Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 01, 2020 | Mar. 27, 2020 | Aug. 02, 2019 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Feb. 1, 2020 | ||
Entity File Number | 001-35720 | ||
Entity Registrant Name | RH | ||
Entity Tax Identification Number | 45-3052669 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 15 Koch Road | ||
Entity Address, City or Town | Corte Madera | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 94925 | ||
City Area Code | 415 | ||
Local Phone Number | 924-1005 | ||
Title of 12(b) Security | Common Stock | ||
Trading Symbol | RH | ||
Security Exchange Name | NYSE | ||
Entity 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 | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 19,238,681 | ||
Entity Public Float | $ 2,188,285,246 | ||
Entity Central Index Key | 0001528849 | ||
Current Fiscal Year End Date | --02-01 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 47,658 | $ 5,803 |
Accounts receivable-net | 48,979 | 40,224 |
Merchandise inventories | 438,696 | 531,947 |
Asset held for sale | 21,795 | |
Prepaid expense and other current assets | 61,619 | 104,198 |
Total current assets | 596,952 | 703,967 |
Property and equipment-net | 967,599 | 952,957 |
Operating lease right-of-use assets | 410,904 | 440,504 |
Goodwill | 124,367 | 124,379 |
Tradenames, trademarks and domain names | 86,022 | |
Deferred tax assets | 45,005 | 35,603 |
Other non-current assets | 214,845 | 79,586 |
Total assets | 2,445,694 | 2,423,018 |
Current liabilities: | ||
Accounts payable and accrued expenses | 330,309 | 320,497 |
Deferred revenue and customer deposits | 162,433 | 152,595 |
Operating lease liabilities | 58,924 | 66,249 |
Other current liabilities | 140,714 | 109,456 |
Total current liabilities | 982,912 | 992,586 |
Asset based credit facility | 53,062 | 57,500 |
Non-current operating lease liabilities | 409,930 | 437,557 |
Non-current finance lease liabilities | 442,988 | 421,245 |
Other non-current obligations | 28,520 | 32,512 |
Total liabilities | 2,427,043 | 2,461,708 |
Commitments and contingencies (Note 18) | ||
Stockholders' (deficit): | ||
Preferred stock-$0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of February 1, 2020 and February 2, 2019 | ||
Common stock-$0.0001 par value per share, 180,000,000 shares authorized, 19,236,681 shares issued and outstanding as of February 1, 2020; 20,480,613 shares issued and 20,477,813 shares outstanding as of February 2, 2019 | 2 | 2 |
Additional paid-in capital | 430,662 | 356,422 |
Accumulated other comprehensive loss | (2,760) | (2,334) |
Accumulated deficit | (409,253) | (392,537) |
Treasury stock-at cost, no shares as of February 1, 2020 and 2,800 shares as of February 2, 2019 | (243) | |
Total stockholders' (deficit) | 18,651 | (38,690) |
Total liabilities and stockholders' (deficit) | 2,445,694 | 2,423,018 |
Asset based credit facility | ||
Current liabilities: | ||
Asset based credit facility | 57,500 | |
Convertible senior notes due 2019 | ||
Current liabilities: | ||
Convertible senior notes due-net | 343,789 | |
Equipment promissory notes | ||
Current liabilities: | ||
Term loan-net | 31,053 | |
Convertible senior notes due 2020 | ||
Current liabilities: | ||
Convertible senior notes due-net | 290,532 | |
Convertible senior notes due-net | 271,157 | |
Convertible senior notes due 2023 | ||
Current liabilities: | ||
Convertible senior notes due-net | 266,658 | $ 249,151 |
Convertible senior notes due 2024 | ||
Current liabilities: | ||
Convertible senior notes due-net | $ 264,982 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Feb. 01, 2020 | Feb. 02, 2019 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 180,000,000 | 180,000,000 |
Common stock, shares issued | 19,236,681 | 20,480,613 |
Common stock, shares outstanding | 19,236,681 | 20,477,813 |
Treasury stock, shares | 0 | 2,800 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Income Statement [Abstract] | |||
Net revenues | $ 2,647,437 | $ 2,505,653 | $ 2,440,174 |
Cost of goods sold | 1,552,426 | 1,520,076 | 1,600,876 |
Gross profit | 1,095,011 | 985,577 | 839,298 |
Selling, general and administrative expenses | 732,180 | 723,841 | 722,183 |
Income from operations | 362,831 | 261,736 | 117,115 |
Other expenses | |||
Interest expense-net | 87,177 | 67,769 | 56,002 |
Goodwill And Tradename Impairment | 32,086 | 33,700 | |
Loss on extinguishment of debt-net | 6,472 | 917 | 4,880 |
Total other expenses | 93,649 | 100,772 | 94,582 |
Income before income taxes | 269,182 | 160,964 | 22,533 |
Income tax expense | 48,807 | 25,233 | 25,132 |
Net income (loss) | $ 220,375 | $ 135,731 | $ (2,599) |
Weighted-average shares used in computing basic net income (loss) per share | 19,082,303 | 21,613,678 | 27,053,616 |
Basic net income (loss) per share | $ 11.55 | $ 6.28 | $ (0.10) |
Weighted-average shares used in computing diluted net income (loss) per share | 24,299,034 | 26,533,225 | 27,053,616 |
Diluted net income (loss) per share | $ 9.07 | $ 5.12 | $ (0.10) |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net income (loss) | $ 220,375 | $ 135,731 | $ (2,599) |
Net (losses) gains from foreign currency translation | (426) | (2,163) | 1,510 |
Net unrealized gains on investment securities | 11 | ||
Total comprehensive income (loss) | $ 219,949 | $ 133,568 | $ (1,078) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings (Accumulated Deficit) | Treasury Stock | Total |
Balances at Jan. 28, 2017 | $ 4,000 | $ 790,866,000 | $ (1,692,000) | $ 154,174,000 | $ (19,523,000) | $ 923,829,000 |
Balances, shares at Jan. 28, 2017 | 40,828,633 | 294,888 | ||||
Stock-based compensation | 50,283,000 | 50,283,000 | ||||
Issuance of restricted stock | $ 0 | 0 | 0 | 0 | $ 0 | 0 |
Issuance of restricted stock, Shares | 15,631 | |||||
Vested and delivered restricted stock units | (4,504,000) | (4,504,000) | ||||
Vested and delivered restricted stock units, Shares | 197,660 | |||||
Exercise of stock options | 23,643,000 | 23,643,000 | ||||
Exercise of stock options, Shares | 695,546 | |||||
Repurchases of common stock | $ (2,000) | $ (1,000,326,000) | $ (1,000,328,000) | |||
Repurchases of common stock, Shares | (20,220,132) | 20,220,132 | ||||
Retirement of treasury stock | (19,523,000) | $ 19,523,000 | ||||
Retirement of treasury stock, Shares | (294,888) | (294,888) | ||||
Net income (loss) | (2,599,000) | $ (2,599,000) | ||||
Net (losses) gains from foreign currency translation | 1,510,000 | 1,510,000 | ||||
Net unrealized holding gains on investments | 11,000 | 11,000 | ||||
Balances at Feb. 03, 2018 | $ 2,000 | 840,765,000 | (171,000) | 151,575,000 | $ (1,000,326,000) | (8,155,000) |
Balances, shares at Feb. 03, 2018 | 21,517,338 | 20,220,132 | ||||
Stock-based compensation | 23,557,000 | 23,557,000 | ||||
Issuance of restricted stock, Shares | 6,405 | |||||
Vested and delivered restricted stock units | (9,502,000) | (9,502,000) | ||||
Vested and delivered restricted stock units, Shares | 122,177 | |||||
Exercise of stock options | 44,024,000 | 44,024,000 | ||||
Exercise of stock options, Shares | 882,272 | |||||
Repurchases of common stock | $ (250,243,000) | (250,243,000) | ||||
Repurchases of common stock, Shares | (2,050,379) | 2,050,379 | ||||
Retirement of treasury stock | (591,519,000) | (658,807,000) | $ 1,250,326,000 | (1,250,300,000) | ||
Retirement of treasury stock, Shares | (22,267,711) | |||||
Equity component value of convertible note issuance-net | 89,933,000 | 89,933,000 | ||||
Sale of common stock warrant | 51,021,000 | 51,021,000 | ||||
Purchase of convertible note hedge | (91,857,000) | (91,857,000) | ||||
Impact of Topic 606 adoption | (21,036,000) | (21,036,000) | ||||
Net income (loss) | 135,731,000 | 135,731,000 | ||||
Net (losses) gains from foreign currency translation | (2,163,000) | (2,163,000) | ||||
Balances at Feb. 02, 2019 | $ 2,000 | 356,422,000 | (2,334,000) | (392,537,000) | $ (243,000) | $ (38,690,000) |
Balances, shares at Feb. 02, 2019 | 20,477,813 | 2,800 | ||||
Balances, shares at Feb. 02, 2019 | 20,477,813 | |||||
Stock-based compensation | 21,406,000 | $ 21,406,000 | ||||
Issuance of restricted stock, Shares | 7,014 | |||||
Vested and delivered restricted stock units | (7,069,000) | (7,069,000) | ||||
Vested and delivered restricted stock units, Shares | 109,062 | |||||
Exercise of stock options | 27,138,000 | 27,138,000 | ||||
Exercise of stock options, Shares | 643,090 | |||||
Repurchases of common stock | $ (250,032,000) | (250,032,000) | ||||
Repurchases of common stock, Shares | (2,167,396) | 2,167,396 | ||||
Retirement of treasury stock | (13,180,000) | (237,091,000) | $ 250,271,000 | (250,300,000) | ||
Retirement of treasury stock, Shares | (2,170,154) | |||||
Equity component value of convertible note issuance-net | 87,070,000 | 87,070,000 | ||||
Sale of common stock warrant | 50,225,000 | 50,225,000 | ||||
Purchase of convertible note hedge | (91,350,000) | (91,350,000) | ||||
Shares issued in connection with warrant agreements | 167,056 | |||||
Net income (loss) | 220,375,000 | 220,375,000 | ||||
Net (losses) gains from foreign currency translation | (426,000) | (426,000) | ||||
Conversion of convertible senior notes | $ 4,000 | 4,000 | ||||
Conversion of convertible senior notes, Shares | 42 | (42) | ||||
Balances at Feb. 01, 2020 | $ 2,000 | $ 430,662,000 | $ (2,760,000) | $ (409,253,000) | $ 18,651,000 | |
Balances, shares at Feb. 01, 2020 | 19,236,681 | |||||
Balances, shares at Feb. 01, 2020 | 19,236,681 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ 220,375 | $ 135,731 | $ (2,599) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 100,739 | 91,372 | 83,176 |
Non-cash operating lease cost | 65,195 | 68,612 | 75,610 |
Asset impairments | 15,168 | 6,533 | 8,876 |
Goodwill And Tradename Impairment | 32,086 | 33,700 | |
Asset held for sale loss (gain) | (1,529) | 8,497 | |
Amortization of debt discount | 46,245 | 41,868 | 30,457 |
Accretion of debt discount upon settlement of debt | (70,482) | ||
Stock-based compensation expense | 21,832 | 23,983 | 50,709 |
Non-cash finance lease interest expense | 22,608 | 16,785 | 11,154 |
Product recalls | (3,517) | 6,874 | 7,707 |
Net non-cash charges resulting from inventory step-up | 380 | 2,527 | |
Amortization of purchase premiums and accretion of purchase discount-net | 99 | ||
Deferred income taxes | (7,709) | (5,018) | 3,733 |
Loss on extinguishment of debt-net | 6,472 | 917 | 4,880 |
Other non-cash interest expense | 4,334 | 3,639 | 4,768 |
Change in assets and liabilities: | |||
Accounts receivable | (7,309) | (8,583) | 2,458 |
Merchandise inventories | 93,266 | (7,399) | 220,767 |
Prepaid expense and other assets | 28,404 | (88,434) | 27,920 |
Landlord assets under construction-net of tenant allowances | (64,300) | (59,001) | (81,065) |
Accounts payable and accrued expenses | 7,445 | 10,148 | 65,105 |
Deferred revenue and customer deposits | 9,799 | 8,413 | 3,366 |
Other current liabilities | (45,767) | 51,214 | 5,008 |
Current and non-current operating lease liability | (77,004) | (70,875) | (70,541) |
Other non-current obligations | (25,077) | (18,139) | (13,310) |
Net cash provided by operating activities | 339,188 | 249,603 | 474,505 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Capital expenditures | (93,623) | (79,992) | (68,393) |
Deposits on asset under construction | (53,000) | ||
Proceeds from sale of assets | 24,078 | 15,123 | |
Purchase of investments | (16,109) | ||
Maturities of investments | 46,890 | ||
Sales of investments | 145,020 | ||
Net cash provided by (used in) investing activities | (122,545) | (79,992) | 122,531 |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings under promissory and equipment security notes | 122,000 | 34,000 | |
Repayments under promissory and equipment security notes | (16,520) | (31,974) | (2,319) |
Debt issuance costs | (4,636) | (8,298) | |
Proceeds from issuance of convertible senior notes | 350,000 | 335,000 | |
Proceeds from issuance of warrants | 50,225 | 51,021 | |
Purchase of convertible note hedges | (91,350) | (91,857) | |
Principal payments under finance leases | (9,682) | (6,885) | (6,105) |
Repurchases of common stock-including commissions | (250,032) | (250,000) | (1,000,326) |
Proceeds from exercise of stock options | 27,138 | 44,024 | 24,896 |
Tax withholdings related to issuance of stock-based awards | (7,069) | (9,502) | (5,759) |
Net cash used in financing activities | (174,804) | (188,992) | (686,941) |
Effects of foreign currency exchange rate translation | 16 | (130) | 152 |
Net increase (decrease) in cash and cash equivalents and restricted cash equivalents | 41,855 | (19,511) | (89,753) |
Cash and cash equivalents and restricted cash equivalents | |||
Beginning of period-cash and cash equivalents | 5,803 | 17,907 | 87,023 |
Beginning of period-restricted cash equivalents (construction related deposits) | 7,407 | 28,044 | |
Beginning of period-cash and cash equivalents and restricted cash equivalents | 5,803 | 25,314 | 115,067 |
End of period-cash and cash equivalents | 47,658 | 5,803 | 17,907 |
End of period-restricted cash equivalents (construction related deposits) | 7,407 | ||
End of period-cash and cash equivalents and restricted cash equivalents | 47,658 | 5,803 | 25,314 |
Cash paid for interest | 43,278 | 31,154 | 28,180 |
Cash paid for taxes | 40,126 | 41,289 | 4,025 |
Non-cash transactions: | |||
Property and equipment additions in accounts payable and accrued expenses at period-end | 5,161 | 7,837 | 7,640 |
Landlord asset additions in accounts payable and accrued expenses at period-end | 19,640 | 12,142 | 17,543 |
Landlord asset additions from unpaid construction related deposits | 195 | 2,807 | 5,091 |
Reclassification of assets from landlord assets under construction to finance lease right-of-use assets | 19,503 | 79,685 | 57,990 |
Issuance of non-current notes payable related to share repurchases from former employees | 243 | ||
Convertible Senior Notes | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Debt issuance costs | (4,818) | (6,349) | |
Repayments of convertible senior notes | (278,560) | ||
Asset based credit facility | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings | 322,500 | 866,500 | 600,000 |
Repayments | (380,000) | (1,008,970) | (400,030) |
Term Loan | |||
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Borrowings | 320,000 | 180,000 | |
Repayments | $ (324,000) | $ (80,000) | $ (103,000) |
Nature of Business
Nature of Business | 12 Months Ended |
Feb. 01, 2020 | |
Significant Accounting Policies | |
Nature of Business | NOTE 1—NATURE OF BUSINESS RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites. As of February 1, 2020, the Company operated a total of 68 RH Galleries and 38 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 15 Waterworks showrooms throughout the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong. |
Organization
Organization | 12 Months Ended |
Feb. 01, 2020 | |
Significant Accounting Policies | |
Organization | NOTE 2—ORGANIZATION The Company was formed on August 18, 2011 and capitalized on September 2, 2011 as a holding company for the purposes 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, the Company acquired all of the outstanding shares of capital stock of Restoration Hardware, Inc., a Delaware corporation, and Restoration Hardware, Inc. became a direct, wholly owned subsidiary of the Company. Restoration Hardware, Inc. was a direct, wholly owned subsidiary of Home Holdings prior to the Company’s initial public offering. Outstanding units issued by Home Holdings under its equity compensation plan, referred to as the Team Resto Ownership Plan, were replaced with common stock of the Company at the time of its initial public offering. These transactions are referred to as the “Reorganization.” On November 7, 2012, the Company completed its initial public offering. On December 15, 2016, Restoration Hardware Holdings, Inc. filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware to change its name to “RH,” effective January 1, 2017. Convertible Senior Notes In September 2019, the Company issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 (the “2024 Notes”). In connection with the issuance of these notes, the Company entered into convertible note hedge transactions for which it paid an aggregate amount of $91.4 million. In connection with the issuance of the 2024 Notes, the Company sold warrants to purchase shares of common stock of the Company, for which it received aggregate proceeds of approximately $50.2 million. Taken together, the Company received total cash proceeds of $304.1 million, net of discounts upon original issuance and offering costs of $4.8 million, from the issuance of the 2024 Notes and the related warrants. Refer to Note 10— Convertible Senior Notes Subsequent Event In March 2020, the World Health Organization declared the outbreak of a novel coronavirus disease (“COVID-19”) as a pandemic, which continues to spread throughout the United States and globally. Refer to Note 20— Subsequent Event |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Feb. 01, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | NOTE 3—SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. Revision As previously disclosed within the Company’s quarterly reports on Form 10-Q for its fiscal quarters during the year ended February 1, 2020, during the adoption process of the new lease accounting standard (refer to “Recently Issued Accounting Standards— Leases” Exit or Disposal Cost Obligations Leases” In addition, during the adoption process of the new lease accounting standard, the Company identified an error in its previously reported consolidated statement of cash flows for fiscal 2018. This error resulted in an understatement of $9.2 million of net cash provided by operating activities and an understatement of $9.2 million of net cash used in investing activities for fiscal 2018. There was no impact on the consolidated balance sheets, consolidated statements of operations or the consolidated statement of stockholders’ equity (deficit) related to this error. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying consolidated financial statements to reflect the correction of these errors. The following are selected line items from the Company’s consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard ( in thousands Year Ended February 2, 2019 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (452) $ 9,201 $ 8,749 Net cash provided by operating activities 300,556 9,201 309,757 Cash flows from investing activities: Capital expenditures (136,736) (9,201) (145,937) Net cash used in investing activities (136,736) (9,201) (145,937) Fiscal Years The Company’s fiscal year ends on the Saturday closest to January 31. As a result, the Company’s fiscal year may include 53 weeks. The fiscal years ended February 1, 2020 (“fiscal 2019”) and February 2, 2019 (“fiscal 2018”) each consisted of 52 weeks. The fiscal year ended February 3, 2018 (“fiscal 2017”) consisted of 53 weeks. Use of Accounting Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the 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 The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. Concentration of Credit Risk The Company maintains its cash and cash equivalent accounts in financial institutions in both U.S. dollar and Canadian dollar denominations. Accounts at the U.S. institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 and accounts at the Canadian institutions are insured by the Canada Deposit Insurance Corporation (“CDIC”) up to $100,000 Canadian dollars. As of February 1, 2020 and February 2, 2019, and at various times throughout these fiscal years, the Company had cash in financial institutions in excess of the amount insured by the FDIC and CDIC. The Company performs ongoing evaluations of these institutions to limit its concentration of credit risk. Accounts Receivable Accounts receivable consist primarily of receivables from the Company’s credit card processors for sales transactions, receivables related to the Company’s contract business and other miscellaneous receivables. Accounts receivable is presented net of allowance for doubtful accounts, which is recorded on a specific identification basis. The allowance for doubtful accounts was $2.2 million and $1.9 million as of February 1, 2020 and February 2, 2019, respectively. Merchandise Inventories The Company’s 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. To determine if the value of inventory should be marked down below original cost, the Company uses estimates to determine the lower of cost or net realizable value, which considers current and anticipated demand, customer preference and the merchandise age. The inventory value is adjusted periodically to reflect current market conditions, which requires management judgments that may significantly affect the ending inventory valuation, as well as gross margin. The estimates used in inventory valuation are lower of cost or net realizable value reserves and obsolescence (including excess and slow-moving inventory). Additionally, the Company estimates and accrues for inventory shrinkage for the period between the last physical count and the balance sheet date. The Company’s inventory reserves contain uncertainties that require management to make assumptions and to apply judgment regarding a number of factors, including market conditions, the selling environment, historical results and current inventory trends. The Company adjusts inventory reserves for net realizable value and obsolescence based on trends, aging reports, specific identification and estimates of future retail sales prices. Reserves for shrinkage are estimated and recorded throughout the year as a percentage of shipped sales for the direct channels, and 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 cycle counts and the results of the Company’s annual physical inventory counts. Actual inventory shrinkage and obsolescence can vary from estimates due to factors including the mix of the Company’s inventory (which ranges from large furniture to décor) and execution against loss prevention initiatives in the Company’s stores, distribution centers, home delivery center locations, off-site storage locations and with its third-party transportation providers. Accordingly, there is no shrinkage reserve at year-end, with the exception of a cycle count reserve for the Company’s distribution centers and home delivery center locations based on the historical cycle count results. If actual net realizable value, obsolescence or shrinkage estimates change from the Company’s original estimates, the Company will adjust its inventory reserves accordingly throughout the period. The Company’s inventory reserve balances were $25.6 million and $30.7 million as of February 1, 2020 and February 2, 2019, respectively. Product Recalls During fiscal 2019, fiscal 2018 and fiscal 2017, the Company initiated product recalls for certain of its products, as well as adjusted accruals related to certain product recalls previously initiated due to changes in estimates based on customer response and vendor and insurance recoveries. Product recalls had the following effect on the Company’s income before income taxes (in thousands) Year Ended February 1, February 2, February 3, 2020 2019 2018 (Increase) decrease to net revenues $ (391) $ 4,733 $ 3,207 Increase (decrease) to cost of goods sold (3,372) (4,139) 4,315 (Increase) decrease to gross profit (3,763) 594 7,522 Increase (decrease) to selling, general and administrative expenses (225) 1,025 185 (Increase) decrease to income before income taxes $ (3,988) $ 1,619 $ 7,707 The product recall accrual as of February 1, 2020 and February 2, 2019 was $2.1 million and $7.8 million, respectively, and is included in other current liabilities on the consolidated balance sheets. Advertising Expenses Advertising expenses primarily represent the costs associated with the Company’s catalog mailings, as well as print and website marketing. Total advertising expense, which is recorded in selling, general and administrative expenses on the consolidated statements of operations, was $107.6 million, $97.0 million and $106.6 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. Capitalized Catalog Costs Capitalized catalog costs consist primarily of third-party incremental direct costs to prepare, print and distribute Source Books. Such costs are capitalized and recognized as expense upon the delivery of the Source Books to the carrier. In the case of multiple printings of a Source Book, the creative costs will be expensed in full upon the initial delivery of Source Books to the carrier. The Company had $13.7 million and $16.2 million of capitalized catalog costs as of February 1, 2020 and February 2, 2019, respectively, which are included in prepaid expense and other current assets on the consolidated balance sheets. 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 and amortization. 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 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 applicable lease term, which could include option periods reasonably certain to be exercised. The Company expenses all internal-use software costs incurred in the preliminary project stage and capitalizes certain direct costs associated with the development and purchase of internal-use software, including external costs of materials and services and internal payroll costs related to the software project, within property and equipment. Capitalized costs are amortized on a straight-line basis over the estimated useful lives of the software, generally between three Interest is capitalized on construction in progress and software projects during the period in which expenditures have been made, activities are in progress to prepare the asset for its intended use and interest expense is being incurred. The Company capitalized interest of $4.9 million, $3.1 million and $3.3 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. During fiscal 2019, $3.7 million of the $4.9 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. During fiscal 2018, $2.7 million of the $3.1 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. During fiscal 2017, $2.5 million of the $3.3 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. Land purchased by the Company is recorded at cost and is a non-depreciable asset. Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. For further discussion regarding the impairment accounting policy refer to “Impairment— Long-Lived Assets Asset Held for Sale Upon designation as an asset held for sale, the carrying value of the asset is recorded at the lower of its carrying value or its estimated fair value less estimated costs to sell, and the Company ceases depreciating the asset. Lease Accounting The Company leases nearly all of its retail and outlet store locations, corporate headquarters, distribution and home delivery facilities, as well as other storage and office space. The initial lease terms of the Company’s real estate leases generally range from ten to fifteen years , and certain leases contain renewal options for up to an additional 25 years , the exercise of which is at the Company’s sole discretion. The Company also leases certain equipment with lease terms generally ranging from three to seven years . The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictions or covenants. The Company accounts for lease and non-lease components as a single lease component for real estate leases, and for all other asset classes the Company accounts for the components separately. The Company determines the lease classification and begins to recognize lease and any related financing expenses upon the lease’s commencement, which for real estate leases is generally upon store opening or, to a lesser extent, when the Company takes possession or control of the asset. The Company subleases certain real estate locations to third parties under operating leases and recognizes rental income received on a straight-line basis over the lease term, which is recorded as an offset to selling, general and administrative expenses on the consolidated statements of operations. Lease arrangements may require the landlord to provide tenant allowances directly to the Company. Standard tenant allowances received from landlords, typically those received under operating lease agreements, are recorded as cash and cash equivalents with an offset recorded in lease right-of-use assets on the consolidated balance sheets. Tenant allowances that are reasonably certain to be received subsequent to lease commencement are reflected as a reduction of both the lease liabilities and right-of-use assets on the consolidated balance sheets at the commencement date. In certain instances tenant allowances are provided for the Company to design and build the leased asset. Tenant allowances received from landlords during the construction phase of a leased asset and prior to lease commencement are recorded as cash and cash equivalents with an offset recorded in other non-current assets (to the extent the Company has incurred related capital expenditure for construction costs) or in other current liabilities (to the extent that payments are received prior to capital construction expenditures by the Company) on the consolidated balance sheets. After the leased asset is constructed and the lease commences, the Company reclassifies the tenant allowance from other non-current assets or other current liabilities to lease right-of-use assets on the consolidated balance sheets, and such allowances are amortized over the reasonably certain lease term. Lease Classification Certain of the Company’s real estate and equipment leases are classified as finance leases. Lease characteristics that the Company evaluates to determine lease classification include, but are not limited to, the reasonably certain lease term, and the economic life and fair value of the leased asset. Lease related assets under such classification are included in finance lease right-of-use assets within property and equipment —net on the consolidated balance sheets. 