | 10,875 | 2,055 | 8,214 |
RH Segment | |||
Segment Reporting Information | |||
Net revenues | 2,835,617 | 3,398,638 | 3,593,842 |
Gross profit | 1,286,107 | 1,708,444 | 1,772,668 |
Depreciation and amortization | 113,695 | 103,221 | 91,252 |
Waterworks | |||
Segment Reporting Information | |||
Net revenues | 193,509 | 191,839 | 164,978 |
Gross profit | 102,912 | 103,541 | 82,743 |
Depreciation and amortization | 5,294 | 5,367 | 4,770 |
Real Estate Investments | |||
Segment Reporting Information | |||
Share of equity method investments loss | $ 11,000 | $ 2,100 | $ 8,200 |
SEGMENT REPORTING - Balance She
SEGMENT REPORTING - Balance Sheet Metrics Under ASC 280 (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 |
Segment Reporting Information | |||
Goodwill | $ 141,033 | $ 141,048 | |
Tradenames, trademarks and other intangible assets | 75,927 | 74,633 | |
Equity method investments | 128,668 | 101,468 | |
Total assets | 4,143,897 | 5,309,289 | |
RH Segment | |||
Segment Reporting Information | |||
Goodwill | 141,033 | 141,048 | $ 141,100 |
Tradenames, trademarks and other intangible assets | 58,927 | 57,633 | |
Total assets | 3,798,572 | 4,953,610 | |
Waterworks | |||
Segment Reporting Information | |||
Tradenames, trademarks and other intangible assets | 17,000 | 17,000 | |
Equity method investments | 3,609 | 623 | |
Total assets | 183,804 | 217,228 | |
Real Estate | |||
Segment Reporting Information | |||
Equity method investments | 125,059 | 100,845 | |
Total assets | $ 161,521 | $ 138,451 |
SEGMENT REPORTING - Balance S_2
SEGMENT REPORTING - Balance Sheet Metrics Under ASC 280 Footnotes (Detail) $ in Millions | 12 Months Ended | |
Feb. 03, 2024 segment | Jan. 28, 2017 USD ($) | |
European entity one | ||
Segment Reporting Information | ||
Ownership percentage | 50% | |
European entity two | ||
Segment Reporting Information | ||
Ownership percentage | 25% | |
Waterworks | ||
Segment Reporting Information | ||
Goodwill impairment | $ | $ 51 | |
Waterworks | Europe | ||
Segment Reporting Information | ||
Number of entities in which membership interests held by segments | segment | 2 |
SEGMENT REPORTING - Net Revenue
SEGMENT REPORTING - Net Revenues, Categories (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Segment Reporting Information | |||
Total net revenues | $ 3,029,126 | $ 3,590,477 | $ 3,758,820 |
Furniture [Member] | |||
Segment Reporting Information | |||
Total net revenues | 2,039,902 | 2,492,514 | 2,599,540 |
Non-furniture [Member] | |||
Segment Reporting Information | |||
Total net revenues | $ 989,224 | $ 1,097,963 | $ 1,159,280 |
SEGMENT REPORTING - Long-lived
SEGMENT REPORTING - Long-lived Assets by Geography Information (Detail) - USD ($) $ in Thousands | Feb. 03, 2024 | Jan. 28, 2023 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | $ 2,672,973 | $ 2,446,029 |
North America | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | 2,359,839 | 2,261,615 |
All other countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Total | $ 313,134 | $ 184,414 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 03, 2024 | Jan. 28, 2023 | Jan. 29, 2022 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 127,561 | $ 528,642 | $ 688,546 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Feb. 03, 2024 shares | |
Trading Arrangements, by Individual | |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |
Eri Chaya [Member] | |
Trading Arrangements, by Individual | |
Material Terms of Trading Arrangement | On December 21, 2023, Eri Chaya, President, Chief Creative & Merchandising Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 160,000 shares of RH’s common stock beginning April 2, 2024. The arrangement’s expiration date is December 31, 2024. |
Name | Eri Chaya |
Title | President, Chief Creative & Merchandising Officer |
Rule 10b5-1 Arrangement Adopted | true |
Adoption Date | Dec. 21, 2023 |
Termination Date | Dec. 31, 2024 |
Aggregate Available | 160,000 |