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 on the consolidated balance sheets. Reasonably Certain Lease Term In recognizing the lease right-of-use assets and lease liabilities, the Company utilizes the lease term for which it is reasonably certain to use the underlying asset, including consideration of options to extend or terminate the lease. At lease commencement, the Company evaluates whether it is 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 the Company’s financial position related to certain Design Galleries or distribution center facilities which typically have greater lease payments. Although the above factors are considered in management’s analysis, the assessment involves subjectivity considering the Company’s strategy, expected future events and market conditions. While the Company believes its estimates and judgments in determining the lease term are reasonable, future events may occur which may require the Company to reassess this determination. Leases, or lease extensions, with a term of twelve months or less are not recorded on the consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Lease Payments The majority of the Company’s real estate lease agreements include minimum rent payments which are subject to stated lease escalations over the lease term and eligible renewal periods. These fixed payments through the reasonably certain lease term are included in the Company’s measurement of the lease right-of-use assets and lease liabilities upon lease commencement. Certain of the Company’s 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, the Company does not recognize a lease right-of-use asset and lease liability related to such payments. Estimated variable rental payments are included in accounts payable and accrued expenses on the consolidated balance sheets in the period they are incurred and until such payments are made, and the related lease cost is included in cost of goods sold on the consolidated statements of operations. The Company has a small group of real estate leases that include rental payments periodically adjusted for inflation (e.g., based on the consumer price index). The Company includes these variable payments in the initial measurement of the lease right-of-use asset and lease liability according to the index or rate at the commencement date and incorporates 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 least commencement and actual amounts incurred are recognized in the consolidated statement of operations in the period such costs are incurred. Incremental Borrowing Rate As the Company’s real estate leases and most of its equipment leases do not include an implicit interest rate, the Company determines the discount rate for each lease based upon the incremental borrowing rate (“IBR”) in order to calculate the present value of lease payments at the commencement date. The IBR is computed as the rate of interest that the Company would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) an amount equal to the total lease payments (iv) in a similar economic environment. The Company utilizes its asset based credit facility as the basis for determining the applicable IBR for each lease. The Company estimates the incremental borrowing rate for each lease primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating; (ii) the weighted-average lease term; and (iii) adjustments for differences between the yield rates and the actual term of the credit facility. In determining the yield rates for leases other than new Design Galleries, the Company utilizes market information as of the beginning of the quarter in which the lease commenced. For Design Galleries, the Company utilizes market information on the lease commencement date. Fair Market Value The Company determines the fair value of the underlying asset, and the lease components such as land and building, for purposes of determining the lease classification and allocating its 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 the Company’s financial position related to certain Design Galleries or distribution center facilities which typically have greater fair values. 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 the Company obtains independent third-party appraisals to determine the fair value of the underlying asset and lease components. While determining fair value requires a variety of input assumptions and judgment, management believes its estimates of fair market value are reasonable. Construction Related Activities The Company is often involved in the construction of leased stores for its newer Design Galleries. Prior to construction commencement, the Company evaluates whether or not it, as lessee, controls the asset being constructed and, depending on the extent to which it is involved, the Company may be the “deemed owner” of the leased asset for accounting purposes during the construction period under a build-to-suit arrangement. If the Company is not the “deemed owner” for accounting purposes during the construction period, such lease is classified as either an operating or finance lease upon lease commencement. During the construction period and prior to lease commencement, any capital amounts contributed by the Company toward the construction of the leased asset (excluding normal leasehold improvements, which are recorded within property and equipment—net) are recorded as “Landlord assets under construction” within other non-current assets on the consolidated balance sheets (refer to Note 4— Prepaid Expense and Other Assets If the Company is the “deemed owner” for accounting purposes, upon commencement of the construction project it is required to capitalize (i) costs incurred by the Company and (ii) the cash and non-cash assets contributed by the landlord for construction as property and equipment on its consolidated balance sheets as build-to-suit assets, with an offsetting financing obligation under build-to-suit lease transactions. The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord to those responsible for construction, are included as property and equipment additions due to build-to-suit lease transactions within the non-cash section of the consolidated statements of cash flows. Over the lease term, these non-cash additions to property and equipment do not impact the Company’s cash outflows, nor do they impact net income on the consolidated statements of operations. Upon completion of the construction project, the Company performs a sale-leaseback analysis to determine if it can derecognize the build-to-suit asset and corresponding financing obligation. If the asset and liability cannot be derecognized, the Company accounts for the agreement as a debt-like arrangement. If the Company is involved in a debt-like arrangement for a non-real estate asset under construction for which the Company plans to lease such asset upon construction completion and makes deposits during the construction period, the Company recognizes the related deposits as “Deposits on asset under construction” within other non-current assets on the consolidated balance sheets (refer to Note 4— Prepaid Expense and Other Assets Accounts Payable, Accrued Expenses and Other Current Liabilities Sale-Leaseback Activities The Company occasionally enters into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which the Company sells the property to a third party and agrees 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, the Company evaluates whether it has transferred control to the third party in accordance with the guidance set forth in ASC Topic 606. If the transfer of the asset is a sale at market terms, the Company recognizes the transaction price for the sale based on the cash proceeds received, derecognizes the carrying amount of the underlying asset and recognizes a gain or loss in the consolidated statements of operations for any difference between the carrying value of the asset and the transaction price. The Company then accounts for the leaseback in accordance with its lease accounting policy. If the transfer of the asset is determined not to be a sale, the Company accounts for the transaction as a financing arrangement. The Company continues to present the asset within property and equipment—net on the consolidated balance sheets and recognizes a non-current obligation on the consolidated balance sheets for the transaction price, with the financial liability subsequently measured in accordance with other applicable GAAP. Intangible Assets Intangible assets reflect the value assigned to tradenames, trademarks and domain names. The Company does not amortize its intangible assets as the Company defines the life of these assets as indefinite. Impairment Goodwill The Company evaluates goodwill annually to determine whether it is impaired or whenever events occur or circumstances change that would indicate that the fair value of a reporting unit is less than its carrying amount. 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 the Company’s 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. The Company performs its annual goodwill impairment testing in the fourth fiscal quarter by comparing the fair value of a reporting unit with its carrying amount, limited to the total amount of goodwill of the reporting unit. The Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company determines fair values using the discounted cash flow approach (“income approach”) or the market multiple valuation approach (“market approach”), when available and appropriate, or a combination of both. The Company assesses the valuation methodology based upon the relevance and availability of the data at the time it performs the valuation. If multiple valuation methodologies are used, the results are weighted appropriately. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views of the long-term outlook for each respective reporting unit. Actual results may differ from those assumed in the Company’s forecasts. The Company derives its discount rates using a capital asset pricing model and analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in its internally developed forecasts. Valuations using the market approach are derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. A market approach is limited to reporting units for which there are publicly traded companies that have the characteristics similar to the Company’s businesses. Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods. 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 by the Chief Operating Decision Maker (“CODM”), which is the Company’s Chief Executive Officer. The Company has deemed RH Segment and Waterworks to be the reporting units for which goodwill is independently tested, as these operating segments are the lowest level for which discrete financial information is prepared and regularly reviewed by the CODM. RH Segment Reporting Unit During fiscal 2019, fiscal 2018 and fiscal 2017, the Company 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, the Company determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount for fiscal 2019, fiscal 2018 and fiscal 2017, and therefore the Company did not recognize goodwill impairment with respect to the RH Segment in any such fiscal year. Waterworks Reporting Unit During the fourth fiscal quarters of 2018 and 2017, the Company conducted its annual strategic planning process. Based upon the outcome of this process in each fiscal year, management identified indicators that there could be an impairment of the Waterworks reporting unit. These indicators included (i) an updated long-range financial plan provided by the Waterworks segment management that indicated a reduction of revenues and EBITDA as compared to prior long-range financial plans, (ii) a review of the strategic initiatives of the Waterworks segment and (iii) the Waterworks segment not achieving revenue and operating income objectives compared to plans. In determining the Waterworks reporting unit estimated fair value using the income approach in both fiscal 2018 and fiscal 2017, the Company projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on a weighted-average cost of capital. This analysis required the Company to make judgments about revenues, expenses, fixed asset and working capital requirements, the impact of updated tax legislation and other subjective inputs. In determining the Waterworks reporting unit estimated fair value using the market approach, the Company considered assumptions that it believes market participants would use in valuing the Waterworks reporting unit, based on EBITDA multiples and including the application of a control premium. For purposes of this analysis, in both fiscal years, the Company weig |
Prepaid Expense and Other Curre
Prepaid Expense and Other Current Assets | 12 Months Ended |
Feb. 01, 2020 | |
Prepaid Expense and Other Current Assets | |
Prepaid Expense and Other Current Assets | NOTE 4—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consist of the following ( in thousands February 1, February 2, 2020 2019 Prepaid expense and other current assets $ 30,678 $ 15,439 Capitalized catalog costs 13,740 16,178 Vendor deposits 11,258 11,836 Right of return asset for merchandise 5,746 5,883 Federal and state tax receivable 197 4,862 Insurance recovery receivable (1) — 50,000 Total prepaid expense and other current assets $ 61,619 $ 104,198 (2) Refer to Note 18— Commitments and Contingencies . Other non-current assets consist of the following ( in thousands February 1, February 2, 2020 2019 Landlord assets under construction $ 138,315 $ 63,159 Deposits on asset under construction 60,000 — Promissory note receivable, including interest 5,354 5,104 Other deposits 5,157 5,068 Deferred financing fees 2,602 3,415 Other non-current assets 3,417 2,840 Total other non-current assets $ 214,845 $ 79,586 |
Property and Equipment
Property and Equipment | 12 Months Ended |
Feb. 01, 2020 | |
Property and Equipment | |
Property and Equipment | NOTE 5—PROPERTY AND EQUIPMENT Property and equipment consists of the following ( in thousands February 1, February 2, 2020 2019 Finance lease right-of-use assets (1) $ 734,425 $ 702,379 Leasehold improvements (2) 318,313 311,416 Computer software 138,328 143,776 Furniture, fixtures and equipment 79,575 76,194 Machinery, equipment and aircraft 66,228 54,207 Building and building improvements 33,370 2,750 Land 6,061 7,110 Built-to-suit property 2,882 — Total property and equipment 1,379,182 1,297,832 Less—accumulated depreciation and amortization (3) (411,583) (344,875) Total property and equipment—net $ 967,599 $ 952,957 (1) Refer to “Lease Accounting” within Note 3— Significant Accounting Policies and Note 9— Leases . (2) Leasehold improvements include construction in progress of $16.0 million and $14.7 million as of February 1, 2020 and February 2, 2019, respectively. (3) Includes accumulated amortization related to finance lease right-of-use assets of $92.3 million and $55.5 million as of February 1, 2020 and February 2, 2019, respectively. Refer to Note 9— Leases. The Company recorded depreciation and amortization of property and equipment, excluding amortization for finance lease right-of-use assets, of $63.7 million, $62.6 million and $63.7 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. |
Goodwill, Tradenames, Trademark
Goodwill, Tradenames, Trademarks and Domain Names | 12 Months Ended |
Feb. 01, 2020 | |
Goodwill, Tradenames, Trademarks and Domain Names | |
Goodwill, Tradenames, Trademarks and Domain Names | NOTE 6—GOODWILL, TRADENAMES, TRADEMARKS AND DOMAIN NAMES The following sets forth the fiscal 2019 goodwill, tradenames, trademarks and domain names activity for the RH Segment and Waterworks ( in thousands Foreign February 2, Currency February 1, 2019 Translation 2020 RH Segment Goodwill $ 124,379 $ (12) $ 124,367 Tradenames, trademarks and domain names 48,563 — 48,563 Waterworks Tradename (1) 37,459 — 37,459 (1) Presented net of an impairment charge of $14.6 million recorded in fiscal 2018 . The following sets forth the fiscal 2018 goodwill, tradenames, trademarks and domain names activity for the RH Segment and Waterworks ( in thousands Foreign February 3, Currency February 2, 2018 Impairment (1) Translation 2019 RH Segment Goodwill $ 124,448 $ — $ (69) $ 124,379 Tradenames, trademarks and domain names 48,563 — — 48,563 Waterworks Goodwill (2) 17,445 (17,445) — — Tradename (3) 52,100 (14,641) — 37,459 (1) Refer to “Impairment” within Note 3 — Significant Accounting Policies . (2) Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively . (3) Presented net of an impairment charge of $14.6 million recorded in fiscal 2018. |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Feb. 01, 2020 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | NOTE 7 — Accounts payable and accrued expenses consist of the following ( in thousands February 1, February 2, 2020 2019 Accounts payable $ 180,714 $ 183,039 Accrued compensation 64,659 64,192 Accrued freight and duty 25,170 20,787 Accrued sales taxes 19,618 18,354 Accrued occupancy 12,067 10,839 Accrued catalog costs 8,267 10,276 Accrued professional fees 4,381 2,050 Other accrued expenses 15,433 10,960 Total accounts payable and accrued expenses $ 330,309 $ 320,497 Other current liabilities consist of the following ( in thousands February 1, February 2, 2020 2019 Promissory notes on asset under construction $ 53,000 $ — Current portion of debt 22,009 892 Allowance for sales returns 19,206 19,821 Unredeemed gift card and merchandise credit liability 16,625 17,192 Federal and state taxes payable 13,591 719 Finance lease liabilities 9,188 9,184 Product recall reserve 2,055 7,767 Other current liabilities 5,040 3,881 Provision for legal settlement (1) — 50,000 Total other current liabilities $ 140,714 $ 109,456 (1) Refer to Note 18— Commitments and Contingencies. |
Other Non-Current Obligations
Other Non-Current Obligations | 12 Months Ended |
Feb. 01, 2020 | |
Other Non-Current Obligations | |
Other Non-Current Obligations | NOTE 8—OTHER NON-CURRENT OBLIGATIONS Other non-current obligations consist of the following ( in thousands February 1, February 2, 2020 2019 Notes payable for share repurchases $ 18,741 $ 18,741 Rollover units and profit interests (1) 3,064 2,637 Unrecognized tax benefits 3,020 2,992 Deferred contract incentive (2) 595 2,976 Other non-current obligations 3,100 5,166 Total other non-current obligations $ 28,520 $ 32,512 (1) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 16 — Stock-Based Compensation . (2) Represents the non-current portion of an incentive payment received in relation to a 5 -year service agreement, which will be amortized over the term of the agreement. |
Leases
Leases | 12 Months Ended |
Feb. 01, 2020 | |
Leases | |
Leases | NOTE 9—LEASES Lease costs—net consist of the following ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Operating lease cost (1)(2) $ 86,448 $ 87,742 $ 95,499 Finance lease costs Amortization of leased assets (1) 36,991 28,848 19,542 Interest on lease liabilities (3) 22,608 16,785 11,154 Variable lease costs (4) 23,471 21,889 23,280 Sublease income (5) (9,609) (7,794) (1,003) Total lease costs—net $ 159,909 $ 147,470 $ 148,472 (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 operations based on the Company’s policy. Refer to Note 3— Significant Accounting Policies . (2) Includes short-term operating lease costs which are not material. (3) Included in interest expense—net on the consolidated statements of operations. (4) 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 $14.6 million, $13.0 million and $13.8 million and charges associated with common area maintenance of $8.9 million, $8.9 million, and $9.5 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Other variable costs, such as 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 fiscal 2019, fiscal 2018, and fiscal 2017. (5) Included in selling, general and administrative expenses on the consolidated statements of operations. Lease right-of-use assets and lease liabilities consist of the following ( in thousands February 1, February 2, 2020 2019 Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 410,904 $ 440,504 Finance leases (1)(2) Property and equipment—net 642,117 646,875 Total lease right-of-use assets 1,053,021 1,087,379 Liabilities Current (3) Operating leases Operating lease liabilities $ 58,924 $ 66,249 Finance leases Other current liabilities 9,188 9,184 Total lease liabilities—current 68,112 75,433 Non-current Operating leases Non-current operating lease liabilities $ 409,930 $ 437,557 Finance leases Non-current finance lease liabilities 442,988 421,245 Total lease liabilities—non-current 852,918 858,802 Total lease liabilities $ 921,030 $ 934,235 (1) Finance lease right-of-use assets include capitalized amounts related to the Company’s completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement. (2) Finance lease right-of-use assets are recorded net of accumulated amortization of $92.3 million and $55.5 million as of February 1, 2020 and February 2, 2019, respectively. (3) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months. The maturities of lease liabilities are as follows as of February 1, 2020 ( in thousands Fiscal year Operating Finance Total 2020 $ 75,634 $ 32,138 $ 107,772 2021 69,343 35,323 104,666 2022 60,711 35,747 96,458 2023 56,266 36,170 92,436 2024 52,424 36,660 89,084 Thereafter 246,482 568,856 815,338 Total lease payments (1) 560,860 744,894 1,305,754 Less—imputed interest (2) (92,006) (292,718) (384,724) Present value of lease liabilities (3) $ 468,854 $ 452,176 $ 921,030 (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 $360.9 million of legally binding payments under the noncancellable term for leases signed but not yet commenced as of February 1, 2020. (2) Calculated using the incremental borrowing rate for each lease at lease commencement. (3) Excludes future commitments under short-term lease agreements of $0.9 million as of February 1, 2020. Supplemental information related to leases consists of the following: February 1, February 2, 2020 2019 Weighted-average remaining lease term (years) Operating leases 8.9 9.2 Finance leases 18.6 19.6 Weighted-average discount rate Operating leases 3.82% 3.78% Finance leases 5.25% 5.28% Other information related to leases consists of the following ( in thousands ): Year Ended February 1, February 2, February 3, 2020 2019 2018 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (95,329) $ (91,965) $ (95,279) Operating cash flows from finance leases (25,260) (16,785) (11,154) Financing cash flows from finance leases (9,682) (6,885) (6,105) Total cash outflows from leases $ (130,271) $ (115,635) $ (112,538) Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash) Finance leases $ 34,063 $ 174,977 $ 26,770 Operating leases 42,122 33,790 33,710 Asset Held for Sale and Sale-Leaseback Transaction During the fourth quarter of fiscal 2018, the Company committed to a plan to sell the Yountville Design Gallery, which resulted in a reclassification of such Gallery from property and equipment—net to assets held for sale on the consolidated balance sheets as of February 2, 2019. The Company performed an assessment and determined that based on management’s best estimate of the fair value of such Gallery as of February 2, 2019, it had an impairment of $8.5 million in fiscal 2018 in the RH Segment. In October 2019, the Company executed a sale-leaseback transaction for the Yountville Design Gallery for sales proceeds of $23.5 million, which qualified for sale-leaseback accounting in accordance with ASC 842. Concurrently with the sale, the Company entered into an operating leaseback arrangement with an initial lease term of 15 years and renewal options for up to an additional 30 years. The Company recognized a gain related to the execution of the sale transaction of $1.2 million in fiscal 2019, which was recorded in selling, general and administrative expenses on the consolidated statements of operations. |
Convertible Senior Notes
Convertible Senior Notes | 12 Months Ended |
Feb. 01, 2020 | |
Debt Disclosure | |
Convertible Senior Notes | NOTE 10—CONVERTIBLE SENIOR NOTES $350 million 0.00% Convertible Senior Notes due 2024 In September 2019, the Company issued in a private offering $350 million principal amount of 0.00% convertible senior notes due 2024 (the “2024 Notes”). The 2024 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2024 Notes will mature on September 15, 2024, unless earlier purchased by the Company or converted. The 2024 Notes will not bear interest, except that the 2024 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2024 Notes. The 2024 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2024 Notes, which may result in the acceleration of the maturity of the 2024 Notes, as described in the indenture governing the 2024 Notes. Events of default under the indenture for the 2024 Notes include, among other things, the occurrence of an event of default by us as defined under any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness of the Company or any of its significant subsidiaries for money borrowed, if that event of default (i) constitutes the failure to pay when due indebtedness in the aggregate principal amount in excess of $20 million and (ii) such event of default continues for a period of 30 days after written notice is delivered to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% of the aggregate principal amount of the 2024 Notes then outstanding. The initial conversion rate applicable to the 2024 Notes is 4.7304 shares of common stock per $1,000 principal amount of 2024 Notes, or a total of approximately 1.656 million shares for the total $350 million principal amount. This initial conversion rate is equivalent to an initial conversion price of approximately $211.40 per share, which represents a 25% premium to the $169.12 closing share price on the day the 2024 Notes were priced. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2024 Notes, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2024 Notes in connection with such make-whole fundamental change. Prior to June 15, 2024, the 2024 Notes 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 the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2024 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of February 1, 2020, none of these conditions have occurred and, as a result, the 2024 Notes were not convertible as of February 1, 2020. On and after June 15, 2024, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2024 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2024 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. The Company may not redeem the 2024 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 2024 Notes), holders may require the Company to purchase all or a portion of their 2024 Notes for cash at a price equal to 100% of the principal amount of the 2024 Notes to be purchased plus any accrued and unpaid special interest to, but excluding, the fundamental change purchase date. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2024 Notes, the Company separated the 2024 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2024 Notes and the fair value of the liability component of the 2024 Notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) will be amortized to interest expense using an effective interest rate of 5.74% over the expected life of the 2024 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Debt issuance costs related to the 2024 Notes were comprised of discounts upon original issuance of $3.5 million and third party offering costs of $1.3 million. In accounting for the debt issuance costs related to the issuance of the 2024 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2024 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity (deficit). Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2024 balance on the consolidated balance sheets. During fiscal 2019 the Company recorded $0.2 million related to the amortization of debt issuance costs related to the 2024 Notes. The carrying value of the 2024 Notes, excluding the discounts upon original issuance and third party offering costs, is as follows ( in thousands February 1, 2020 Liability component Principal $ 350,000 Less: Debt discount (81,634) Net carrying amount $ 268,366 Equity component (1) $ 87,252 (1) Included in additional paid-in capital on the consolidated balance sheets. The Company recorded interest expense of $5.6 million for the amortization of the debt discount related to the 2024 Notes during fiscal 2019. 2024 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2024 Notes and exercise of the overallotment option in September 2019, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 1.656 million shares of its common stock at a price of approximately $211.40 per share. The total cost of the convertible note hedge transactions was approximately $91.4 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 1.656 million shares of the Company’s common stock at a price of $338.24 per share, which represents a 100% premium to the $169.12 closing share price on the day the 2024 Notes were priced. The warrants contain certain adjustment mechanisms whereby the total number of shares to be purchased under such warrants may be increased up to a cap of approximately 3.3 million shares of common stock (which cap may also be subject to adjustment). The Company received approximately $50.2 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2024 Notes until the Company’s common stock is above approximately $338.24 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the consolidated balance sheets. The Company recorded a deferred tax liability of $21.7 million in connection with the debt discount associated with the 2024 Notes and recorded a deferred tax asset of $22.7 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the consolidated balance sheets. $335 million 0.00% Convertible Senior Notes due 2023 In June 2018, the Company issued in a private offering $300 million principal amount of 0.00% convertible senior notes due 2023 and issued an additional $35 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering (collectively, the “2023 Notes”). The 2023 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2023 Notes will mature on June 15, 2023, unless earlier purchased by the Company or converted. The 2023 Notes will not bear interest, except that the 2023 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2023 Notes. The 2023 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2023 Notes, which may result in the acceleration of the maturity of the 2023 Notes, as described in the indenture governing the 2023 Notes. Events of default under the indenture for the 2023 Notes include, among other things, the occurrence of an event of default by us as defined under any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness of the Company or any of its significant subsidiaries for money borrowed, if that event of default (i) constitutes the failure to pay when due indebtedness in the aggregate principal amount in excess of $20 million and (ii) such event of default continues for a period of 30 days after written notice is delivered to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% of the aggregate principal amount of the 2023 Notes then outstanding. The initial conversion rate applicable to the 2023 Notes is 5.1640 shares of common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $193.65 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2023 Notes, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2023 Notes in connection with such make-whole fundamental change. Prior to March 15, 2023, the 2023 Notes are convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2018, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2023 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of February 1, 2020, none of these conditions have occurred and, as a result, the 2023 Notes were not convertible as of February 1, 2020. On and after March 15, 2023 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2023 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2023 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. The Company may not redeem the 2023 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 2023 Notes), holders may require the Company to purchase all or a portion of their 2023 Notes for cash at a price equal to 100% of the principal amount of the 2023 Notes to be purchased plus any accrued and unpaid special interest to, but excluding, the fundamental change purchase date. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2023 Notes, the Company separated the 2023 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2023 Notes and the fair value of the liability component of the 2023 Notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) will be amortized to interest expense using an effective interest rate of 6.35% over the expected life of the 2023 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Debt issuance costs related to the 2023 Notes were comprised of discounts upon original issuance of $1.7 million and third party offering costs of $4.6 million. In accounting for the debt issuance costs related to the issuance of the 2023 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2023 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity (deficit). Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2023 balance on the consolidated balance sheets. The Company recorded $0.9 million and $0.5 million related to the amortization of debt issuance costs in fiscal 2019 and fiscal 2018, respectively, related to the 2023 Notes. The carrying values of the 2023 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands February 1, February 2, 2020 2019 Liability component Principal $ 335,000 $ 335,000 Less: Debt discount (64,729) (81,311) Net carrying amount $ 270,271 $ 253,689 Equity component (1) $ 90,990 $ 90,990 (1) Included in additional paid-in capital on the consolidated balance sheets. The Company recorded interest expense of $16.5 million and $9.7 million for the amortization of the debt discount related to the 2023 Notes during fiscal 2019 and fiscal 2018, respectively. 2023 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2023 Notes and exercise of the overallotment option in June 2018, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 1.730 million shares of its common stock at a price of approximately $193.65 per share. The total cost of the convertible note hedge transactions was approximately $91.9 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 1.730 million shares of the Company’s common stock at a price of $309.84 per share. The warrants contain certain adjustment mechanisms whereby the total number of shares to be purchased under such warrants may be increased up to a cap of approximately 3.5 million shares of common stock (which cap may also be subject to adjustment). The Company received approximately $51.0 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2023 Notes until the Company’s common stock is above approximately $309.84 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity (deficit), are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the consolidated balance sheets. The Company recorded a deferred tax liability of $22.3 million in connection with the debt discount associated with the 2023 Notes and recorded a deferred tax asset of $22.5 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the consolidated balance sheets. $300 million 0.00% Convertible Senior Notes due 2020 In June 2015, the Company issued in a private offering $250 million principal amount of 0.00% convertible senior notes due 2020 and, in July 2015, the Company issued an additional $50 million principal amount pursuant to the exercise of the overallotment option granted to the initial purchasers as part of its June 2015 offering (collectively, the “2020 Notes”). The 2020 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2020 Notes will mature on July 15, 2020, unless earlier purchased by the Company or converted. The 2020 Notes will not bear interest, except that the 2020 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2020 Notes. The 2020 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2020 Notes, which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the 2020 Notes. Events of default under the indenture for the 2020 Notes include, among other things, the occurrence of an event of default by us as defined under any mortgage, indenture or instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness of the Company or any of its significant subsidiaries for money borrowed, if that event of default (i) constitutes the failure to pay when due indebtedness in the aggregate principal amount in excess of $20 million and (ii) such event of default continues for a period of 30 days after written notice is delivered to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% of the aggregate principal amount of the 2020 Notes then outstanding. The 2020 Notes are guaranteed by the Company’s primary operating subsidiary, Restoration Hardware, Inc., as Guarantor. The guarantee is the unsecured obligation of the Guarantor and is subordinated to the Guarantor’s obligations from time to time with respect to its Credit Agreement and ranks equal in right of payment with respect to Guarantor’s other obligations. The initial conversion rate applicable to the 2020 Notes is 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $118.13 per share. To the extent the stock price is less than $118.13 per share, the Company is required to settle the par value in cash, subject to the cash settlement averaging period under the indenture. To the extent the stock price is greater than $118.13 per share, the Company may settle the par value at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture governing the 2020 Notes, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2020 Notes in connection with such make-whole fundamental change. Prior to March 15, 2020, the 2020 Notes are convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2015, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2020 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. The first condition was satisfied during the calendar quarter ended December 31, 2019 and, accordingly, holders may convert their 2020 Notes during the calendar quarter ending March 31, 2020. Regardless of the foregoing circumstances, on and after March 15, 2020 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2020 Notes at any time. Upon conversion, the 2020 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock to the extent the Company’s stock price is greater than $118.13 per share. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. We expect to repay the $300 million outstanding principal amount of the convertible notes in cash, whether in connection with a conversion of such notes or repayment at maturity in July 2020. The Company may not redeem the 2020 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 2020 Notes), holders may require the Company to purchase all or a portion of their 2020 Notes for cash at a price equal to 100% of the principal amount of the 2020 Notes to be purchased plus any accrued and unpaid special interest to, but excluding, the fundamental change purchase date. Under GAAP, certain convertible debt instruments that may be settled in cash on conversion are required to be separately accounted for as liability and equity components of the instrument in a manner that reflects the issuer’s non-convertible debt borrowing rate. Accordingly, in accounting for the issuance of the 2020 Notes, the Company separated the 2020 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2020 Notes and the fair value of the liability component of the 2020 Notes. The debt discount will be amortized to interest expense using an effective interest rate of 6.47% over the expected life of the 2020 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. Debt issuance costs related to the 2020 Notes were comprised of discounts upon original issuance of $3.8 million and third party offering costs of $2.3 million. In accounting for the debt issuance costs related to the issuance of the 2020 Notes, the Company allocated the total amount incurred to the liability and equity components based on their relative values. Debt issuance costs attributable to the liability component are amortized to interest expense using the effective interest method over the expected life of the 2020 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity (deficit). Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2020 balance on the consolidated balance sheets. The Company recorded $1.2 million, $1.1 million and $1.0 million related to the amortization of debt issuance costs in fiscal 2019, fiscal 2018 and fiscal 2017, respectively, related to the 2020 Notes. The carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands February 1, February 2, 2020 2019 Liability component Principal $ 300,000 $ 300,000 Less: Debt discount (8,890) (27,081) Net carrying amount $ 291,110 $ 272,919 Equity component (1) $ 84,003 $ 84,003 (1) Included in additional paid-in capital on the consolidated balance sheets. The Company recorded interest expense of $18.2 million, $17.1 million and $16.0 million for the amortization of the debt discount related to the 2020 Notes during fiscal 2019, fiscal 2018 and fiscal 2017, respectively. 2020 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2020 Notes in June 2015 and the exercise in full of the overallotment option in July 2015, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 2.540 million shares of its common stock at a price of approximately $118.13 per share. The total cost of the convertible note hedge transactions was approximately $68.3 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 2.540 million shares of the Company’s common stock at a price of $189.00 per share. The warrants contain certain adjustment mechanisms whereby the total number of shares to be purchased under such warrants may be increased up to a cap of approximately 5.1 million shares of common stock (which cap may also be subject to adjustment). The Company received approximately $30.4 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2020 Notes until the Company’s common stock is above approximately $189.00 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity (deficit), are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the consolidated balance sheets. The Company recorded a deferred tax liability of $32.8 million in connection with the debt discount associated with the 2020 Notes and recorded a deferred tax asset of $26.6 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in non-current deferred tax assets on the consolidated balance sheets. The provision for income taxes in fiscal 2017 included $1.1 million of income tax benefit as a result of the Tax Act for the provisional re-measurement of the deferred tax asset and liability related to the 2020 Notes for the reduction in the U.S. corporate income tax rate from 35% to 21% . $350 million 0.00% Convertible Senior Notes due 2019 In June 2014, the Company issued $350 million principal amount of 0.00% convertible senior notes due 2019 (the “2019 Notes”) in a private offering. The 2019 Notes were governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2019 Notes did not bear interest, except that the 2019 Notes were subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2019 Notes. The 2019 Notes were unsecured obligations and did not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events were also considered “events of default” under the 2019 Notes, which could result in the acceleration of the maturity of the 2019 Notes, as described in the indenture governing the 2019 Notes. The 2019 Notes matured on June 15, 2019. The initial conversion rate applicable to the 2019 Notes was 8.6143 shares of common stock per $1,000 principal amount of 2019 Notes, which was equivalent to an initial conversion price of approximately $116.09 per share. The conversion rate was subject to adjustment upon the occurrence of certain specified events, but was not adjusted for any ac |
Credit Facilities
Credit Facilities | 12 Months Ended |
Feb. 01, 2020 | |
Debt Disclosure | |
Credit Facilities | NOTE 11—CREDIT FACILITIES The outstanding balances under the Company’s credit facilities were as follows ( in thousands February 1, February 2, 2020 2019 Outstanding Unamortized Debt Net Carrying Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Amount Issuance Costs Amount Asset based credit facility (1) $ — $ — $ — $ 57,500 $ — $ 57,500 Equipment promissory notes (2) 53,372 (310) 53,062 — — — Total credit facilities $ 53,372 $ (310) $ 53,062 $ 57,500 $ — $ 57,500 (1) Deferred financing fees associated with the asset based credit facility as of February 1, 2020 and February 2, 2019 were $2.6 million and $3.4 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 June 28, 2022. (2) Represents total equipment security notes secured by certain of the Company’s property and equipment, of which $22.0 million outstanding was included in other current liabilities. The remaining $31.4 million outstanding, included in other non-current obligations on the consolidated balance sheets, has principal payments due of $23.0 million, $7.9 million and $0.5 million in fiscal 2021, fiscal 2022 and fiscal 2023, respectively. Asset Based Credit Facility & Term Loan Facilities In August 2011, Restoration Hardware, Inc., along with its Canadian subsidiary, Restoration Hardware Canada, Inc., entered into a credit agreement with Bank of America, N.A., as administrative agent, and certain other lenders (the “Original Credit Agreement”). On June 28, 2017, Restoration Hardware, Inc. entered into an eleventh amended and restated credit agreement (the “Credit Agreement”) among Restoration Hardware, Inc., Restoration Hardware Canada, Inc., various subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and Bank of America, N.A. as administrative agent and collateral agent (“First Lien Administrative Agent”), which amended and restated the Original Credit Agreement. The Credit Agreement has a revolving line of credit with initial availability of up to $600.0 million, of which $10.0 million is available to Restoration Hardware Canada, Inc., and includes a $200.0 million accordion feature under which the revolving line of credit may be expanded by agreement of the parties from $600.0 million to up to $800.0 million if and to the extent the lenders, whether existing lenders or new lenders, agree to increase their credit commitments. In addition, the Credit Agreement established an $80.0 million last in, last out (“LILO”) term loan facility. The maturity date of the Credit Agreement is June 28, 2022. In June 2018, the Company repaid the LILO term loan in full. As a result of the repayment, the Company incurred a $0.5 million loss on extinguishment of debt in fiscal 2018, which represents the acceleration of amortization of debt issuance costs. The Company did not incur any prepayment penalties upon the early extinguishment of the LILO term loan. On June 12, 2018, Restoration Hardware, Inc. entered into a First Amendment (the “First Amendment”) to the Credit Agreement. The First Amendment (a) changed the Credit Agreement’s definition of “Eligible In-Transit Inventory” to clarify the requirements to be fulfilled by the borrowers with respect to such in-transit inventory, and (b) clarified that no Default or Event of Default was caused by any prior non-compliance with such requirements with respect to in-transit inventory. Eligible In-Transit Inventory consists of inventory being shipped from vendor locations outside of the United States. Qualifying in-transit inventory is included within the Company’s borrowing base for eligible collateral for purposes of determining the amount of borrowing available to borrowers under the Credit Agreement. On November 23, 2018, Restoration Hardware, Inc. entered into a Consent and Second Amendment (the “Second Amendment”) to the Credit Agreement. The Second Amendment included certain clarifying changes to among other things: (a) address the processing of payments from insurance proceeds in connection with casualty or other insured losses with respect to property or assets of a Loan Party, and (b) add an additional category of permitted restricted payment to allow the lead borrower to make annual restricted payments of up to $3 million per fiscal year to cover payments of certain administrative and other obligations of RH in the ordinary course of business. On April 4, 2019, Restoration Hardware, Inc., entered into a third amendment to the Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, (a) established a $120.0 million first in, last out (“FILO”) term loan facility, which amount was fully borrowed as of April 4, 2019 and which incurs interest at a rate that is 1.25% greater than the interest rate applicable to the revolving loans provided for under the Credit Agreement at any time, (b) provided for additional permitted indebtedness, as defined in the Credit Agreement, that the loan parties can incur, and (c) modified the borrowing availability under the Credit Agreement in certain circumstances. The Company repaid the full amount of the FILO term loan as of February 1, 2020. As a result of the repayment, the Company incurred a $0.8 million loss on extinguishment of debt in fiscal 2019, which represents the acceleration of amortization of debt issuance costs. The Company did not incur any prepayment penalties upon the early extinguishment of the FILO term loan. On May 31, 2019, Restoration Hardware, Inc. entered into a fourth amendment to the Credit Agreement (the “Fourth Amendment”). The Fourth Amendment, among other things, amended the Credit Agreement to (a) extend the time to deliver monthly financial statements to the lenders for the fiscal months ending February 2019 and March 2019 until June 19, 2019, (b) remove the requirement to deliver monthly financial statements to the lenders for the last fiscal month of any fiscal quarter, and (c) waive any default or event of default under the Credit Agreement relating to the delivery of monthly financial statements or other information to lenders for the fiscal months ending February 2019 and March 2019. The availability of credit at any given time under the Credit Agreement is limited by reference to a borrowing base formula based upon numerous factors, including the value of eligible inventory and eligible accounts receivable. As a result of the borrowing base formula, actual borrowing availability under the revolving line of credit could be less than the stated amount of the revolving line of credit (as reduced by the actual borrowings and outstanding letters of credit under the revolving line of credit). All obligations under the Credit Agreement are secured by substantially all of the assets, including accounts receivable, inventory, intangible assets, property, equipment, goods and fixtures of Restoration Hardware, Inc., Restoration Hardware Canada, Inc., RH US, LLC, Waterworks Operating Co., LLC and Waterworks IP Co., LLC. Borrowings under the revolving line of credit are subject to interest, at the borrowers’ option, at either the bank’s reference rate or London Inter-bank Offered Rate (“LIBOR”) (or, in the case of the revolving line of credit, the Bank of America “BA” Rate or the Canadian Prime Rate, as such terms are defined in the Credit Agreement, for Canadian borrowings denominated in Canadian dollars or the United States Index Rate or LIBOR for Canadian borrowings denominated in United States dollars) plus an applicable margin rate, in each case. The Credit Agreement contains various restrictive covenants, including, among others, limitations on the ability to incur liens, make loans or other investments, incur additional debt, issue additional equity, merge or consolidate with or into another person, sell assets, pay dividends or make other distributions, or enter into transactions with affiliates, along with other restrictions and limitations typical to credit agreements of this type and size. The Credit Agreement also contains various affirmative covenants, including the obligation to deliver notice to the First Lien Administrative Agent following the Company’s obtaining knowledge of any matter that has resulted or could reasonably be expected to result in a “Material Adverse Effect” (as defined in the Credit Agreement). In addition, under the Credit Agreement, the Company is required to meet specified financial ratios in order to undertake certain actions, and the Company may be required to maintain certain levels of excess availability or meet a specified consolidated fixed-charge coverage ratio (“FCCR”). Subject to certain exceptions, the trigger for the FCCR occurs if the domestic availability under the revolving line of credit is less than the greater of (i) $40.0 million and (ii) 10% of the lesser of (x) the domestic revolving commitments under the Credit Agreement and (y) the domestic revolving borrowing base. If the availability under the Credit Agreement is less than the foregoing amount, then Restoration Hardware, Inc. is required subject to certain exceptions to maintain an FCCR of at least one to one. As of February 1, 2020, Restoration Hardware, Inc. was in compliance with all The Credit Agreement requires a daily sweep of all cash receipts and collections to prepay the loans under the agreement while (i) an event of default exists or (ii) the availability under the revolving line of credit for extensions of credit is less than the greater of (A) $40.0 million and (B) 10% of the sum of (a) the lesser of (x) the aggregate revolving commitments under the Credit Agreement and (y) the aggregate revolving borrowing base, plus (b) the lesser of (x) the then outstanding amount of the LILO term loan or (y) the LILO term loan borrowing base. The Credit Agreement includes customary events of default, in certain cases subject to customary periods to cure. The occurrence of an event of default, following the applicable cure period, would permit the lenders to, among other things, terminate any existing commitments under the Credit Agreement and declare the unpaid principal, accrued and unpaid interest and all other amounts payable under the Credit Agreement to be immediately due and payable. As of February 1, 2020, the Company had no outstanding borrowings under the revolving credit facility portion of the Credit Agreement. The availability of credit at any given time under the Credit Agreement is limited by reference to a borrowing base formula based upon numerous factors, including the value of eligible inventory and eligible accounts receivable. As a result of the borrowing base formula, actual borrowing availability under the revolving line of credit could be less than the stated amount of the revolving line of credit (as reduced by the actual borrowings and outstanding letters of credit under the revolving line of credit). Under the terms of such provisions, the amount under the revolving line of credit borrowing base that could be available pursuant to the Credit Agreement as of February 1, 2020 was $321.7 million, net of $13.2 million in outstanding letters of credit. Second Lien Credit Agreement On April 10, 2019, Restoration Hardware, Inc., entered into a credit agreement, dated as of April 9, 2019 and effective as of April 10, 2019 (the “Second Lien Credit Agreement”), among (i) Restoration Hardware, Inc., as lead borrower, (ii) the guarantors party thereto, (iii) the lenders party thereto, each of whom were managed or advised by either Benefit Street Partners L.L.C. and its affiliated investment managers or Apollo Capital Management, L.P. and its affiliated investment managers, and (iv) BSP Agency, LLC, as administrative agent and collateral agent (the “Second Lien Administrative Agent”) with respect to a second lien term loan in an aggregate principal amount equal to $200.0 million with a maturity date of April 9, 2024 (the “Second Lien Term Loan”). The second lien term loan of $200.0 million in principal was repaid in full on September 20, 2019. As a result of the repayment, the Company incurred a $6.7 million loss on extinguishment of debt, which includes a prepayment penalty of $4.0 million and acceleration of amortization of debt issuance costs of $2.7 million. The Second Lien Term Loan bore interest at an annual rate generally based on LIBOR plus 6.50%. This rate was a floating rate that reset periodically based upon changes in LIBOR rates during the life of the Second Lien Term Loan. At the date of the initial borrowing, the rate was set at one-month LIBOR plus 6.50%. Intercreditor Agreement On April 10, 2019, in connection with the Second Lien Credit Agreement, Restoration Hardware, Inc. entered into an Intercreditor Agreement (the “Intercreditor Agreement”), dated as of April 9, 2019 and effective as of April 10, 2019, with the First Lien Administrative Agent and the Second Lien Administrative Agent. The Intercreditor Agreement established various customary inter-lender terms, including, without limitation, with respect to priority of liens, permitted actions by each party, application of proceeds, exercise of remedies in case of default, releases of liens and certain limitations on the amendment of the Credit Agreement and the Second Lien Credit Agreement without the consent of the other party. The Intercreditor Agreement is no longer in effect after repayment of the Second Lien Term Loan on September 20, 2019. Equipment Loan Facility On September 5, 2017, Restoration Hardware, Inc. entered into a Master Loan and Security Agreement with Banc of America Leasing & Capital, LLC (“BAL”) pursuant to which BAL and the Company agreed that BAL would finance certain equipment of the Company from time to time, with each such equipment financing to be evidenced by an equipment security note setting forth the terms for each particular equipment loan. Each equipment loan is secured by a purchase money security interest in the financed equipment. As of February 1, 2020, the Company had $53.4 million in aggregate amounts outstanding under the equipment security notes at a weighted-average interest rate of 4.56%. The maturity dates of the equipment security notes vary, but generally have a maturity of three |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Feb. 01, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | NOTE 12—FAIR VALUE MEASUREMENTS Certain financial assets and liabilities are required to be carried at fair value. Fair value is the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining the fair value, the Company utilizes market data or assumptions that it believes market participants would use in pricing the asset or liability, which would maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, including assumptions about risk and the risks inherent in the inputs of the valuation technique. The degree of judgment used in measuring the fair value of financial instruments generally correlates to the level of pricing observability. Pricing observability is impacted by a number of factors, including the type of financial instrument, whether the financial instrument is new to the market and not yet established and the characteristics specific to the transaction. Financial instruments with readily available active quoted prices for which fair value can be measured generally will have a higher degree of pricing observability and a lesser degree of judgment used in measuring fair value. Conversely, financial instruments rarely traded or not quoted will generally have less, or no, pricing observability and a higher degree of judgment used in measuring fair value. The Company’s financial assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories: ● Level 1—Quoted prices are available in active markets for identical investments as of the reporting date. ● Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies. ● Level 3—Pricing inputs are unobservable for the investment and include situations where there is little, if any, market activity for the investment. The inputs used in the determination of fair value require significant management judgment or estimation. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Fair Value Measurements—Recurring Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value due to the short-term nature of activity within these accounts. The estimated fair value of the asset based credit facility approximates cost as the interest rate associated with the facility is variable and resets frequently. The estimated fair value and carrying value of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes were as follows ( in thousands February 1, February 2, 2020 2019 Fair Carrying Fair Carrying Value Value (1) Value Value (1) Convertible senior notes due 2019 (2) $ — $ — $ 334,756 $ 344,146 Convertible senior notes due 2020 295,573 291,110 260,258 272,919 Convertible senior notes due 2023 272,623 270,271 230,684 253,689 Convertible senior notes due 2024 255,849 268,366 — — (1) Carrying value represents the principal amount less the equity component of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes classified in stockholders’ equity (deficit), and does not exclude the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third party offering costs, as applicable. (2) The 2019 Notes matured on June 15, 2019. The fair value of each of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of the Company’s convertible notes, when available, the Company’s stock price and interest rates based on similar debt issued by parties with credit ratings similar to the Company (Level 2). Fair Value Measurements—Non-Recurring The fair value of the Waterworks reporting unit and tradename as of February 2, 2019 was determined based on unobservable (Level 3) inputs and valuation techniques, as discussed in “Impairment” within Note 3— Significant Accounting Policies |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 01, 2020 | |
Income Taxes | |
Income Taxes | NOTE 13—INCOME TAXES The United States enacted the Tax Cuts and Jobs Act (the “Tax Act”) on December 22, 2017, which had a significant impact to the Company’s provision for income taxes as of and for the years ended February 2, 2019 and February 3, 2018. The Tax Act included a number of changes to existing U.S. tax laws that impact the Company, including the reduction of the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017. Reduction of the U.S. Corporate Income Tax Rate The Company measures deferred tax assets and liabilities using enacted tax rates that will apply in the years in which the temporary differences are expected to be recovered or paid. Accordingly, the Company’s deferred tax assets and liabilities were re-measured to reflect the reduction in the U.S. corporate income tax rate from 35% to 21%, resulting in a provisional $6.1 million increase in income tax expense for the year ended February 3, 2018 and a corresponding provisional $6.1 million decrease in net deferred tax assets as of February 3, 2018. The Company completed the accounting for re-measurement of its deferred tax assets and liabilities as of February 2, 2019, and recorded $0.5 million to income tax expense and a corresponding $0.5 million decrease in net deferred tax assets as of February 2, 2019. The cumulative impact to the Company’s provision for income tax expense in fiscal 2017 and fiscal 2018 for the re-measurement of the Company’s deferred tax assets and liabilities as result of the Tax Act was $6.6 million. Transition Tax on Foreign Earnings The Company recognized a provisional income tax expense of $1.0 million for the year ended February 3, 2018 related to the one-time transition tax on indefinitely reinvested foreign earnings. The Company completed its computation of transition tax liability in 2018 and did not recognize additional income tax expense or benefit for the year ended February 2, 2019. The cumulative impact to the Company’s provision for income tax expense for the one-time transition tax on indefinitely reinvested foreign earnings as result of the Tax Act was $1.0 million. The following is a summary of the income before income taxes ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Domestic $ 267,538 $ 157,827 $ 21,241 Foreign 1,644 3,137 1,292 Total income before income taxes $ 269,182 $ 160,964 $ 22,533 The following is a summary of the income tax expense (benefit) ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Current Federal $ 45,985 $ 24,012 $ 18,593 State 10,806 6,275 2,761 Foreign 403 1,270 933 Total current tax expense 57,194 31,557 22,287 Deferred Federal (7,173) (4,428) 3,692 State (1,477) (2,049) (844) Foreign 263 153 (3) Total deferred tax expense (benefit) (8,387) (6,324) 2,845 Total income tax expense $ 48,807 $ 25,233 $ 25,132 A reconciliation of the federal statutory tax rate to the Company’s effective tax rate is as follows: Year Ended February 1, February 2, February 3, 2020 2019 2018 Provision at federal statutory tax rate 21.0 % 21.0 % 33.7 % State income taxes—net of federal tax impact 2.5 1.7 4.7 Tax rate adjustments 0.2 0.1 (0.8) Meals and entertainment 0.1 0.3 1.9 Aircraft expenses 0.1 0.1 4.8 Stock compensation—excess benefits (6.6) (9.9) (27.9) Goodwill impairment — 1.8 23.9 Non-deductible stock-based compensation — — 35.7 Federal statutory tax rate change — — 27.4 Foreign income inclusion—transition tax — — 4.4 Net adjustments to tax accruals and other — — 1.9 Valuation allowance — 0.3 1.5 Donation of appreciated property — — (0.2) Foreign income — — (1.3) Other permanent items 0.8 0.3 1.8 Effective tax rate 18.1 % 15.7 % 111.5 % Significant components of the Company’s deferred tax assets and liabilities are as follows ( in thousands February 1, February 2, 2020 2019 Non-current deferred tax assets (liabilities) Lease liabilities $ 249,243 $ 253,826 Stock-based compensation 22,400 22,721 Accrued expenses 21,362 16,657 Merchandise inventories 8,028 14,735 Deferred lease credits 6,395 1,188 Deferred revenue 2,235 — Net operating loss carryforwards 1,763 1,654 Convertible senior notes 717 — Other 1,846 2,591 Non-current deferred tax assets 313,989 313,372 Valuation allowance (1,007) (1,623) Net non-current deferred tax assets $ 312,982 $ 311,749 Property and equipment $ (137,448) $ (137,240) Lease right-of-use assets (110,075) (118,549) Tradename, trademarks and intangibles (13,026) (12,386) Prepaid expense and other (4,882) (4,209) State benefit (2,546) (2,556) Convertible senior notes — (1,054) Deferred revenue — (152) Non-current deferred tax liabilities (267,977) (276,146) Total net non-current deferred tax assets $ 45,005 $ 35,603 A reconciliation of the valuation allowance is as follows ( in thousands Year Ended February 1, February 2, 2020 2019 Balance at beginning of fiscal year $ 1,623 $ 1,190 Net changes in deferred tax assets and liabilities (616) 433 Balance at end of fiscal year $ 1,007 $ 1,623 The Company has recorded deferred tax assets and liabilities based upon estimates of their realizable value, such estimates are based upon likely future tax consequences. In assessing the need for a valuation allowance, the Company considers 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, the Company records a valuation allowance. As of February 1, 2020 and February 2, 2019, the Company had $1.0 million and $1.6 million, respectively, in valuation allowances against deferred tax assets in certain state and foreign jurisdictions due to historical losses. As of February 1, 2020, the Company had state net operating loss carryovers of $6.5 million and foreign net operating loss carryovers of $8.2 million. The state net operating loss carryovers will begin to expire in 2022, and the foreign net operating loss carryovers will begin to expire in 2023. 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). The Company 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 is as follows ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Balance at beginning of fiscal year $ 8,459 $ 8,152 $ 2,190 Gross increases (decreases)—prior period tax positions (2) 239 5,491 Gross increases (decreases)—current period tax positions 438 375 471 Reductions based on the lapse of the applicable statutes of limitations (381) (307) — Balance at end of fiscal year $ 8,514 $ 8,459 $ 8,152 As of February 1, 2020, the Company has $8.5 million of unrecognized tax benefits, of which $7.8 million would reduce income tax expense and the effective tax rate, if recognized. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized. In October 2017, the Company filed an amended federal tax return claiming a $5.4 million refund, however, no income tax benefit was recorded during fiscal 2019, fiscal 2018 or fiscal 2017 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 1, 2020, the Company has $6.3 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months. The Company accounts for interest and penalties related to exposures as a component of income tax expense. The Company had interest accruals of $0.5 million associated with exposures as of both February 1, 2020 and February 2, 2019, respectively. The Company is subject to taxation in the United States and various states and foreign jurisdictions. As of February 1, 2020, the Company is subject to examination by the tax authorities for fiscal 2015 through fiscal 2018. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Feb. 01, 2020 | |
Net Income (Loss) Per Share | |
Net Income (Loss) Per Share | NOTE 14—NET INCOME (LOSS) PER SHARE The weighted-average shares used for net income (loss) per share are as follows: Year Ended February 1, February 2, February 3, 2020 2019 2018 Weighted-average shares—basic 19,082,303 21,613,678 27,053,616 Effect of dilutive stock-based awards 4,554,682 4,567,303 — Effect of dilutive convertible senior notes (1) 662,049 352,244 — Weighted-average shares—diluted 24,299,034 26,533,225 27,053,616 (1) The 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share, $193.65 per share and $ 211.40 per share, respectively. The 2019 Notes matured on June 15, 2019 and did not have an impact of the Company’s dilutive share count post-maturity. The following number of options and restricted stock units were excluded from the calculation of diluted net income (loss) per share because their inclusion would have been anti-dilutive: Year Ended February 1, February 2, February 3, 2020 2019 2018 Options 360,496 351,145 2,895,471 Restricted stock units — 2,625 229,308 Total anti-dilutive stock-based awards 360,496 353,770 3,124,779 |
Share Repurchases and Share Ret
Share Repurchases and Share Retirements | 12 Months Ended |
Feb. 01, 2020 | |
Share Repurchases and Share Retirements | |
Share Repurchases and Share Retirements | NOTE 15—SHARE REPURCHASES AND SHARE RETIREMENTS $950 Million Share Repurchase Program On October 10, 2018, the Company’s Board of Directors authorized a share repurchase program of up to $700.0 million. In fiscal 2018, the Company repurchased approximately 2.0 million shares of its common stock under this share repurchase program at an average price of $122.10 per share, for an aggregate repurchase amount of approximately $250.0 million. Subsequent to the repurchases under this share repurchase program in fiscal 2018, the initial $700.0 million authorization amount was replenished by the Board of Directors on March 25, 2019 (as replenished, the $950 million Repurchase Program”). In fiscal 2019, the Company repurchased approximately 2.2 million shares of its common stock under the $950 million Repurchase Program at an average price of $115.36 per share, for an aggregate repurchase amount of approximately $250.0 million. As of February 1, 2020, there was $450.0 million remaining for future share repurchases under this program. $700 Million Share Repurchase Program On May 2, 2017, the Company’s Board of Directors authorized a share repurchase program of up to $700 million (the “$700 Million Repurchase Program”). Under the $700 Million Repurchase Program, the Company repurchased approximately 12.4 million shares of its common stock at an average price of $56.60 per share, for an aggregate repurchase amount of approximately $700 million in fiscal 2017. As the $700 Million Repurchase Program was completed during fiscal 2017, there will be no repurchases in future periods under this repurchase authorization. $300 Million Share Repurchase Program On February 21, 2017, the Company’s Board of Directors authorized a share repurchase program of up to $300 million (the “$300 Million Repurchase Program”). Under the $300 Million Repurchase Program, the Company repurchased approximately 7.8 million shares of its common stock at an average price of $38.24 per share, for an aggregate repurchase amount of approximately $300 million in fiscal 2017. As the $300 Million Repurchase Program was completed during fiscal 2017, there will be no repurchases in future periods under this repurchase authorization. Share Repurchases Under Equity Plans As of February 1, 2020 and February 2, 2019, the aggregate unpaid principal amount of the notes payable for share repurchases was $18.7 million and $19.6 million, respectively. As of February 1, 2020, $18.7 million was included in other non-current obligations on the consolidated balance sheets. As of February 2, 2019, $0.9 million and $18.7 million were included in other current liabilities and other non-current obligations on the consolidated balance sheets, respectively. The Company recorded interest expense on the outstanding notes of $0.9 million, $1.0 million and $1.0 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. Of the $18.7 million and $19.6 million notes payable for share repurchases outstanding as of February 1, 2020 and February 2, 2019, respectively, $15.5 million was due to a current board member of the Company. Share Retirements In fiscal 2019, the Company retired 2,170,154 shares of its common stock related to shares it had repurchased under the $950 Million Repurchase Program. As a result of this retirement, the Company reclassified a total of $250.3 million from treasury stock, of which $13.2 million was allocated to additional paid-in capital and $237.1 million was allocated to retained earnings (accumulated deficit) on the consolidated balance sheets and consolidated statements of shareholders’ equity (deficit) as of February 1, 2020. In fiscal 2018, the Company retired 22,267,711 shares of its common stock related to shares it had repurchased under the $300 Million Repurchase Program, $700 Million Repurchase Program and $950 Million Repurchase Program. As a result of this retirement, the Company reclassified a total of $1,250.3 million from treasury stock, of which $591.5 million was allocated to additional paid-in capital and $658.8 million was allocated to retained earnings (accumulated deficit) on the consolidated balance sheets and consolidated statements of shareholders’ equity (deficit) as of February 2, 2019. In fiscal 2017, the Company retired 294,888 shares of its common stock related to shares it had repurchased under the Company’s equity plans. As a result of this retirement, the Company reclassified a total of $19.5 million from treasury stock, all of which was allocated to additional paid-in capital on the consolidated balance sheets and consolidated statements of shareholders’ equity (deficit) as of February 3, 2018. There was no impact on the consolidated statements of operations or cash flows related to these share retirement activities. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Feb. 01, 2020 | |
Stock-Based Compensation. | |
Stock-Based Compensation | NOTE 16—STOCK-BASED COMPENSATION The Company estimates the value of equity grants based upon an OPM and recognizes this estimated value as compensation expense over the vesting periods. The Company recognizes expense associated with performance-based awards when it becomes probable that the performance condition will be met. Once it becomes probable that an award will vest, the Company recognizes compensation expense equal to the number of shares which are probable to vest multiplied by the fair value of the related shares measured at the grant date. Stock-based compensation expense is included in selling, general and administrative expenses on the consolidated statements of operations. The Company recorded stock-based compensation expense of $21.8 million, $24.0 million and $50.7 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. No stock-based compensation cost has been capitalized in the accompanying consolidated financial statements. 2012 Stock Incentive Plan and 2012 Stock Option Plan 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 the Company’s employees, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights, cash-based awards and any combination thereof to the Company’s employees, directors and consultants and the Company’s 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 the Company’s employees and advisors. Aside from these options granted on November 1, 2012, no other awards will be granted under the Option Plan. As of February 2, 2019, there were a total of 1,419,552 shares issuable under the Stock Incentive Plan. On February 4, 2019, an additional 409,556 shares became issuable under the Stock Incentive Plan in accordance with the Stock Incentive Plan evergreen provision, increasing the total number of shares issuable under the Stock Incentive Plan to 1,829,108. Awards under the plans reduce the number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under the Stock Incentive Plan increase the number of shares available for future issuance. Cancellations and forfeitures of awards previously granted under the Option Plan are immediately retired and are no longer available for future issuance. The number of shares available for future issuance under the Stock Incentive Plan as of February 1, 2020 was 1,630,107. Shares issued as a result of award exercises under the Stock Incentive Plan and Option Plan will be funded with the issuance of new shares. On February 3, 2020, an additional 384,734 shares became issuable under the Stock Incentive Plan in accordance with the Stock Incentive Plan evergreen provision. 2012 Stock Incentive Plan and 2012 Stock Option Plan—Stock Options A summary of stock option activity under the Stock Incentive Plan and the Option Plan is as follows: Weighted-Average Options Exercise Price Outstanding—February 2, 2019 7,499,416 $ 54.37 Granted 534,050 110.17 Exercised (643,090) 42.20 Cancelled (255,641) 90.88 Outstanding—February 1, 2020 7,134,735 $ 58.34 The fair value of stock options issued was estimated on the date of grant using the following assumptions: Year Ended February 1, February 2, February 3, 2020 2019 2018 Expected volatility 55.7 % 54.7 % 48.3 % Expected life (years) 7.1 6.7 9.3 Risk-free interest rate 2.3 % 2.9 % 2.2 % Dividend yield — — — A summary of additional information about stock options is as follows: Year Ended February 1, February 2, February 3, 2020 2019 2018 Weighted-average fair value per share of stock options granted $ 63.35 $ 69.60 $ 24.24 Aggregate intrinsic value of stock options exercised (in thousands) 82,718 77,311 27,362 Fair value of stock options vested (in thousands) 11,816 13,915 38,402 Information about stock options outstanding, vested or expected to vest, and exercisable as of February 1, 2020 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 — 1,011,010 6.08 $ 35.59 431,410 $ 34.70 $46.50 — 2,876,826 2.75 46.50 2,876,826 46.50 $47.53 — 1,294,395 6.64 52.47 1,270,635 52.38 $68.30 — 1,160,604 3.68 77.21 1,101,689 76.67 $91.67 — 781,900 8.79 110.66 53,150 107.11 $241.97 — 10,000 9.84 241.97 — — Total 7,134,735 4.75 $ 58.34 5,733,710 $ 53.27 Vested or expected to vest 6,819,795 $ 56.93 The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of February 1, 2020 was $1,073.5 million, $1,035.6 million, and $891.5 million, respectively. Stock options exercisable as of February 1, 2020 had a weighted-average remaining contractual life of 4.10 years. The Company recorded stock-based compensation expense for stock options of $14.0 million, $13.6 million and $37.5 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. The fiscal 2017 expense of $37.5 million includes the $23.9 million of expense associated with the option grant to Mr. Friedman in May 2017. Refer to Chairman and Chief Executive Officer Option Grant 2012 Stock Incentive Plan—Restricted Stock Awards The Company grants restricted stock awards, which include restricted stock and restricted stock units, to its employees and members of its Board of Directors. A summary of restricted stock award activity is as follows: Weighted- Average Grant Date Fair Intrinsic Awards Value Value Outstanding—February 2, 2019 415,469 $ 52.40 Granted 7,014 129.21 Released (176,508) 59.61 Cancelled (25,990) 53.05 Outstanding—February 1, 2020 219,985 $ 49.00 $ 45,921,869 A summary of additional information about restricted stock awards is as follows: Year Ended February 1, February 2, February 3, 2020 2019 2018 Weighted-average fair value per share of awards granted $ 129.21 $ 111.38 $ 55.31 Grant date fair value of awards released (in thousands) 10,522 11,477 16,839 The Company recorded stock-based compensation expense for restricted stock awards of $7.3 million, $10.0 million and $12.8 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. As of February 1, 2020, the total unrecognized compensation expense related to unvested restricted stock awards was $5.5 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 1.47 years. Chairman and Chief Executive Officer Option Grant On May 2, 2017, the Company’s Board of Directors granted Mr. Friedman an option to purchase 1,000,000 shares of the Company’s common stock with an exercise price equal to $50 per share. The option contains dual-condition restrictions consisting of both time-based service restrictions over four years and performance-based restrictions linked to achieving the Company’s common stock price objectives of $100, $125 and $150 per share. The option is fully vested on the date of grant but the shares underlying the option remain subject to transfer restrictions to the extent the performance-based and time-based requirements have not been met. The option resulted in a non-cash stock compensation charge of $23.9 million in fiscal 2017, which is included in the $37.5 million stock-based compensation expense for stock options recorded in fiscal 2017 discussed above. Time-Based Restrictions The time-based restrictions are measured over an initial four year service period from the date of the award and these restrictions will lapse at the end of each of these first four years at a rate of 250,000 shares per year if (i) Mr. Friedman remains employed at the end of such year, and (ii) the stock price goals have been achieved in such year as described further below. Performance-Based Restrictions The stock price objectives are measured each year and are set at prices for the Company’s common stock of $100, $125 and $150 per share. If all three stock price objectives are met in the first performance year, restrictions will lapse as to 250,000 shares in aggregate at the end of such year, with 83,333 shares tied to a $100 price per share, 83,333 shares tied to a $125 price per share and 83,334 shares tied to a $150 price per share. The same price performance tests are applied in the second year of performance such that restrictions will lapse for an additional 250,000 shares at the end of the second year and then again as to an additional 250,000 shares at the end of each of the third and fourth years so long as Mr. Friedman remains employed at the end of each year. To the extent that any of the price performance objectives is not reached within one four 8 Rollover Units In connection with the acquisition of Waterworks, $1.5 million rollover units in the Waterworks subsidiary (the “Rollover Units”) were recorded as part of the transaction. The Rollover Units are subject to the terms of the Waterworks LLC agreement, including redemption rights at an amount equal to the greater of (i) the $1.5 million remitted as consideration in the business combination or (ii) an amount based on the percentage interest represented in the overall valuation of the Waterworks subsidiary (the “Appreciation Rights”). The Appreciation Rights are measured at fair value and are subject to fair value measurements during the expected life of the Rollover Units, with changes to fair value recorded in the consolidated statements of operations. The fair value of the Appreciation Rights is determined based on an OPM. The Company did not record any expense related to the Appreciation Rights during fiscal 2019, fiscal 2018 or fiscal 2017. As of both February 1, 2020 and February 2, 2019, the liability associated with the Rollover Units and related Appreciation Rights was $1.5 million, which is included in other non-current obligations on the consolidated balance sheets. Profit Interests In connection with the acquisition of Waterworks, profit interests units in the Waterworks subsidiary (the “Profit Interests”) were issued to certain Waterworks associates. The Profit Interests are measured at their grant date fair value and expensed on a straight-line basis over their expected life, or five years. The Profit Interests are subject to fair value measurements during their expected life, with changes to fair value recorded in the consolidated statements of operations. The fair value of the Profit Interests is determined based on an OPM. The Company recorded $0.5 million, $0.4 million and $0.4 million related to the Profit Interests in fiscal 2019, fiscal 2018 and fiscal 2017, respectively, which is included in selling, general and administrative expenses on the consolidated statements of operations. As of February 1, 2020 and February 2, 2019, the liability associated with the Profit Interests was $1.6 million and $1.1 million, respectively, which is included in other non-current obligations on the consolidated balance sheets. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Feb. 01, 2020 | |
Employee Benefit Plans | |
Employee Benefit Plans | NOTE 17—EMPLOYEE BENEFIT PLANS The Company has a 401(k) plan for its 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. The Company, at its discretion, may contribute funds to the 401(k) plan. The Company made no contributions to the 401(k) plan during fiscal 2019, fiscal 2018, or fiscal 2017. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Feb. 01, 2020 | |
Commitments and Contingencies. | |
Commitments and Contingencies | NOTE 18—COMMITMENTS AND CONTINGENCIES Commitments The Company had no material off balance sheet commitments as of February 1, 2020. Contingencies The Company is involved in lawsuits, claims and proceedings incident to the ordinary course of its business. These disputes are increasing in number as the business expands and the Company grows larger. Litigation is inherently unpredictable. As a result, the outcome of matters in which the Company is involved could result in unexpected expenses and liability that could adversely affect the Company’s operations. In addition, any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The Company reviews the need for any loss contingency reserves and establishes reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters, particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that the Company does establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what the Company accrues from time to time. The Company believes that the ultimate resolution of its current matters will not have a material adverse effect on its consolidated financial statements. Securities Class Action On February 2, 2017, City of Miami General Employees’ & Sanitation Employees’ Retirement Trust filed a class action complaint in the United States District Court, Northern District of California, against the Company, Gary Friedman, and Karen Boone. On March 16, 2017, Peter J. Errichiello, Jr. filed a similar class action complaint in the same forum and against the same parties. On April 26, 2017, the court consolidated the two actions. The consolidated action is captioned In re RH, Inc. Securities Litigation. An amended consolidated complaint was filed in June 2017 asserting claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The complaint asserts claims purportedly on behalf of a class of purchasers of Company common stock from March 26, 2015 to June 8, 2016. The alleged misstatements relate to statements regarding the roll out of the RH Modern product line and the Company’s inventory levels. The complaint seeks class certification, monetary damages, and other appropriate relief, including an award of costs and attorneys’ fees. On March 21, 2019, the Company and the individual defendants in the case entered into a binding memorandum of understanding to settle the case. The settlement amount is $50 million, which was funded entirely by the Company’s insurance carriers. On May 6, 2019, the plaintiffs filed a motion for preliminary approval of the proposed settlement together with a settlement agreement executed by both parties. The settlement agreement was subject to customary conditions including court approval following notice to the Company’s shareholders, and a hearing at which time the court will consider the fairness, reasonableness and adequacy of the settlement. On June 21, 2019, the court issued an order preliminarily approving the settlement. The court granted final approval of the settlement on October 25, 2019. As a result of signing the settlement agreement in fiscal 2018, the Company recorded a provision for legal settlement and unpaid legal fees for $50 million within other current liabilities on the consolidated balance sheets as of February 2, 2019. Additionally, the Company recorded a litigation insurance recovery receivable of $50 million as of February 2, 2019 within prepaid expense and other current assets on the consolidated balance sheets, which represented the estimated insurance claims proceeds from the Company’s insurance carriers. As a result of the court approval and adjudication of the claims in fiscal 2019, as well as the Company’s insurance carriers funding the settlement amount, the Company has derecognized the provision for legal settlement and unpaid legal fees within other current liabilities and the associated litigation insurance recovery receivable on the consolidated balance sheets as of February 1, 2020, which settlement resolved all of the claims that were or could have been brought in the action. Shareholder Derivative Lawsuit On April 24, 2018, purported Company shareholder David Magnani filed a purported shareholder derivative suit in the United States District Court, Northern District of California, captioned Magnani v. Friedman et al. (No. 18-cv-02452). On June 29, 2018, Hosrof Izmirliyan filed a similar purported shareholder derivative complaint in the same forum, captioned Izmirliyan v. Friedman et al. (No. 18-cv-03930). On July 29, 2018, the court consolidated both derivative actions, and the consolidated action is captioned In re RH Shareholder Derivative Litigation. On August 24, 2018, plaintiffs filed an amended complaint that names RH as a nominal defendant and Gary Friedman, Karen Boone, Carlos Alberini, Keith Belling, Eri Chaya, Mark Demilio, Katie Mitic, Ali Rowghani and Leonard Schlesinger as defendants. The allegations substantially track those in the securities class action described above. Plaintiffs bring claims against all individual defendants under Section 14(a) of the Exchange Act, as well as claims for breach of fiduciary duty, unjust enrichment, and waste of corporate assets. The plaintiffs also allege insider trading and misappropriation of information claims against two of the individual defendants. The amended complaint seeks monetary damages, corporate governance changes, restitution, and an award of costs and attorneys’ fees. The Company believes that plaintiffs lack standing to bring this derivative action. On September 28, 2018, the Company filed a motion to stay proceedings and a motion to dismiss the consolidated complaint. On January 23, 2019, the court granted the motion to stay the case pending resolution of the securities class action discussed above. On March 19, 2020, the parties reached an agreement in principle to settle the litigation, which agreement is subject to the finalization of a stipulation of settlement, and certain conditions, including approval by the Company’s board of directors, and approval by the Court. The settlement involves certain non-monetary terms as well as payment of the plaintiffs’ attorneys’ legal fees, which payment is expected to be funded by the Company’s insurance carriers. |
Segment Reporting
Segment Reporting | 12 Months Ended |
Feb. 01, 2020 | |
Segment Reporting | |
Segment Reporting | NOTE 19—SEGMENT REPORTING The Company defines reportable and operating segments on the same basis that it uses to evaluate performance internally by the CODM. The Company has determined that the Chief Executive Officer is its CODM. The Company has two operating segments: RH Segment and Waterworks. The two operating segments include all sales channels accessed by the Company’s customers, including sales through catalogs, websites, stores, and the commercial channel. The Company’s two operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared management team and customer base, the Company has determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors. The Company uses operating income to evaluate segment profitability. Operating income is defined as net income before interest expense—net, goodwill and tradename impairment, loss on extinguishment of debt—net and income tax expense. Segment Information The following table presents the statements of operations metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting (in thousands) Year Ended February 1, February 2, February 3, 2020 2019 2018 RH Segment Waterworks Total RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 2,514,296 $ 133,141 $ 2,647,437 $ 2,375,472 $ 130,181 $ 2,505,653 $ 2,319,332 $ 120,842 $ 2,440,174 Gross profit 1,038,722 56,289 1,095,011 933,805 51,772 985,577 791,730 47,568 839,298 Depreciation and amortization 96,148 4,591 100,739 86,719 4,653 91,372 78,772 4,404 83,176 The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting (in thousands) February 1, February 2, 2020 2019 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 124,367 $ — $ 124,367 $ 124,379 $ — $ 124,379 Tradenames, trademarks and domain names (2) 48,563 37,459 86,022 48,563 37,459 86,022 Total assets 2,301,823 143,871 2,445,694 2,273,951 149,067 2,423,018 (1) The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018. The Company uses segment operating income to evaluate segment performance and allocate resources. Segment operating income excludes (i) asset impairments and lease losses, (ii) severance costs associated with a reorganizations, (iii) product recall accruals and adjustments—net, (iv) asset held for sale gain (loss), (v) favorable legal settlements, net of legal expenses, (vi) disposals of inventory and property and equipment, lease related charges, inventory transfer costs and other costs and adjustments associated with distribution center closures, (vii) non-cash amortization of the inventory fair value adjustment recorded in connection with the acquisition of Waterworks, (viii) a non-cash compensation charge related to a fully vested option grant made to Mr. Friedman in May 2017, (ix) the release of the remaining reserve for potential claims regarding anti-dumping duties which the Company believes have lapsed and (x) the gain on sale of building and land for one of the Company’s previously owned retail galleries. These items are excluded from segment operating income in order to provide better transparency of segment operating results. Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that the CODM and management reviews. The following table presents segment operating income and income before income taxes ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Operating income: RH Segment $ 375,315 $ 288,106 $ 161,111 Waterworks 3,780 (922) (1,615) Asset impairments and lease losses (21,899) (7,218) (4,417) Reorganization related costs (1,075) (9,977) (949) Recall accrual 3,988 (1,619) (7,707) Asset held for sale gain (loss) 1,529 (8,497) — Legal settlements 1,193 5,289 — Distribution center closures — (3,046) (7,230) Impact of inventory step-up — (380) (2,527) Executive non-cash compensation — — (23,872) Anti-dumping exposure — — 2,202 Gain on sale of building and land — — 2,119 Income from operations 362,831 261,736 117,115 Interest expense—net 87,177 67,769 56,002 Goodwill and tradename impairment — 32,086 33,700 Loss on extinguishment of debt—net 6,472 917 4,880 Income before income taxes $ 269,182 $ 160,964 $ 22,533 The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor furniture. Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor. Net revenues in each category were as follows ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Furniture $ 1,794,317 $ 1,625,553 $ 1,543,404 Non-furniture 853,120 880,100 896,770 Total net revenues $ 2,647,437 $ 2,505,653 $ 2,440,174 The Company is domiciled in the United States and primarily operates its retail and outlet stores in the United States. As of February 1, 2020, the Company operates 4 retail and 2 outlet stores in Canada and 1 retail store in the U.K. Revenues from Canadian and U.K. operations, and the long-lived assets in Canada and the U.K., are not material to the Company. Canada and U.K. geographic revenues are based upon revenues recognized at the retail store locations in the respective country. No single customer accounted for more than 10% of the Company’s revenues in fiscal 2019, fiscal 2018 or fiscal 2017. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Feb. 01, 2020 | |
Subsequent Events | |
Subsequent Events | NOTE 20—SUBSEQUENT EVENT In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the United States and globally. The COVID-19 health crisis poses significant and widespread risks to the Company’s business as well as to the business environment and the markets in which the Company operates. In response to the public health crisis posed by COVID-19, effective from March 17, 2020, the Company temporarily closed its retail locations for an indeterminate period of time. Although the Company continues to serve its customers virtually through its Gallery representatives and designers, as well as its online websites, the Company’s business operations are being substantially affected by applicable regulatory restrictions including stay-at-home requirements applicable in California where its corporate headquarters is located. The Company’s decision to reopen retail locations will be affected by a number of factors including applicable regulatory restrictions and there is substantial uncertainty regarding the manner and timing in which the Company can return some or all of its business to more normal business operations. The Company may face longer term closure requirements and other operational restrictions with respect to some or all of its physical locations for prolonged periods of time due to, among other factors, evolving and increasingly stringent federal, state and local restrictions including shelter-in-place orders. Even once the Company is able to reopen closed physical locations, changes in consumer behavior and health concerns may continue to impact consumer demand for the Company’s products and customer traffic at its Galleries, restaurants and outlets and may make it more difficult to staff its business operations. As a result of these developments, the Company expects an unfavorable impact on its sales, results of operations and cash flows in fiscal 2020. The Company has already experienced significant disruption to its business as a result of the rapid development of COVID-19 and the corresponding reduction in sales associated with its retail location closures. The Company may face longer term closure requirements with respect to some or all of its physical locations for prolonged periods of time due to, among other factors, evolving and increasingly stringent federal, state and local restrictions and shelter-in-place orders. Even once the Company is able to reopen its physical locations, changes in consumer behavior and health concerns may continue to impact customer traffic at the Company’s retail locations and may make it more difficult to staff these locations. Additionally, customer purchasing patterns are influenced by economic factors including the health of the stock market and the Company has correlated previous downturns in the stock market with a reduction in consumer demands for its products. Accordingly, adverse conditions and events have occurred that will impact the Company’s operations and liquidity. The Company has relied on cash flows from operations, net cash proceeds from the issuance of the convertible senior notes, as well as borrowings under credit facilities as primary sources of liquidity. The current events and economic conditions are significant in relation to the Company’s ability to fund its business operations, as well as debt repayments when due, such as the $300 million convertible senior notes maturing in July 2020 and payments under equipment promissory notes. The Company expects to repay the $300 million outstanding principal amount of the convertible notes in cash, whether in connection with a conversion of such notes or repayment at maturity in July 2020. In response to the impact of COVID-19, the Company is implementing a number of measures to minimize cash outlays, including managing workforce costs, delaying planned capital expenditures, deferring new business introductions, adjusting the timing and circulation of Source Books and minimizing discretionary expenses. The Company plans to utilize its asset based credit facility, and the Company may pursue other sources of capital that may include other forms of external financing, in order to increase its cash position and preserve financial flexibility in response to the uncertainty in the United States and global markets resulting from COVID-19. Refer to Note 10— Convertible Senior Notes Credit Facilities Company’s outstanding debt agreements. The Company had outstanding borrowings under the Credit Agreement of $35.0 million as of March 27, 2020 and the amount under the revolving line of credit borrowing base that could be available pursuant to the Credit Agreement was $307.9 million, net of $13.2 million in outstanding letters of credit. The Company believes that these actions mitigate risks arising from COVID-19 and will be sufficient to repay the Company’s debt obligations as they become due, meet working capital requirements and fulfill other capital needs for more than the next 12 months. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (Unaudited) | 12 Months Ended |
Feb. 01, 2020 | |
Selected Quarterly Financial Data (Unaudited) | |
Selected Quarterly Financial Data (Unaudited) | NOTE 21—SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Quarterly financial data for fiscal 2019 and fiscal 2018 are set forth below ( in thousands, except share and per share amounts Three Months Ended May 4, August 3, November 2, February 1, Fiscal 2019 2019 2019 2019 2020 Net revenues $ 598,421 $ 706,514 $ 677,526 $ 664,976 Gross profit 232,814 294,958 284,166 283,073 Net income 35,722 63,757 52,463 68,433 Weighted-average shares used in computing basic net income per share 19,976,858 18,465,876 18,765,769 19,120,709 Basic net income per share $ 1.79 $ 3.45 $ 2.80 $ 3.58 Weighted-average shares used in computing diluted net income per share 24,933,987 22,324,112 24,170,172 25,767,864 Diluted net income per share $ 1.43 $ 2.86 $ 2.17 $ 2.66 Three Months Ended May 5, August 4, November 3, February 2, Fiscal 2018 2018 2018 2018 2019 Net revenues $ 557,406 $ 640,798 $ 636,558 $ 670,891 Gross profit 209,333 268,344 250,021 257,879 Net income 25,461 62,906 20,114 27,250 Weighted-average shares used in computing basic net income per share 21,545,025 21,925,702 22,082,141 20,901,841 Basic net income per share $ 1.18 $ 2.87 $ 0.91 $ 1.30 Weighted-average shares used in computing diluted net income per share 25,230,228 27,496,561 27,703,319 25,702,791 Diluted net income per share $ 1.01 $ 2.29 $ 0.73 $ 1.06 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Feb. 01, 2020 | |
Significant Accounting Policies | |
Nature of Business | RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites. As of February 1, 2020, the Company operated a total of 68 RH Galleries and 38 RH outlet stores in 31 states, the District of Columbia and Canada, as well as 15 Waterworks showrooms throughout the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong. |
Basis of Presentation | Basis of Presentation These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (“GAAP”). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. |
Revision | Revision As previously disclosed within the Company’s quarterly reports on Form 10-Q for its fiscal quarters during the year ended February 1, 2020, during the adoption process of the new lease accounting standard (refer to “Recently Issued Accounting Standards— Leases” Exit or Disposal Cost Obligations Leases” In addition, during the adoption process of the new lease accounting standard, the Company identified an error in its previously reported consolidated statement of cash flows for fiscal 2018. This error resulted in an understatement of $9.2 million of net cash provided by operating activities and an understatement of $9.2 million of net cash used in investing activities for fiscal 2018. There was no impact on the consolidated balance sheets, consolidated statements of operations or the consolidated statement of stockholders’ equity (deficit) related to this error. Although these errors are not considered to be material to any of the previously issued financial statements, the Company has revised the accompanying consolidated financial statements to reflect the correction of these errors. The following are selected line items from the Company’s consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard ( in thousands Year Ended February 2, 2019 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (452) $ 9,201 $ 8,749 Net cash provided by operating activities 300,556 9,201 309,757 Cash flows from investing activities: Capital expenditures (136,736) (9,201) (145,937) Net cash used in investing activities (136,736) (9,201) (145,937) |
Fiscal Years | Fiscal Years The Company’s fiscal year ends on the Saturday closest to January 31. As a result, the Company’s fiscal year may include 53 weeks. The fiscal years ended February 1, 2020 (“fiscal 2019”) and February 2, 2019 (“fiscal 2018”) each consisted of 52 weeks. The fiscal year ended February 3, 2018 (“fiscal 2017”) consisted of 53 weeks. |
Use of Accounting Estimates | Use of Accounting Estimates The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the 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 The Company considers all highly liquid investments with original maturities of 90 days or less to be cash equivalents. |
Concentration of Credit Risk | Concentration of Credit Risk The Company maintains its cash and cash equivalent accounts in financial institutions in both U.S. dollar and Canadian dollar denominations. Accounts at the U.S. institutions are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250,000 and accounts at the Canadian institutions are insured by the Canada Deposit Insurance Corporation (“CDIC”) up to $100,000 Canadian dollars. As of February 1, 2020 and February 2, 2019, and at various times throughout these fiscal years, the Company had cash in financial institutions in excess of the amount insured by the FDIC and CDIC. The Company performs ongoing evaluations of these institutions to limit its concentration of credit risk. |
Accounts Receivable | Accounts Receivable Accounts receivable consist primarily of receivables from the Company’s credit card processors for sales transactions, receivables related to the Company’s contract business and other miscellaneous receivables. Accounts receivable is presented net of allowance for doubtful accounts, which is recorded on a specific identification basis. The allowance for doubtful accounts was $2.2 million and $1.9 million as of February 1, 2020 and February 2, 2019, respectively. |
Merchandise Inventories | Merchandise Inventories The Company’s 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. To determine if the value of inventory should be marked down below original cost, the Company uses estimates to determine the lower of cost or net realizable value, which considers current and anticipated demand, customer preference and the merchandise age. The inventory value is adjusted periodically to reflect current market conditions, which requires management judgments that may significantly affect the ending inventory valuation, as well as gross margin. The estimates used in inventory valuation are lower of cost or net realizable value reserves and obsolescence (including excess and slow-moving inventory). Additionally, the Company estimates and accrues for inventory shrinkage for the period between the last physical count and the balance sheet date. The Company’s inventory reserves contain uncertainties that require management to make assumptions and to apply judgment regarding a number of factors, including market conditions, the selling environment, historical results and current inventory trends. The Company adjusts inventory reserves for net realizable value and obsolescence based on trends, aging reports, specific identification and estimates of future retail sales prices. Reserves for shrinkage are estimated and recorded throughout the year as a percentage of shipped sales for the direct channels, and 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 cycle counts and the results of the Company’s annual physical inventory counts. Actual inventory shrinkage and obsolescence can vary from estimates due to factors including the mix of the Company’s inventory (which ranges from large furniture to décor) and execution against loss prevention initiatives in the Company’s stores, distribution centers, home delivery center locations, off-site storage locations and with its third-party transportation providers. Accordingly, there is no shrinkage reserve at year-end, with the exception of a cycle count reserve for the Company’s distribution centers and home delivery center locations based on the historical cycle count results. If actual net realizable value, obsolescence or shrinkage estimates change from the Company’s original estimates, the Company will adjust its inventory reserves accordingly throughout the period. The Company’s inventory reserve balances were $25.6 million and $30.7 million as of February 1, 2020 and February 2, 2019, respectively. |
Product Recalls | Product Recalls During fiscal 2019, fiscal 2018 and fiscal 2017, the Company initiated product recalls for certain of its products, as well as adjusted accruals related to certain product recalls previously initiated due to changes in estimates based on customer response and vendor and insurance recoveries. Product recalls had the following effect on the Company’s income before income taxes (in thousands) Year Ended February 1, February 2, February 3, 2020 2019 2018 (Increase) decrease to net revenues $ (391) $ 4,733 $ 3,207 Increase (decrease) to cost of goods sold (3,372) (4,139) 4,315 (Increase) decrease to gross profit (3,763) 594 7,522 Increase (decrease) to selling, general and administrative expenses (225) 1,025 185 (Increase) decrease to income before income taxes $ (3,988) $ 1,619 $ 7,707 The product recall accrual as of February 1, 2020 and February 2, 2019 was $2.1 million and $7.8 million, respectively, and is included in other current liabilities on the consolidated balance sheets. |
Advertising Expenses | Advertising Expenses Advertising expenses primarily represent the costs associated with the Company’s catalog mailings, as well as print and website marketing. Total advertising expense, which is recorded in selling, general and administrative expenses on the consolidated statements of operations, was $107.6 million, $97.0 million and $106.6 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. Capitalized Catalog Costs Capitalized catalog costs consist primarily of third-party incremental direct costs to prepare, print and distribute Source Books. Such costs are capitalized and recognized as expense upon the delivery of the Source Books to the carrier. In the case of multiple printings of a Source Book, the creative costs will be expensed in full upon the initial delivery of Source Books to the carrier. The Company had $13.7 million and $16.2 million of capitalized catalog costs as of February 1, 2020 and February 2, 2019, respectively, which are included in prepaid expense and other current assets on the consolidated balance sheets. 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 and amortization. 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 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 applicable lease term, which could include option periods reasonably certain to be exercised. The Company expenses all internal-use software costs incurred in the preliminary project stage and capitalizes certain direct costs associated with the development and purchase of internal-use software, including external costs of materials and services and internal payroll costs related to the software project, within property and equipment. Capitalized costs are amortized on a straight-line basis over the estimated useful lives of the software, generally between three Interest is capitalized on construction in progress and software projects during the period in which expenditures have been made, activities are in progress to prepare the asset for its intended use and interest expense is being incurred. The Company capitalized interest of $4.9 million, $3.1 million and $3.3 million in fiscal 2019, fiscal 2018 and fiscal 2017, respectively. During fiscal 2019, $3.7 million of the $4.9 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. During fiscal 2018, $2.7 million of the $3.1 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. During fiscal 2017, $2.5 million of the $3.3 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount. Land purchased by the Company is recorded at cost and is a non-depreciable asset. Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of assets may not be recoverable. For further discussion regarding the impairment accounting policy refer to “Impairment— Long-Lived Assets Asset Held for Sale Upon designation as an asset held for sale, the carrying value of the asset is recorded at the lower of its carrying value or its estimated fair value less estimated costs to sell, and the Company ceases depreciating the asset. |
Lease Accounting | Lease Accounting The Company leases nearly all of its retail and outlet store locations, corporate headquarters, distribution and home delivery facilities, as well as other storage and office space. The initial lease terms of the Company’s real estate leases generally range from ten to fifteen years , and certain leases contain renewal options for up to an additional 25 years , the exercise of which is at the Company’s sole discretion. The Company also leases certain equipment with lease terms generally ranging from three to seven years . The Company’s lease agreements generally do not contain any material residual value guarantees or material restrictions or covenants. The Company accounts for lease and non-lease components as a single lease component for real estate leases, and for all other asset classes the Company accounts for the components separately. The Company determines the lease classification and begins to recognize lease and any related financing expenses upon the lease’s commencement, which for real estate leases is generally upon store opening or, to a lesser extent, when the Company takes possession or control of the asset. The Company subleases certain real estate locations to third parties under operating leases and recognizes rental income received on a straight-line basis over the lease term, which is recorded as an offset to selling, general and administrative expenses on the consolidated statements of operations. Lease arrangements may require the landlord to provide tenant allowances directly to the Company. Standard tenant allowances received from landlords, typically those received under operating lease agreements, are recorded as cash and cash equivalents with an offset recorded in lease right-of-use assets on the consolidated balance sheets. Tenant allowances that are reasonably certain to be received subsequent to lease commencement are reflected as a reduction of both the lease liabilities and right-of-use assets on the consolidated balance sheets at the commencement date. In certain instances tenant allowances are provided for the Company to design and build the leased asset. Tenant allowances received from landlords during the construction phase of a leased asset and prior to lease commencement are recorded as cash and cash equivalents with an offset recorded in other non-current assets (to the extent the Company has incurred related capital expenditure for construction costs) or in other current liabilities (to the extent that payments are received prior to capital construction expenditures by the Company) on the consolidated balance sheets. After the leased asset is constructed and the lease commences, the Company reclassifies the tenant allowance from other non-current assets or other current liabilities to lease right-of-use assets on the consolidated balance sheets, and such allowances are amortized over the reasonably certain lease term. Lease Classification Certain of the Company’s real estate and equipment leases are classified as finance leases. Lease characteristics that the Company evaluates to determine lease classification include, but are not limited to, the reasonably certain lease term, and the economic life and fair value of the leased asset. Lease related assets under such classification are included in finance lease right-of-use assets within property and equipment —net on the consolidated balance sheets. 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 on the consolidated balance sheets. Reasonably Certain Lease Term In recognizing the lease right-of-use assets and lease liabilities, the Company utilizes the lease term for which it is reasonably certain to use the underlying asset, including consideration of options to extend or terminate the lease. At lease commencement, the Company evaluates whether it is 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 the Company’s financial position related to certain Design Galleries or distribution center facilities which typically have greater lease payments. Although the above factors are considered in management’s analysis, the assessment involves subjectivity considering the Company’s strategy, expected future events and market conditions. While the Company believes its estimates and judgments in determining the lease term are reasonable, future events may occur which may require the Company to reassess this determination. Leases, or lease extensions, with a term of twelve months or less are not recorded on the consolidated balance sheets, and the Company recognizes lease expense for these leases on a straight-line basis over the lease term. Lease Payments The majority of the Company’s real estate lease agreements include minimum rent payments which are subject to stated lease escalations over the lease term and eligible renewal periods. These fixed payments through the reasonably certain lease term are included in the Company’s measurement of the lease right-of-use assets and lease liabilities upon lease commencement. Certain of the Company’s 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, the Company does not recognize a lease right-of-use asset and lease liability related to such payments. Estimated variable rental payments are included in accounts payable and accrued expenses on the consolidated balance sheets in the period they are incurred and until such payments are made, and the related lease cost is included in cost of goods sold on the consolidated statements of operations. The Company has a small group of real estate leases that include rental payments periodically adjusted for inflation (e.g., based on the consumer price index). The Company includes these variable payments in the initial measurement of the lease right-of-use asset and lease liability according to the index or rate at the commencement date and incorporates 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 least commencement and actual amounts incurred are recognized in the consolidated statement of operations in the period such costs are incurred. Incremental Borrowing Rate As the Company’s real estate leases and most of its equipment leases do not include an implicit interest rate, the Company determines the discount rate for each lease based upon the incremental borrowing rate (“IBR”) in order to calculate the present value of lease payments at the commencement date. The IBR is computed as the rate of interest that the Company would have to pay to (i) borrow on a collateralized basis (ii) over a similar term (iii) an amount equal to the total lease payments (iv) in a similar economic environment. The Company utilizes its asset based credit facility as the basis for determining the applicable IBR for each lease. The Company estimates the incremental borrowing rate for each lease primarily by reference to (i) yield rates on debt issuances by companies of a similar credit rating; (ii) the weighted-average lease term; and (iii) adjustments for differences between the yield rates and the actual term of the credit facility. In determining the yield rates for leases other than new Design Galleries, the Company utilizes market information as of the beginning of the quarter in which the lease commenced. For Design Galleries, the Company utilizes market information on the lease commencement date. Fair Market Value The Company determines the fair value of the underlying asset, and the lease components such as land and building, for purposes of determining the lease classification and allocating its 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 the Company’s financial position related to certain Design Galleries or distribution center facilities which typically have greater fair values. 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 the Company obtains independent third-party appraisals to determine the fair value of the underlying asset and lease components. While determining fair value requires a variety of input assumptions and judgment, management believes its estimates of fair market value are reasonable. Construction Related Activities The Company is often involved in the construction of leased stores for its newer Design Galleries. Prior to construction commencement, the Company evaluates whether or not it, as lessee, controls the asset being constructed and, depending on the extent to which it is involved, the Company may be the “deemed owner” of the leased asset for accounting purposes during the construction period under a build-to-suit arrangement. If the Company is not the “deemed owner” for accounting purposes during the construction period, such lease is classified as either an operating or finance lease upon lease commencement. During the construction period and prior to lease commencement, any capital amounts contributed by the Company toward the construction of the leased asset (excluding normal leasehold improvements, which are recorded within property and equipment—net) are recorded as “Landlord assets under construction” within other non-current assets on the consolidated balance sheets (refer to Note 4— Prepaid Expense and Other Assets If the Company is the “deemed owner” for accounting purposes, upon commencement of the construction project it is required to capitalize (i) costs incurred by the Company and (ii) the cash and non-cash assets contributed by the landlord for construction as property and equipment on its consolidated balance sheets as build-to-suit assets, with an offsetting financing obligation under build-to-suit lease transactions. The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord to those responsible for construction, are included as property and equipment additions due to build-to-suit lease transactions within the non-cash section of the consolidated statements of cash flows. Over the lease term, these non-cash additions to property and equipment do not impact the Company’s cash outflows, nor do they impact net income on the consolidated statements of operations. Upon completion of the construction project, the Company performs a sale-leaseback analysis to determine if it can derecognize the build-to-suit asset and corresponding financing obligation. If the asset and liability cannot be derecognized, the Company accounts for the agreement as a debt-like arrangement. If the Company is involved in a debt-like arrangement for a non-real estate asset under construction for which the Company plans to lease such asset upon construction completion and makes deposits during the construction period, the Company recognizes the related deposits as “Deposits on asset under construction” within other non-current assets on the consolidated balance sheets (refer to Note 4— Prepaid Expense and Other Assets Accounts Payable, Accrued Expenses and Other Current Liabilities Sale-Leaseback Activities The Company occasionally enters into sale-leaseback transactions to finance certain property acquisitions and capital expenditures, pursuant to which the Company sells the property to a third party and agrees 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, the Company evaluates whether it has transferred control to the third party in accordance with the guidance set forth in ASC Topic 606. If the transfer of the asset is a sale at market terms, the Company recognizes the transaction price for the sale based on the cash proceeds received, derecognizes the carrying amount of the underlying asset and recognizes a gain or loss in the consolidated statements of operations for any difference between the carrying value of the asset and the transaction price. The Company then accounts for the leaseback in accordance with its lease accounting policy. If the transfer of the asset is determined not to be a sale, the Company accounts for the transaction as a financing arrangement. The Company continues to present the asset within property and equipment—net on the consolidated balance sheets and recognizes a non-current obligation on the consolidated balance sheets for the transaction price, with the financial liability subsequently measured in accordance with other applicable GAAP. |
Intangible Assets | Intangible Assets Intangible assets reflect the value assigned to tradenames, trademarks and domain names. The Company does not amortize its intangible assets as the Company defines the life of these assets as indefinite. |
Impairment | Impairment Goodwill The Company evaluates goodwill annually to determine whether it is impaired or whenever events occur or circumstances change that would indicate that the fair value of a reporting unit is less than its carrying amount. 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 the Company’s 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. The Company performs its annual goodwill impairment testing in the fourth fiscal quarter by comparing the fair value of a reporting unit with its carrying amount, limited to the total amount of goodwill of the reporting unit. The Company will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The Company determines fair values using the discounted cash flow approach (“income approach”) or the market multiple valuation approach (“market approach”), when available and appropriate, or a combination of both. The Company assesses the valuation methodology based upon the relevance and availability of the data at the time it performs the valuation. If multiple valuation methodologies are used, the results are weighted appropriately. Under the income approach, fair value is determined based on the present value of estimated future cash flows, discounted at an appropriate risk-adjusted rate. The Company uses its internal forecasts to estimate future cash flows and includes an estimate of long-term future growth rates based on its most recent views of the long-term outlook for each respective reporting unit. Actual results may differ from those assumed in the Company’s forecasts. The Company derives its discount rates using a capital asset pricing model and analyzing published rates for industries relevant to its reporting units to estimate the cost of equity financing. The Company uses discount rates that are commensurate with the risks and uncertainty inherent in the respective businesses and in its internally developed forecasts. Valuations using the market approach are derived from metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses is based on the markets in which the reporting units operate giving consideration to risk profiles, size, geography, and diversity of products and services. A market approach is limited to reporting units for which there are publicly traded companies that have the characteristics similar to the Company’s businesses. Estimating the fair value of reporting units requires the use of estimates and significant judgments that are based on a number of factors including actual operating results. It is reasonably possible that the judgments and estimates described above could change in future periods. 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 by the Chief Operating Decision Maker (“CODM”), which is the Company’s Chief Executive Officer. The Company has deemed RH Segment and Waterworks to be the reporting units for which goodwill is independently tested, as these operating segments are the lowest level for which discrete financial information is prepared and regularly reviewed by the CODM. RH Segment Reporting Unit During fiscal 2019, fiscal 2018 and fiscal 2017, the Company 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, the Company determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount for fiscal 2019, fiscal 2018 and fiscal 2017, and therefore the Company did not recognize goodwill impairment with respect to the RH Segment in any such fiscal year. Waterworks Reporting Unit During the fourth fiscal quarters of 2018 and 2017, the Company conducted its annual strategic planning process. Based upon the outcome of this process in each fiscal year, management identified indicators that there could be an impairment of the Waterworks reporting unit. These indicators included (i) an updated long-range financial plan provided by the Waterworks segment management that indicated a reduction of revenues and EBITDA as compared to prior long-range financial plans, (ii) a review of the strategic initiatives of the Waterworks segment and (iii) the Waterworks segment not achieving revenue and operating income objectives compared to plans. In determining the Waterworks reporting unit estimated fair value using the income approach in both fiscal 2018 and fiscal 2017, the Company projected future cash flows based on management’s estimates and long-term plans and applied a discount rate based on a weighted-average cost of capital. This analysis required the Company to make judgments about revenues, expenses, fixed asset and working capital requirements, the impact of updated tax legislation and other subjective inputs. In determining the Waterworks reporting unit estimated fair value using the market approach, the Company considered assumptions that it believes market participants would use in valuing the Waterworks reporting unit, based on EBITDA multiples and including the application of a control premium. For purposes of this analysis, in both fiscal years, the Company weighted the results 80% towards the income approach and 20% towards the market approach. Based on the estimated fair value of the Waterworks reporting unit as of the assessment date of each of its fiscal 2018 and fiscal 2017 analysis, the Company recorded a $17.4 million and $33.7 million non-cash impairment in the fourth quarter of fiscal 2018 and fiscal 2017, respectively, to reduce the carrying value of goodwill in the Waterworks reporting unit. The impairment is recorded in goodwill and tradename impairment on the consolidated statements of operations and the Waterworks reporting unit goodwill was fully impaired as of February 2, 2019. Tradenames, Trademarks and Domain Names The Company annually evaluates whether tradenames, trademarks and domain names continue to have an indefinite life. Tradenames, trademarks and domain names 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. The Company qualitatively assesses indefinite-lived intangible asset impairment 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 domain names are not qualitatively assessed or if such intangible assets are qualitatively assessed and it is determined it is not more likely than not that the asset’s fair value is greater 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 management 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, management’s plans for future operations, brand initiatives, recent results of operations and projected future cash flows. In the event the Company quantitatively assesses a reporting unit’s indefinite-lived intangible asset for impairment, the Company performs 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. RH Segment Reporting Unit During fiscal 2019, fiscal 2018 and fiscal 2017, the Company qualitatively assessed the indefinite-lived intangible assets of the RH Segment reporting unit for impairment and determined it was more likely than not that the fair value of the assets were greater than their carrying amounts. Based on the qualitative tests performed in each fiscal year, the Company did not perform quantitative impairment tests in any year. The Company did not recognize any impairment with respect to intangible assets for the RH Segment reporting unit in fiscal 2019, fiscal 2018 and fiscal 2017. Waterworks Reporting Unit In connection with the goodwill impairment test performed for the Waterworks reporting unit in fiscal 2017, described above, the Company performed an impairment test on the tradenames allocated to the reporting unit which utilized the discounted cash flow methodology under the relief-from-royalty method. Under the relief-from-royalty method, the Company’s significant assumptions include the forecasted future revenues and the estimated royalty rate, expressed as a percentage of revenues. Based on the quantitative impairment test performed, which resulted in fair value of the tradename in excess of book value by approximately 26%, the Company concluded that the tradename allocated to the Waterworks reporting unit was not impaired as of February 3, 2018 and did not recognize any impairment with respect to the tradename for the Waterworks reporting unit in fiscal 2017. At the end of each of the first three fiscal quarters of 2018, the Company determined that there were no events or circumstances that indicated any impairment for the Waterworks reporting unit tradename. During the fourth fiscal quarter of 2018, management updated the fiscal 2019 budget and financial projections beyond fiscal 2019 for the Waterworks reporting unit. There were certain factors that caused the key financial inputs for the tradename valuation model to significantly decrease from the previous inputs, the most significant of which was a reduction of future forecasted net revenues resulting from an expected shift in product mix, challenges in continuing to grow the showrooms business and supply chain constraints. These factors arising during the fourth fiscal quarter of 2018 had a significant and negative impact on the estimated future cash flows of the Waterworks reporting unit. In connection with the goodwill impairment test performed for the Waterworks reporting unit in fiscal 2018, described above, the Company performed an impairment test on the tradename allocated to the reporting unit which utilized the discounted cash flow methodology under the relief-from-royalty method. Under the relief-from-royalty method, the Company’s significant assumptions include the forecasted future revenues and the estimated royalty rate, expressed as a percentage of revenues. Based on the quantitative impairment test performed and the result of changes in forecasted revenues and the valuation assumption around future royalty rates, the Company concluded that the Waterworks reporting unit tradename was impaired as of February 2, 2019. As a result, the Company recognized a $14.6 million non-cash impairment with respect to the tradename for the Waterworks reporting unit in fiscal 2018, which was recorded in goodwill and tradename impairment on the consolidated statements of operations. The Company performed its annual impairment procedures on the tradename allocated to the Waterworks reporting unit which utilized the discounted cash flow methodology under the relief-from-royalty method. Under the relief-from-royalty method, the Company’s significant assumptions include the forecasted future revenues and the estimated royalty rate, expressed as a percentage of revenues. Based on the quantitative impairment test performed, the Company concluded that the Waterworks reporting unit tradename was not impaired as of February 1, 2020. The Company did not recognize any impairment for the Waterworks reporting unit tradename in fiscal 2019, and the Waterworks tradename balance was $37.5 million as of February 1, 2020. 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, the Company recognizes 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 the stores is the individual gallery level. Since there is typically no active market for the Company’s long-lived assets, the Company estimates 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 management 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. The Company’s estimates are subject to uncertainty and may be affected by a number of factors outside its control, including general economic conditions and the competitive environment. While the Company believes its 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 the Company to revise its estimates. The Company did not record impairment for long-lived tangible assets at the individual gallery level in fiscal 2019, fiscal 2018 or fiscal 2017. Due to certain distribution center closures and business line integrations in fiscal 2019, fiscal 2018 and fiscal 2017, the Company recorded impairment for certain corporate assets and other long-lived assets as discussed below under “Distribution Center Closures” and “RH Contemporary Art Impairment,” as well as in Note 9— Leases Distribution Center Closures During the third quarter of fiscal 2018, the Company initiated and executed a plan to close its distribution center located in Essex, MD. As a result of the distribution center closure, the Company incurred restructuring related costs in the RH Segment in fiscal 2018, including a lease impairment charge of $2.2 million and a loss on disposal of capitalized property and equipment of $0.2 million, as well as costs for employee termination benefits of $0.2 million. The impact to selling, general and administrative expenses on the consolidated statements of operations was $2.6 million, which represents the total charges incurred with this distribution center closure. The Company did not incur any charges in fiscal 2019 and does not expect to incur additional charges in the future associated with this distribution center closure. During the third quarter of fiscal 2017, the Company initiated a plan to close two of its distribution centers, one located in Mira Loma, CA and one located in Dallas, TX. The Mira Loma distribution center closure was finalized in November 2017 and the Dallas distribution center closure was finalized in January 2018, both of which occurred in the fourth quarter of fiscal 2017. As a result of the distribution center closures, the Company incurred restructuring related costs in the RH Segment in fiscal 2017, including estimated loss on disposal of capitalized property and equipment of $4.4 million, as well as costs for employee termination benefits of $0.9 million. The total expense of $5.3 million was included in selling, general and administrative expenses on the consolidated statements of operations. During the first quarter of fiscal 2018, the Company recognized a $0.8 million reversal of an estimated loss on disposal of asset due to negotiations of the sales price being finalized. The Company did not incur any charges in fiscal 2019 and does not expect to incur additional charges in the future associated with these distribution center closures. RH Contemporary Art Impairment In fiscal 2016, the Company initiated and executed a plan to integrate the RH Contemporary Art (“RHCA”) product line into the broader RH platform and no longer operates RHCA as a separate division. The Company recorded additional operating lease right-of-use asset impairment associated with RHCA of $4.6 million, $3.4 million and $4.4 million during fiscal 2019, fiscal 2018 and fiscal 2017, respectively. These impairment charges, which are recorded in the RH Segment, resulted from an update to both the timing and the amount of future estimated lease related cash inflows based on present market conditions, which is included in selling, general and administrative expenses on the consolidated statements of operations. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs related to debt, excluding the asset based credit facility, are recorded as a contra-liability and are presented net against the respective debt balance on the consolidated balance sheets. Debt issuance costs are amortized utilizing the effective interest method over the expected life of the respective debt. Such amortization is included in interest expense—net on the consolidated statements of operations. Deferred financing fees related to the asset based credit facility are included in non-current assets on the consolidated balance sheets. Deferred financing fees related to the asset based credit facility are amortized utilizing the straight-line method. Such amortization is included in interest expense—net on the consolidated statements of operations. |
Revenue Recognition | Revenue Recognition The Company recognizes revenues 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. Revenues recognized for merchandise delivered via all other delivery channels are recognized upon shipment. Revenues from “cash-and-carry” store sales are recognized at the point of sale in the store. Discounts or other accommodations provided to customers are accounted for as a reduction of sales. The Company recognizes shipping and handling fees as activities to fulfill the promise to transfer the merchandise to customers. The Company applies this policy consistently across all of its distribution channels. In instances where revenue is recognized for the related merchandise upon delivery to customers, the related costs of shipping and handling activities are accrued for in the same period. In instances where revenue is recognized for the related merchandise prior to delivery to customers (i.e., revenue recognized upon shipment), the related costs of shipping and handling activities are accrued for in the same period. Costs of shipping and handling are included in cost of goods sold. Sales tax collected is not recognized as revenue but is included in accounts payable and accrued expenses on the consolidated balance sheets as it is ultimately remitted to governmental authorities. The Company reserves for projected merchandise returns. Merchandise returns are often resalable merchandise and are refunded by issuing the same payment tender of the original purchase. Merchandise exchanges of the same product and price are not considered merchandise returns and, therefore, are excluded when calculating the sales returns reserve. The Company’s customers may return purchased items for a refund. The Company provides an allowance for sales returns based on historical return rates, which is presented on a gross basis. The allowance for sales returns is presented within other current liabilities and the estimated value of the right of return asset for merchandise is presented within prepaid expense and other assets on the consolidated balance sheets. A summary of the allowance for sales returns is as follows ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Balance at beginning of fiscal year $ 19,821 $ 10,565 $ 10,077 Impact of Topic 606 adoption — 5,862 — Provision for sales returns 107,811 112,218 108,134 Actual sales returns (108,426) (108,824) (107,646) Balance at end of fiscal year $ 19,206 $ 19,821 $ 10,565 |
Deferred Revenue and Customer Deposits | Deferred Revenue and Customer Deposits The Company defers revenue associated with merchandise delivered via the home-delivery channel. In instances where the Company recognizes revenue when the merchandise is delivered to customers, it is included as deferred revenue on the consolidated balance sheets while in-transit. Deferred revenue also includes the unrecognized portion of the annual RH Members Program fee. New membership fees are recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, based on historical trends of sales to members. Membership renewal fees are recorded as deferred revenue when collected from customers and are recognized as revenue on a straight-line basis over the membership period, or one year. Customer deposits represent payments made by customers on custom orders. At the time of purchase the Company collects deposits for all custom orders equivalent to 50% of the customer purchase price. Custom order deposits are recognized as revenue when the customer obtains control of the merchandise. The Company expects that substantially all of the deferred revenue, customer deposits and deferred membership fees as of February 1, 2020 will be recognized within the next six months as the performance obligations are satisfied. |
Gift Cards and Merchandise Credits | Gift Cards and Merchandise Credits The Company sells gift cards and issues merchandise credits to its customers in its stores and through its websites and product catalogs. Such gift cards and merchandise credits do not have expiration dates. The Company defers revenue when cash payments are received in advance of performance for unsatisfied obligations related to its gift cards and merchandise credits. During fiscal 2019 and fiscal 2018, the Company recognized $19.8 million and $21.6 million, respectively, of revenue related to previous deferrals related to its gift cards and merchandise credits. Customer liabilities related to gift cards and merchandise credits was $16.6 million and $17.2 million as of February 1, 2020 and February 2, 2019, respectively. The Company recognizes breakage associated with gift cards and merchandise credits proportional to actual gift card redemptions. Breakage of $1.6 million and $1.5 million was recorded in net revenues in fiscal 2019 and fiscal 2018, respectively. Breakage resulted in a reduction of selling, general and administrative expenses of $3.0 million in fiscal 2017. The Company expects that approximately 70% of the remaining gift card and merchandise credit liabilities will be recognized when the gift cards are redeemed by customers. |
Self Insurance | Self Insurance The Company maintains insurance coverage for significant exposures, as well as those risks that, by law, must be insured. In the case of the Company’s health care coverage for employees, the Company has 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. The Company had liabilities of $2.2 million and $2.0 million related to health care coverage as of February 1, 2020 and February 2, 2019, respectively. The Company carries workers’ compensation insurance subject to a deductible amount for which the Company is responsible on each claim. The Company had liabilities of $4.7 and $3.3 million related to workers’ compensation claims, primarily for claims that do not meet the per-incident deductible, as of February 1, 2020 and February 2, 2019, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company recognizes the fair value of stock-based compensation in the consolidated financial statements as compensation expense over the requisite service period. 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 the Company’s stock on the date of grant. The fair value of each option award granted under the Company’s 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. The Company 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. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold includes, but is not limited to, the direct cost of purchased merchandise, inventory shrinkage, inventory reserves and write-downs, inbound freight, all freight costs to get merchandise to the Company’s stores, design and buying costs, occupancy costs related to store operations and supply chain, such as rent, property tax and common area maintenance, depreciation and amortization and all logistics costs associated with shipping product to 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, store expenses other than occupancy, and expenses related to many of the Company’s operations at its corporate headquarters, including utilities, depreciation and amortization, credit card fees and marketing expense, which primarily includes catalog production, mailing and print advertising costs. All store pre-opening costs are included in selling, general and administrative expenses and are expensed as incurred. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is computed as net income (loss) 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, common share equivalents under equity plans using the treasury-stock method and the calculated common share equivalents in excess of the respective conversion rates related to each of the convertible senior notes. Diluted net loss per share is computed as net loss divided by the weighted-average number of common shares outstanding for the period. Potential dilutive securities are excluded from the computation of diluted net income (loss) per share if their effect is anti-dilutive. |
Treasury Stock | Treasury Stock The Company records its purchases of treasury stock at cost as a separate component of stockholders’ equity (deficit). Upon retirement of treasury stock, the Company allocates the excess of the purchase price over par value to additional paid-in capital subject to certain limitations with any remaining purchase price allocated to retained earnings (accumulated deficit). |
Income Taxes | Income Taxes The Company accounts 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 the Company’s consolidated financial statements or tax returns. In estimating future tax consequences, the Company generally takes 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, the Company may record a valuation allowance to reduce its 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 management’s best estimate of the recoverability of the Company’s 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 the Company were to determine that it is not more-likely-than-not able to realize its 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 the Company’s 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. The Company recognizes interest and penalties related to unrecognized tax benefits in tax expense. |
Comprehensive Income | Comprehensive Income Comprehensive income is comprised of net income and other gains and losses affecting equity that are excluded from net income. The components of other comprehensive income consist of net gains (losses) on foreign currency translation and net unrealized holding gains (losses) on available-for-sale investments, both of which are presented net of tax. |
Foreign Currency Translation | Foreign Currency Translation Local currencies are generally considered the functional currencies outside the United States. Assets and liabilities denominated in non-U.S. 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 (losses) are reflected in the accumulated other comprehensive income section on the consolidated statements of stockholders’ equity (deficit). Foreign currency gains (losses) resulting from foreign currency transactions are included in selling, general and administrative expenses on the consolidated statements of operations and are not material for all periods presented. |
Commitments and Contingencies | The Company reviews the need for any loss contingency reserves and establishes reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters, particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that the Company does establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what the Company accrues from time to time. The Company believes that the ultimate resolution of its current matters will not have a material adverse effect on its consolidated financial statements. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Significant Accounting Policies | |
Summary of Condensed Consolidated Statements of Cash Flows Illustrating Effect of Corrections | The following are selected line items from the Company’s consolidated statements of cash flows illustrating the effect of the corrections, prior to the adoption of the modified retrospective application of the new lease accounting standard ( in thousands Year Ended February 2, 2019 As Reported Adjustment As Revised Cash flows from operating activities: Change in accounts payable and accrued expenses $ (452) $ 9,201 $ 8,749 Net cash provided by operating activities 300,556 9,201 309,757 Cash flows from investing activities: Capital expenditures (136,736) (9,201) (145,937) Net cash used in investing activities (136,736) (9,201) (145,937) |
Schedule of Product Recall Adjustments Effect on Income Before Taxes | Year Ended February 1, February 2, February 3, 2020 2019 2018 (Increase) decrease to net revenues $ (391) $ 4,733 $ 3,207 Increase (decrease) to cost of goods sold (3,372) (4,139) 4,315 (Increase) decrease to gross profit (3,763) 594 7,522 Increase (decrease) to selling, general and administrative expenses (225) 1,025 185 (Increase) decrease to income before income taxes $ (3,988) $ 1,619 $ 7,707 |
Schedule of Property and Equipment Useful Lives | Category of Property and Equipment Useful Life Building and building improvements 40 years Machinery, equipment and aircraft 3 to 10 years Furniture, fixtures and equipment 3 to 7 years Computer software 3 to 10 years |
Summary of Allowance for Sales Returns | A summary of the allowance for sales returns is as follows ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Balance at beginning of fiscal year $ 19,821 $ 10,565 $ 10,077 Impact of Topic 606 adoption — 5,862 — Provision for sales returns 107,811 112,218 108,134 Actual sales returns (108,426) (108,824) (107,646) Balance at end of fiscal year $ 19,206 $ 19,821 $ 10,565 |
Summary of Impact of Adopting ASUs on the Statement of Income and the Balance Sheet | The following tables summarize the impact of adopting Topic 606 on the Company’s consolidated statement of income ( in thousands The following table presents the impact of adopting the ASUs, as well as the correction of an immaterial error as discussed in “Revision” above, on the Company’s consolidated balance sheet ( in thousands February 2, 2019 As Reported Adjustments and Other (1) As Adjusted and Revised ASSETS Current assets: Cash and cash equivalents $ 5,803 $ — $ 5,803 Accounts receivable—net 40,224 — 40,224 Merchandise inventories 531,947 — 531,947 Asset held for sale — 21,795 (2) 21,795 Prepaid expense and other current assets 104,719 (521) (3) 104,198 Total current assets 682,693 21,274 703,967 Property and equipment—net 863,562 89,395 (4) 952,957 Operating lease right-of-use assets — 440,504 (5) 440,504 Goodwill 124,379 — 124,379 Tradenames, trademarks and domain names 86,022 — 86,022 Deferred tax assets 30,033 5,570 (6) 35,603 Other non-current assets 19,345 60,241 (7) 79,586 Total assets $ 1,806,034 $ 616,984 $ 2,423,018 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities: Accounts payable and accrued expenses $ 320,441 $ 56 (8) $ 320,497 Deferred revenue and customer deposits 152,595 — 152,595 Convertible senior notes due 2019—net 343,789 — 343,789 Operating lease liabilities — 66,249 (5) 66,249 Other current liabilities 101,347 8,109 (1)(9) 109,456 Total current liabilities 918,172 74,414 992,586 Asset based credit facility 57,500 — 57,500 Convertible senior notes due 2020—net 271,157 — 271,157 Convertible senior notes due 2023—net 249,151 — 249,151 Financing obligations under build-to-suit lease transactions 228,928 (228,928) (10) — Deferred rent and lease incentives 53,742 (53,742) (10) — Non-current operating lease liabilities — 437,557 (5) 437,557 Non-current finance lease liabilities — 421,245 (9) 421,245 Other non-current obligations 50,346 (17,834) (1)(11) 32,512 Total liabilities 1,828,996 632,712 2,461,708 Stockholders’ deficit: Preferred stock — — — Common stock 2 — 2 Additional paid-in capital 356,422 — 356,422 Accumulated other comprehensive loss (2,333) (1) (2,334) Accumulated deficit (376,810) (15,727) (1)(12) (392,537) Treasury stock (243) — (243) Total stockholders’ deficit (22,962) (15,728) (38,690) Total liabilities and stockholders’ deficit $ 1,806,034 $ 616,984 $ 2,423,018 (1) During the adoption process of the ASUs, the Company identified a lease agreement that was incorrectly accounted for as an impaired lease under ASC 420— Exit or Disposal Cost Obligations in fiscal 2017 and the first quarter of fiscal 2018. Refer to “Revision” above. (2) Represents recognition of asset held for sale under a sale-leaseback transaction. (3) Represents reclassification of prepaid rent to operating lease liabilities and other current liabilities (for finance leases). (4) Represents (i) recognition of finance lease right-of-use assets, partially offset by (ii) derecognition of non-Company owned properties that were capitalized under previously existing build-to-suit accounting policies, (iii) reclassification of construction in progress assets determined to be landlord assets to other non-current assets and (iv) reclassification of initial direct costs related to operating leases to operating lease right-of-use assets. (5) Represents recognition of operating lease right-of-use assets and corresponding current and non-current lease liabilities. The operating lease right-of-use asset also includes the reclassification of deferred rent and unamortized lease incentives related to operating leases and the reclassification of initial direct costs from property and equipment—net. (6) Represents recognition of net deferred tax assets related to the adoption of the ASUs. (7) Primarily represents reclassification from property and equipment—net of construction in progress assets determined to be landlord assets for which the lease has not yet commenced. (8) Represents a reclassification of an accrual for real estate taxes. (9) Represents recognition of the current and non-current finance lease liabilities. The other current liabilities line item also includes the reclassification of current obligations associated with leases previously reported as capital leases to finance lease liabilities. (10) Represents (i) derecognition of liabilities related to non-Company owned properties that were consolidated under previously existing build-to-suit accounting policies and (ii) reclassification of deferred rent and unamortized lease incentives to operating lease right-of-use assets upon adoption of the ASUs. (11) Represents (i) derecognition of the net lease loss liabilities as such balances were reclassified to operating lease right-of-use assets and operating current and non-current liabilities and (ii) the reclassification of non-current obligations associated with leases previously reported as capital leases to finance lease liabilities. (12) Represents a decrease to the consolidated net income for fiscal 2017 and fiscal 2018, as well as an increase of $4.0 million to beginning fiscal 2017 retained earnings related to the adoption of the ASUs. |
Prepaid Expense and Other Cur_2
Prepaid Expense and Other Current Assets (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Prepaid Expense and Other Current Assets | |
Prepaid Expense and Other Current Assets | Prepaid expense and other current assets consist of the following ( in thousands February 1, February 2, 2020 2019 Prepaid expense and other current assets $ 30,678 $ 15,439 Capitalized catalog costs 13,740 16,178 Vendor deposits 11,258 11,836 Right of return asset for merchandise 5,746 5,883 Federal and state tax receivable 197 4,862 Insurance recovery receivable (1) — 50,000 Total prepaid expense and other current assets $ 61,619 $ 104,198 (2) Refer to Note 18— Commitments and Contingencies . |
Schedule of Other Non-Current Assets | Other non-current assets consist of the following ( in thousands February 1, February 2, 2020 2019 Landlord assets under construction $ 138,315 $ 63,159 Deposits on asset under construction 60,000 — Promissory note receivable, including interest 5,354 5,104 Other deposits 5,157 5,068 Deferred financing fees 2,602 3,415 Other non-current assets 3,417 2,840 Total other non-current assets $ 214,845 $ 79,586 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Property and Equipment | |
Schedule of Property and Equipment | Property and equipment consists of the following ( in thousands February 1, February 2, 2020 2019 Finance lease right-of-use assets (1) $ 734,425 $ 702,379 Leasehold improvements (2) 318,313 311,416 Computer software 138,328 143,776 Furniture, fixtures and equipment 79,575 76,194 Machinery, equipment and aircraft 66,228 54,207 Building and building improvements 33,370 2,750 Land 6,061 7,110 Built-to-suit property 2,882 — Total property and equipment 1,379,182 1,297,832 Less—accumulated depreciation and amortization (3) (411,583) (344,875) Total property and equipment—net $ 967,599 $ 952,957 (1) Refer to “Lease Accounting” within Note 3— Significant Accounting Policies and Note 9— Leases . (2) Leasehold improvements include construction in progress of $16.0 million and $14.7 million as of February 1, 2020 and February 2, 2019, respectively. (3) Includes accumulated amortization related to finance lease right-of-use assets of $92.3 million and $55.5 million as of February 1, 2020 and February 2, 2019, respectively. Refer to Note 9— Leases. |
Goodwill and Tradenames, Tradem
Goodwill and Tradenames, Trademarks and Domain Names (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Goodwill, Tradenames, Trademarks and Domain Names | |
Goodwill, Tradenames, Trademarks and Domain Names Activity | The following sets forth the fiscal 2019 goodwill, tradenames, trademarks and domain names activity for the RH Segment and Waterworks ( in thousands Foreign February 2, Currency February 1, 2019 Translation 2020 RH Segment Goodwill $ 124,379 $ (12) $ 124,367 Tradenames, trademarks and domain names 48,563 — 48,563 Waterworks Tradename (1) 37,459 — 37,459 (1) Presented net of an impairment charge of $14.6 million recorded in fiscal 2018 . The following sets forth the fiscal 2018 goodwill, tradenames, trademarks and domain names activity for the RH Segment and Waterworks ( in thousands Foreign February 3, Currency February 2, 2018 Impairment (1) Translation 2019 RH Segment Goodwill $ 124,448 $ — $ (69) $ 124,379 Tradenames, trademarks and domain names 48,563 — — 48,563 Waterworks Goodwill (2) 17,445 (17,445) — — Tradename (3) 52,100 (14,641) — 37,459 (1) Refer to “Impairment” within Note 3 — Significant Accounting Policies . (2) Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively . (3) Presented net of an impairment charge of $14.6 million recorded in fiscal 2018. |
Accounts Payable, Accrued Exp_2
Accounts Payable, Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following ( in thousands February 1, February 2, 2020 2019 Accounts payable $ 180,714 $ 183,039 Accrued compensation 64,659 64,192 Accrued freight and duty 25,170 20,787 Accrued sales taxes 19,618 18,354 Accrued occupancy 12,067 10,839 Accrued catalog costs 8,267 10,276 Accrued professional fees 4,381 2,050 Other accrued expenses 15,433 10,960 Total accounts payable and accrued expenses $ 330,309 $ 320,497 |
Schedule of Other Current Liabilities | Other current liabilities consist of the following ( in thousands February 1, February 2, 2020 2019 Promissory notes on asset under construction $ 53,000 $ — Current portion of debt 22,009 892 Allowance for sales returns 19,206 19,821 Unredeemed gift card and merchandise credit liability 16,625 17,192 Federal and state taxes payable 13,591 719 Finance lease liabilities 9,188 9,184 Product recall reserve 2,055 7,767 Other current liabilities 5,040 3,881 Provision for legal settlement (1) — 50,000 Total other current liabilities $ 140,714 $ 109,456 (1) Refer to Note 18— Commitments and Contingencies. |
Other Non-Current Obligations (
Other Non-Current Obligations (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Other Non-Current Obligations | |
Schedule of Other Non-Current Obligations | Other non-current obligations consist of the following ( in thousands February 1, February 2, 2020 2019 Notes payable for share repurchases $ 18,741 $ 18,741 Rollover units and profit interests (1) 3,064 2,637 Unrecognized tax benefits 3,020 2,992 Deferred contract incentive (2) 595 2,976 Other non-current obligations 3,100 5,166 Total other non-current obligations $ 28,520 $ 32,512 (1) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 16 — Stock-Based Compensation . (2) Represents the non-current portion of an incentive payment received in relation to a 5 -year service agreement, which will be amortized over the term of the agreement. |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Leases | |
Summary of Lease Costs | Lease costs—net consist of the following ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Operating lease cost (1)(2) $ 86,448 $ 87,742 $ 95,499 Finance lease costs Amortization of leased assets (1) 36,991 28,848 19,542 Interest on lease liabilities (3) 22,608 16,785 11,154 Variable lease costs (4) 23,471 21,889 23,280 Sublease income (5) (9,609) (7,794) (1,003) Total lease costs—net $ 159,909 $ 147,470 $ 148,472 (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 operations based on the Company’s policy. Refer to Note 3— Significant Accounting Policies . (2) Includes short-term operating lease costs which are not material. (3) Included in interest expense—net on the consolidated statements of operations. (4) 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 $14.6 million, $13.0 million and $13.8 million and charges associated with common area maintenance of $8.9 million, $8.9 million, and $9.5 million in fiscal 2019, fiscal 2018, and fiscal 2017, respectively. Other variable costs, such as 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 fiscal 2019, fiscal 2018, and fiscal 2017. (5) Included in selling, general and administrative expenses on the consolidated statements of operations. |
Summary of Lease Right-of-use Assets and Lease Liabilities | Lease right-of-use assets and lease liabilities consist of the following ( in thousands February 1, February 2, 2020 2019 Balance Sheet Classification Assets Operating leases Operating lease right-of-use assets $ 410,904 $ 440,504 Finance leases (1)(2) Property and equipment—net 642,117 646,875 Total lease right-of-use assets 1,053,021 1,087,379 Liabilities Current (3) Operating leases Operating lease liabilities $ 58,924 $ 66,249 Finance leases Other current liabilities 9,188 9,184 Total lease liabilities—current 68,112 75,433 Non-current Operating leases Non-current operating lease liabilities $ 409,930 $ 437,557 Finance leases Non-current finance lease liabilities 442,988 421,245 Total lease liabilities—non-current 852,918 858,802 Total lease liabilities $ 921,030 $ 934,235 (1) Finance lease right-of-use assets include capitalized amounts related to the Company’s completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement. (2) Finance lease right-of-use assets are recorded net of accumulated amortization of $92.3 million and $55.5 million as of February 1, 2020 and February 2, 2019, respectively. (3) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months. The maturities of lease liabilities are as follows as of February 1, 2020 ( in thousands Fiscal year Operating Finance Total 2020 $ 75,634 $ 32,138 $ 107,772 2021 69,343 35,323 104,666 2022 60,711 35,747 96,458 2023 56,266 36,170 92,436 2024 52,424 36,660 89,084 Thereafter 246,482 568,856 815,338 Total lease payments (1) 560,860 744,894 1,305,754 Less—imputed interest (2) (92,006) (292,718) (384,724) Present value of lease liabilities (3) $ 468,854 $ 452,176 $ 921,030 (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 $360.9 million of legally binding payments under the noncancellable term for leases signed but not yet commenced as of February 1, 2020. (2) Calculated using the incremental borrowing rate for each lease at lease commencement. (3) Excludes future commitments under short-term lease agreements of $0.9 million as of February 1, 2020. |
Summary of Maturities of Lease Liabilities | |
Summary of Supplemental Information Related to Leases | February 1, February 2, 2020 2019 Weighted-average remaining lease term (years) Operating leases 8.9 9.2 Finance leases 18.6 19.6 Weighted-average discount rate Operating leases 3.82% 3.78% Finance leases 5.25% 5.28% |
Summary of Other Information Related to Leases | Other information related to leases consists of the following ( in thousands ): Year Ended February 1, February 2, February 3, 2020 2019 2018 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases $ (95,329) $ (91,965) $ (95,279) Operating cash flows from finance leases (25,260) (16,785) (11,154) Financing cash flows from finance leases (9,682) (6,885) (6,105) Total cash outflows from leases $ (130,271) $ (115,635) $ (112,538) Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations (non-cash) Finance leases $ 34,063 $ 174,977 $ 26,770 Operating leases 42,122 33,790 33,710 |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Convertible senior notes due 2024 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying value of the 2024 Notes, excluding the discounts upon original issuance and third party offering costs, is as follows ( in thousands February 1, 2020 Liability component Principal $ 350,000 Less: Debt discount (81,634) Net carrying amount $ 268,366 Equity component (1) $ 87,252 (1) Included in additional paid-in capital on the consolidated balance sheets. |
Convertible senior notes due 2023 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying values of the 2023 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands February 1, February 2, 2020 2019 Liability component Principal $ 335,000 $ 335,000 Less: Debt discount (64,729) (81,311) Net carrying amount $ 270,271 $ 253,689 Equity component (1) $ 90,990 $ 90,990 (1) Included in additional paid-in capital on the consolidated balance sheets. |
Convertible senior notes due 2020 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands February 1, February 2, 2020 2019 Liability component Principal $ 300,000 $ 300,000 Less: Debt discount (8,890) (27,081) Net carrying amount $ 291,110 $ 272,919 Equity component (1) $ 84,003 $ 84,003 (1) Included in additional paid-in capital on the consolidated balance sheets. |
Convertible senior notes due 2019 | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | As of February 1, 2020, the 2019 Notes are no longer outstanding. As of February 2, 2019, the carrying value of the 2019 Notes, excluding the discounts and commissions payable to the initial purchasers and third party offering costs, was as follows ( in thousands February 2, 2019 Liability component Principal $ 350,000 Less: Debt discount (5,854) Net carrying amount $ 344,146 Equity component (1) $ 70,482 (1) Included in additional paid-in capital on the consolidated balance sheets. |
Credit Facilities (Tables)
Credit Facilities (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Debt Disclosure | |
Schedule of Credit Facilities | The outstanding balances under the Company’s credit facilities were as follows ( in thousands February 1, February 2, 2020 2019 Outstanding Unamortized Debt Net Carrying Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Amount Issuance Costs Amount Asset based credit facility (1) $ — $ — $ — $ 57,500 $ — $ 57,500 Equipment promissory notes (2) 53,372 (310) 53,062 — — — Total credit facilities $ 53,372 $ (310) $ 53,062 $ 57,500 $ — $ 57,500 (1) Deferred financing fees associated with the asset based credit facility as of February 1, 2020 and February 2, 2019 were $2.6 million and $3.4 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 June 28, 2022. (2) Represents total equipment security notes secured by certain of the Company’s property and equipment, of which $22.0 million outstanding was included in other current liabilities. The remaining $31.4 million outstanding, included in other non-current obligations on the consolidated balance sheets, has principal payments due of $23.0 million, $7.9 million and $0.5 million in fiscal 2021, fiscal 2022 and fiscal 2023, respectively. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Fair Value Measurements | |
Estimated Fair Value and Carrying Value of Notes | February 1, February 2, 2020 2019 Fair Carrying Fair Carrying Value Value (1) Value Value (1) Convertible senior notes due 2019 (2) $ — $ — $ 334,756 $ 344,146 Convertible senior notes due 2020 295,573 291,110 260,258 272,919 Convertible senior notes due 2023 272,623 270,271 230,684 253,689 Convertible senior notes due 2024 255,849 268,366 — — (1) Carrying value represents the principal amount less the equity component of the 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes classified in stockholders’ equity (deficit), and does not exclude the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third party offering costs, as applicable. (2) The 2019 Notes matured on June 15, 2019. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Income Taxes | |
Summary of Income Before Income Taxes | The following is a summary of the income before income taxes ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Domestic $ 267,538 $ 157,827 $ 21,241 Foreign 1,644 3,137 1,292 Total income before income taxes $ 269,182 $ 160,964 $ 22,533 |
Summary of Income Tax Expense (Benefit) | The following is a summary of the income tax expense (benefit) ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Current Federal $ 45,985 $ 24,012 $ 18,593 State 10,806 6,275 2,761 Foreign 403 1,270 933 Total current tax expense 57,194 31,557 22,287 Deferred Federal (7,173) (4,428) 3,692 State (1,477) (2,049) (844) Foreign 263 153 (3) Total deferred tax expense (benefit) (8,387) (6,324) 2,845 Total income tax expense $ 48,807 $ 25,233 $ 25,132 |
Schedule of Reconciliation of Federal Statutory Tax Rate to Company's Effective Tax Rate | Year Ended February 1, February 2, February 3, 2020 2019 2018 Provision at federal statutory tax rate 21.0 % 21.0 % 33.7 % State income taxes—net of federal tax impact 2.5 1.7 4.7 Tax rate adjustments 0.2 0.1 (0.8) Meals and entertainment 0.1 0.3 1.9 Aircraft expenses 0.1 0.1 4.8 Stock compensation—excess benefits (6.6) (9.9) (27.9) Goodwill impairment — 1.8 23.9 Non-deductible stock-based compensation — — 35.7 Federal statutory tax rate change — — 27.4 Foreign income inclusion—transition tax — — 4.4 Net adjustments to tax accruals and other — — 1.9 Valuation allowance — 0.3 1.5 Donation of appreciated property — — (0.2) Foreign income — — (1.3) Other permanent items 0.8 0.3 1.8 Effective tax rate 18.1 % 15.7 % 111.5 % |
Components of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets and liabilities are as follows ( in thousands February 1, February 2, 2020 2019 Non-current deferred tax assets (liabilities) Lease liabilities $ 249,243 $ 253,826 Stock-based compensation 22,400 22,721 Accrued expenses 21,362 16,657 Merchandise inventories 8,028 14,735 Deferred lease credits 6,395 1,188 Deferred revenue 2,235 — Net operating loss carryforwards 1,763 1,654 Convertible senior notes 717 — Other 1,846 2,591 Non-current deferred tax assets 313,989 313,372 Valuation allowance (1,007) (1,623) Net non-current deferred tax assets $ 312,982 $ 311,749 Property and equipment $ (137,448) $ (137,240) Lease right-of-use assets (110,075) (118,549) Tradename, trademarks and intangibles (13,026) (12,386) Prepaid expense and other (4,882) (4,209) State benefit (2,546) (2,556) Convertible senior notes — (1,054) Deferred revenue — (152) Non-current deferred tax liabilities (267,977) (276,146) Total net non-current deferred tax assets $ 45,005 $ 35,603 |
Schedule of Reconciliation of Valuation Allowance | A reconciliation of the valuation allowance is as follows ( in thousands Year Ended February 1, February 2, 2020 2019 Balance at beginning of fiscal year $ 1,623 $ 1,190 Net changes in deferred tax assets and liabilities (616) 433 Balance at end of fiscal year $ 1,007 $ 1,623 |
Schedule of Reconciliation of Unrecognized Tax Benefits | A reconciliation of the exposures related to unrecognized tax benefits is as follows ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Balance at beginning of fiscal year $ 8,459 $ 8,152 $ 2,190 Gross increases (decreases)—prior period tax positions (2) 239 5,491 Gross increases (decreases)—current period tax positions 438 375 471 Reductions based on the lapse of the applicable statutes of limitations (381) (307) — Balance at end of fiscal year $ 8,514 $ 8,459 $ 8,152 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Net Income (Loss) Per Share | |
Schedule of Weighted Average Shares Used for Net Income per Share | The weighted-average shares used for net income (loss) per share are as follows: Year Ended February 1, February 2, February 3, 2020 2019 2018 Weighted-average shares—basic 19,082,303 21,613,678 27,053,616 Effect of dilutive stock-based awards 4,554,682 4,567,303 — Effect of dilutive convertible senior notes (1) 662,049 352,244 — Weighted-average shares—diluted 24,299,034 26,533,225 27,053,616 (1) The 2019 Notes, 2020 Notes, 2023 Notes and 2024 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share, $193.65 per share and $ 211.40 per share, respectively. The 2019 Notes matured on June 15, 2019 and did not have an impact of the Company’s dilutive share count post-maturity. |
Anti-Dilutive Securities Excluded from Diluted Net Income per Share | Year Ended February 1, February 2, February 3, 2020 2019 2018 Options 360,496 351,145 2,895,471 Restricted stock units — 2,625 229,308 Total anti-dilutive stock-based awards 360,496 353,770 3,124,779 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Stock-Based Compensation. | |
Summary of Stock Option Activity | Weighted-Average Options Exercise Price Outstanding—February 2, 2019 7,499,416 $ 54.37 Granted 534,050 110.17 Exercised (643,090) 42.20 Cancelled (255,641) 90.88 Outstanding—February 1, 2020 7,134,735 $ 58.34 |
Schedule of Assumptions Used to Estimate Fair Value of Stock Options Issued | Year Ended February 1, February 2, February 3, 2020 2019 2018 Expected volatility 55.7 % 54.7 % 48.3 % Expected life (years) 7.1 6.7 9.3 Risk-free interest rate 2.3 % 2.9 % 2.2 % Dividend yield — — — |
Summary of Additional Information about Stock Options | Year Ended February 1, February 2, February 3, 2020 2019 2018 Weighted-average fair value per share of stock options granted $ 63.35 $ 69.60 $ 24.24 Aggregate intrinsic value of stock options exercised (in thousands) 82,718 77,311 27,362 Fair value of stock options vested (in thousands) 11,816 13,915 38,402 |
Schedule of Stock Options Outstanding, Vested or Expected to Vest, and Exercisable | Information about stock options outstanding, vested or expected to vest, and exercisable as of February 1, 2020 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 — 1,011,010 6.08 $ 35.59 431,410 $ 34.70 $46.50 — 2,876,826 2.75 46.50 2,876,826 46.50 $47.53 — 1,294,395 6.64 52.47 1,270,635 52.38 $68.30 — 1,160,604 3.68 77.21 1,101,689 76.67 $91.67 — 781,900 8.79 110.66 53,150 107.11 $241.97 — 10,000 9.84 241.97 — — Total 7,134,735 4.75 $ 58.34 5,733,710 $ 53.27 Vested or expected to vest 6,819,795 $ 56.93 |
Summary of Restricted Stock Award Activity | Weighted- Average Grant Date Fair Intrinsic Awards Value Value Outstanding—February 2, 2019 415,469 $ 52.40 Granted 7,014 129.21 Released (176,508) 59.61 Cancelled (25,990) 53.05 Outstanding—February 1, 2020 219,985 $ 49.00 $ 45,921,869 |
Summary of Additional Information about Restricted Stock Awards | Year Ended February 1, February 2, February 3, 2020 2019 2018 Weighted-average fair value per share of awards granted $ 129.21 $ 111.38 $ 55.31 Grant date fair value of awards released (in thousands) 10,522 11,477 16,839 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Segment Reporting | |
Schedule of Segment information | The following table presents the statements of operations metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting (in thousands) Year Ended February 1, February 2, February 3, 2020 2019 2018 RH Segment Waterworks Total RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 2,514,296 $ 133,141 $ 2,647,437 $ 2,375,472 $ 130,181 $ 2,505,653 $ 2,319,332 $ 120,842 $ 2,440,174 Gross profit 1,038,722 56,289 1,095,011 933,805 51,772 985,577 791,730 47,568 839,298 Depreciation and amortization 96,148 4,591 100,739 86,719 4,653 91,372 78,772 4,404 83,176 |
Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting | The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting (in thousands) February 1, February 2, 2020 2019 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 124,367 $ — $ 124,367 $ 124,379 $ — $ 124,379 Tradenames, trademarks and domain names (2) 48,563 37,459 86,022 48,563 37,459 86,022 Total assets 2,301,823 143,871 2,445,694 2,273,951 149,067 2,423,018 (1) The Waterworks reporting unit goodwill of $51.1 million recognized upon acquisition in fiscal 2016 was fully impaired as of February 2, 2019, with $17.4 million and $33.7 million impairment recorded in fiscal 2018 and fiscal 2017, respectively. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $14.6 million recorded in fiscal 2018. |
Schedule of Segment Operating Income and Income Before Income Taxes | The following table presents segment operating income and income before income taxes ( in thousands Year Ended February 1, February 2, February 3, 2020 2019 2018 Operating income: RH Segment $ 375,315 $ 288,106 $ 161,111 Waterworks 3,780 (922) (1,615) Asset impairments and lease losses (21,899) (7,218) (4,417) Reorganization related costs (1,075) (9,977) (949) Recall accrual 3,988 (1,619) (7,707) Asset held for sale gain (loss) 1,529 (8,497) — Legal settlements 1,193 5,289 — Distribution center closures — (3,046) (7,230) Impact of inventory step-up — (380) (2,527) Executive non-cash compensation — — (23,872) Anti-dumping exposure — — 2,202 Gain on sale of building and land — — 2,119 Income from operations 362,831 261,736 117,115 Interest expense—net 87,177 67,769 56,002 Goodwill and tradename impairment — 32,086 33,700 Loss on extinguishment of debt—net 6,472 917 4,880 Income before income taxes $ 269,182 $ 160,964 $ 22,533 |
Net Revenues | Year Ended February 1, February 2, February 3, 2020 2019 2018 Furniture $ 1,794,317 $ 1,625,553 $ 1,543,404 Non-furniture 853,120 880,100 896,770 Total net revenues $ 2,647,437 $ 2,505,653 $ 2,440,174 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (Tables) | 12 Months Ended |
Feb. 01, 2020 | |
Selected Quarterly Financial Data (Unaudited) | |
Schedule of Quarterly Financial Data | Quarterly financial data for fiscal 2019 and fiscal 2018 are set forth below ( in thousands, except share and per share amounts Three Months Ended May 4, August 3, November 2, February 1, Fiscal 2019 2019 2019 2019 2020 Net revenues $ 598,421 $ 706,514 $ 677,526 $ 664,976 Gross profit 232,814 294,958 284,166 283,073 Net income 35,722 63,757 52,463 68,433 Weighted-average shares used in computing basic net income per share 19,976,858 18,465,876 18,765,769 19,120,709 Basic net income per share $ 1.79 $ 3.45 $ 2.80 $ 3.58 Weighted-average shares used in computing diluted net income per share 24,933,987 22,324,112 24,170,172 25,767,864 Diluted net income per share $ 1.43 $ 2.86 $ 2.17 $ 2.66 Three Months Ended May 5, August 4, November 3, February 2, Fiscal 2018 2018 2018 2018 2019 Net revenues $ 557,406 $ 640,798 $ 636,558 $ 670,891 Gross profit 209,333 268,344 250,021 257,879 Net income 25,461 62,906 20,114 27,250 Weighted-average shares used in computing basic net income per share 21,545,025 21,925,702 22,082,141 20,901,841 Basic net income per share $ 1.18 $ 2.87 $ 0.91 $ 1.30 Weighted-average shares used in computing diluted net income per share 25,230,228 27,496,561 27,703,319 25,702,791 Diluted net income per share $ 1.01 $ 2.29 $ 0.73 $ 1.06 |
Nature of Business (Detail)
Nature of Business (Detail) | Feb. 01, 2020storestateitem |
Nature of Business | |
Number of RH Galleries | 68 |
Number of RH outlet stores | store | 38 |
Number of states that galleries and stores operate, District of Columbia and Canada | state | 31 |
Number of waterworks showrooms throughout the United States and in the U.K. | 15 |
Organization (Detail)
Organization (Detail) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Sep. 30, 2019 | Jun. 30, 2018 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Organization Consolidation and Presentation of Financial Statements | |||||
Debt instrument, principal amount | $ 350,000 | $ 350,000 | |||
Purchase of convertible note hedges | 91,350 | $ 91,857 | |||
Cash proceeds from sale of warrants | 50,225 | 51,021 | |||
Original issuance and offering costs | 4,636 | $ 8,298 | |||
Convertible senior notes due 2023 | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Debt instrument, principal amount | $ 335,000 | $ 335,000 | |||
Cash proceeds from sale of warrants | 50,200 | $ 51,000 | |||
Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Purchase of convertible note hedges | 91,400 | 91,900 | |||
Convertible senior notes due 2024 | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Cash proceeds from sale of warrants | 304,100 | ||||
Original issuance and offering costs | 4,800 | ||||
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Purchase of convertible note hedges | 91,400 | ||||
Cash proceeds from sale of warrants | 50,200 | ||||
Private Placement | Convertible senior notes due 2023 | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Debt instrument, principal amount | $ 350,000 | $ 300,000 | |||
Debt instrument, interest rate | 0.00% | 0.00% | |||
Private Placement | Convertible senior notes due 2024 | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Debt instrument, interest rate | 0.00% | ||||
Over Allotment Option in Private Placement | Convertible senior notes due 2023 | |||||
Organization Consolidation and Presentation of Financial Statements | |||||
Debt instrument, principal amount | $ 35,000 |
Significant Accounting Polici_4
Significant Accounting Policies - Revision (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Retained earnings (accumulated deficit) | $ (409,253) | $ (392,537) | |
As Reported | |||
Retained earnings (accumulated deficit) | (376,810) | $ 152,400 | |
As Revised | |||
Retained earnings (accumulated deficit) | (379,100) | 151,000 | |
Overstatement of net income | |||
Revision due to prior year misstatement in current year financial statements, amount | 900 | 1,400 | |
Overstatement of retained earnings | |||
Revision due to prior year misstatement in current year financial statements, amount | $ 1,400 | ||
Understatement of accumulated deficit | |||
Revision due to prior year misstatement in current year financial statements, amount | $ 2,300 | ||
Understatement of other non-current obligations | |||
Revision due to prior year misstatement in current year financial statements, amount | 3,300 | ||
Overstatement of other current liabilities | |||
Revision due to prior year misstatement in current year financial statements, amount | 1,000 | ||
Understatement of net cash provided by operating activities | |||
Revision due to prior year misstatement in current year financial statements, amount | 9,200 | ||
Understatement of net cash used in investing activities | |||
Revision due to prior year misstatement in current year financial statements, amount | $ 9,200 |
Significant Accounting Polici_5
Significant Accounting Policies - Summary of Consolidated Cash Flows Illustrating Effect of Corrections (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Cash flows from operating activities: | |||
Change in accounts payable and accrued expenses | $ 7,445 | $ 10,148 | $ 65,105 |
Net cash provided by operating activities | 339,188 | 249,603 | 474,505 |
Cash flows from investing activities: | |||
Capital expenditures | (93,623) | (79,992) | (68,393) |
Net cash used in investing activities | $ (122,545) | (79,992) | $ 122,531 |
As Reported | |||
Cash flows from operating activities: | |||
Change in accounts payable and accrued expenses | (452) | ||
Net cash provided by operating activities | 300,556 | ||
Cash flows from investing activities: | |||
Capital expenditures | (136,736) | ||
Net cash used in investing activities | (136,736) | ||
Adjustment | |||
Cash flows from operating activities: | |||
Change in accounts payable and accrued expenses | 9,201 | ||
Net cash provided by operating activities | 9,201 | ||
Cash flows from investing activities: | |||
Capital expenditures | (9,201) | ||
Net cash used in investing activities | (9,201) | ||
As Revised | |||
Cash flows from operating activities: | |||
Change in accounts payable and accrued expenses | 8,749 | ||
Net cash provided by operating activities | 309,757 | ||
Cash flows from investing activities: | |||
Capital expenditures | (145,937) | ||
Net cash used in investing activities | $ (145,937) |
Significant Accounting Polici_6
Significant Accounting Policies - Accounts Receivable (Detail) - USD ($) $ in Millions | Feb. 01, 2020 | Feb. 02, 2019 |
Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 2.2 | $ 1.9 |
Significant Accounting Polici_7
Significant Accounting Policies - Merchandise Inventories (Detail) - USD ($) $ in Millions | Feb. 01, 2020 | Feb. 02, 2019 |
Significant Accounting Policies | ||
Allowance for doubtful accounts | $ 2.2 | $ 1.9 |
Significant Accounting Polici_8
Significant Accounting Policies - Product Recalls (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Product recalls, effect on the Company's income before income taxes | |||
(Increase) decrease to income before income taxes | $ (3,988) | $ 1,619 | $ 7,707 |
Net revenues | |||
Product recalls, effect on the Company's income before income taxes | |||
(Increase) decrease to income before income taxes | (391) | 4,733 | 3,207 |
Cost of goods sold | |||
Product recalls, effect on the Company's income before income taxes | |||
(Increase) decrease to income before income taxes | (3,372) | (4,139) | 4,315 |
Gross profit | |||
Product recalls, effect on the Company's income before income taxes | |||
(Increase) decrease to income before income taxes | (3,763) | 594 | 7,522 |
Selling, general and administrative expenses | |||
Product recalls, effect on the Company's income before income taxes | |||
(Increase) decrease to income before income taxes | (225) | 1,025 | $ 185 |
Other current liabilities | |||
Product recalls, effect on the Company's income before income taxes | |||
Product recall accrual | $ 2,100 | $ 7,800 |
Significant Accounting Polici_9
Significant Accounting Policies - Advertising Expenses (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Significant Accounting Policies | |||
Advertising expense | $ 107,600 | $ 97,000 | $ 106,600 |
Capitalized catalog costs and other current assets | $ 13,740 | $ 16,178 |
Significant Accounting Polic_10
Significant Accounting Policies - Property and Equipment (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Property, Plant and Equipment [Line Items] | |||
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | ||
Capitalized interest | |||
Capitalized Interest | $ 4.9 | $ 3.1 | $ 3.3 |
Capitalized interest related to amortization of Convertible Notes debt discount | $ 3.7 | $ 2.7 | $ 2.5 |
Building and building improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 40 years | ||
Minimum | Machinery, equipment and aircraft | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Minimum | Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Minimum | Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Maximum | Machinery, equipment and aircraft | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 10 years | ||
Maximum | Furniture, fixtures and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 7 years | ||
Maximum | Computer software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 10 years |
Significant Accounting Polic_11
Significant Accounting Policies - Lease Accounting (Detail) | 12 Months Ended |
Feb. 01, 2020 | |
Lessee, Lease, Description [Line Items] | |
Renewal term, operating lease | 25 years |
Lessee, Finance Lease, Existence of Option to Extend [true false] | true |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms, operating lease | 15 years |
Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms, operating lease | 10 years |
Finance leased Equipment | Maximum | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms, operating lease | 7 years |
Finance leased Equipment | Minimum | |
Lessee, Lease, Description [Line Items] | |
Initial lease terms, operating lease | 3 years |
Significant Accounting Polic_12
Significant Accounting Policies - Impairment and Closures (Detail) | 3 Months Ended | 12 Months Ended | |||||
Feb. 02, 2019USD ($) | May 05, 2018USD ($) | Feb. 03, 2018USD ($) | Oct. 28, 2017USD ($)Center | Feb. 01, 2020USD ($) | Feb. 02, 2019USD ($) | Feb. 03, 2018USD ($) | |
Goodwill impairment | $ 51,100,000 | ||||||
Indefinite-lived intangible assets | $ 86,022,000 | $ 86,022,000 | 86,022,000 | ||||
Additional impairment has been recorded for corporate assets and other long-lived assets | 0 | 0 | $ 0 | ||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Costs incurred in disposal of asset | $ 800,000 | ||||||
RH Segment | |||||||
Indefinite-lived intangible assets | 48,563,000 | $ 48,563,000 | 48,563,000 | 48,563,000 | 48,563,000 | ||
Waterworks | |||||||
Goodwill impairment | 17,400,000 | 33,700,000 | $ 17,445,000 | $ 33,700,000 | |||
Percentage of weighted results towards income approach | 80.00% | 80.00% | |||||
Percentage of estimated fair value towards market approach | 20.00% | 20.00% | |||||
Percentage of fair value of the tradename in excess of book value | 26.00% | ||||||
Impairment to tradename and domain names | $ 14,641,000 | ||||||
Indefinite-lived intangible assets | 37,459,000 | 52,100,000 | 37,459,000 | 37,459,000 | $ 52,100,000 | ||
Tradename | Waterworks | |||||||
Indefinite-lived intangible assets | 37,500,000 | ||||||
Distribution center closures | |||||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Distribution centers | Center | 2 | ||||||
Distribution center closures | Dallas, TX | |||||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Distribution centers | Center | 1 | ||||||
Distribution center closures | Mira Loma, CA | |||||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Distribution centers | Center | 1 | ||||||
RHCA integration into RH platform | RH Segment | |||||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Liability for lease losses | 3,400,000 | $ 4,400,000 | 4,600,000 | 3,400,000 | $ 4,400,000 | ||
RHCA integration into RH platform | Distribution center closures | |||||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Liability for lease losses | $ 2,200,000 | $ 4,400,000 | 2,200,000 | ||||
Restructuring related costs, including loss on disposal | 4,400,000 | ||||||
Employee termination benefits | 900,000 | $ 200,000 | |||||
Restructuring related costs impact to selling, general and administrative expenses | $ 5,300,000 | 2,600,000 | |||||
Capitalized property and equipment | RHCA integration into RH platform | Distribution center closures | |||||||
Distribution Center Closures and RH Contemporary Art Impairment | |||||||
Restructuring related costs, including loss on disposal | $ 200,000 |
Significant Accounting Polic_13
Significant Accounting Policies - Summary of Allowance for Sales Returns (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Significant Accounting Policies | |||
Balance at beginning of fiscal year | $ 19,821 | $ 10,565 | $ 10,077 |
Impact of Topic 606 adoption | 5,862 | ||
Provision for sales returns | 107,811 | 112,218 | 108,134 |
Actual sales returns | (108,426) | (108,824) | (107,646) |
Balance at end of fiscal year | $ 19,206 | $ 19,821 | $ 10,565 |
Significant Accounting Polic_14
Significant Accounting Policies - Deferred Revenue, Customer Deposits and Gift Cards and Merchandise Credits (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Recently Issued Accounting Standards | |||
Revenue recognized on membership period | 1 year | ||
Customer deposits | 50.00% | ||
Revenue recognition, gift cards, breakage | $ 1.6 | $ 1.5 | $ 3 |
Inventory reserve balances | 25.6 | 30.7 | |
Gift cards and merchandise credits | |||
Recently Issued Accounting Standards | |||
Gift card liabilities | 16.6 | 17.2 | |
Gift card and merchandise credits | |||
Recently Issued Accounting Standards | |||
Revenue related to previous deferrals | $ 19.8 | $ 21.6 | |
Percentage of remaining revenue recognized on gift card and merchandise credit | 70.00% |
Significant Accounting Polic_15
Significant Accounting Policies - Self Insurance (Detail) - USD ($) $ in Millions | Feb. 01, 2020 | Feb. 02, 2019 |
Significant Accounting Policies | ||
Liabilities related to health care coverage | $ 2.2 | $ 2 |
Liabilities related to workers' compensation | $ 4.7 | $ 3.3 |
Significant Accounting Polic_16
Significant Accounting Policies - Recently Issued Accounting Standards (Detail) - USD ($) $ in Millions | Feb. 04, 2018 | Feb. 02, 2019 | Feb. 03, 2018 |
As Reported | |||
Recently Issued Accounting Standards | |||
Decrease to retained earnings | $ 4 | $ 4 | |
Accounting Standards Update 2014-09 | Adjustments | |||
Recently Issued Accounting Standards | |||
Decrease to retained earnings | $ 21 |
Significant Accounting Polic_17
Significant Accounting Policies - Summary of Impact of Adopting Topic 606 Consolidated Statements of Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 01, 2020 | Nov. 02, 2019 | Aug. 03, 2019 | May 04, 2019 | Feb. 02, 2019 | Nov. 03, 2018 | Aug. 04, 2018 | May 05, 2018 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Net revenues | $ 664,976 | $ 677,526 | $ 706,514 | $ 598,421 | $ 670,891 | $ 636,558 | $ 640,798 | $ 557,406 | $ 2,647,437 | $ 2,505,653 | |
Cost of goods sold | 1,552,426 | 1,520,076 | $ 1,600,876 | ||||||||
Gross profit | 283,073 | 284,166 | 294,958 | 232,814 | 257,879 | 250,021 | 268,344 | 209,333 | 1,095,011 | 985,577 | 839,298 |
Selling, general and administrative expenses | 732,180 | 723,841 | 722,183 | ||||||||
Income from operations | 362,831 | 261,736 | 117,115 | ||||||||
Other expenses | |||||||||||
Interest expense-net | 87,177 | 67,769 | 56,002 | ||||||||
Goodwill and tradename impairment | 32,086 | 33,700 | |||||||||
Loss on extinguishment of debt-net | 6,472 | 917 | 4,880 | ||||||||
Total other expenses | 93,649 | 100,772 | |||||||||
Income before income taxes | 269,182 | 160,964 | 22,533 | ||||||||
Income tax expense | 48,807 | 25,233 | 25,132 | ||||||||
Net income | $ 68,433 | $ 52,463 | $ 63,757 | $ 35,722 | $ 27,250 | $ 20,114 | $ 62,906 | $ 25,461 | 220,375 | 135,731 | $ (2,599) |
Adjustments | Accounting Standards Update 2014-09 | |||||||||||
Net revenues | (2,030) | (9,868) | |||||||||
Cost of goods sold | 861 | (3,485) | |||||||||
Gross profit | (2,891) | (6,383) | |||||||||
Selling, general and administrative expenses | (10,742) | (2,616) | |||||||||
Income from operations | 7,851 | (3,767) | |||||||||
Other expenses | |||||||||||
Income before income taxes | 7,851 | (3,767) | |||||||||
Income tax expense | 1,336 | (3,945) | |||||||||
Net income | 6,515 | 178 | |||||||||
Balances without Adoption of Topic 606 | Accounting Standards Update 2014-09 | |||||||||||
Net revenues | 2,645,407 | 2,495,785 | |||||||||
Cost of goods sold | 1,553,287 | 1,516,591 | |||||||||
Gross profit | 1,092,120 | 979,194 | |||||||||
Selling, general and administrative expenses | 721,438 | 721,225 | |||||||||
Income from operations | 370,682 | 257,969 | |||||||||
Other expenses | |||||||||||
Interest expense-net | 87,177 | 67,769 | |||||||||
Goodwill and tradename impairment | 32,086 | ||||||||||
Loss on extinguishment of debt-net | 6,472 | 917 | |||||||||
Total other expenses | 93,649 | 100,772 | |||||||||
Income before income taxes | 277,033 | 157,197 | |||||||||
Income tax expense | 50,143 | 21,288 | |||||||||
Net income | $ 226,890 | $ 135,909 |
Significant Accounting Polic_18
Significant Accounting Policies - Summary of Impact of Adopting Topic 606 on Certain items of the Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Prepaid expense and other current assets | $ 61,619 | $ 104,198 |
Deferred tax assets | 45,005 | 35,603 |
Accounts payable and accrued expenses | 330,309 | 320,497 |
Deferred revenue and customer deposits | 162,433 | 152,595 |
Other current liabilities | 140,714 | 109,456 |
Accumulated deficit | (409,253) | (392,537) |
Adjustments | Accounting Standards Update 2014-09 | ||
Prepaid expense and other current assets | 30,980 | 33,587 |
Deferred tax assets | (6,561) | (6,561) |
Accounts payable and accrued expenses | (570) | (686) |
Deferred revenue and customer deposits | 7,894 | 9,304 |
Other current liabilities | (10,634) | (2,806) |
Accumulated deficit | 27,729 | 21,214 |
Balances without Adoption of Topic 606 | Accounting Standards Update 2014-09 | ||
Prepaid expense and other current assets | 92,599 | 137,785 |
Deferred tax assets | 38,444 | 29,042 |
Accounts payable and accrued expenses | 329,739 | 319,811 |
Deferred revenue and customer deposits | 170,327 | 161,899 |
Other current liabilities | 130,080 | 106,650 |
Accumulated deficit | $ (381,524) | $ (371,323) |
Significant Accounting Polic_19
Significant Accounting Policies - Summary of Impact of Adopting ASUs on the Consolidated Balance Sheet (Detail) - USD ($) $ in Thousands | Feb. 04, 2018 | Feb. 02, 2019 | Feb. 03, 2018 | Feb. 01, 2020 | Jan. 28, 2017 |
Current assets: | |||||
Cash and cash equivalents | $ 5,803 | $ 17,907 | $ 47,658 | $ 87,023 | |
Accounts receivable-net | 40,224 | 48,979 | |||
Merchandise inventories | 531,947 | 438,696 | |||
Asset held for sale | 21,795 | ||||
Prepaid expense and other current assets | 104,198 | 61,619 | |||
Total current assets | 703,967 | 596,952 | |||
Property and equipment-net | 952,957 | 967,599 | |||
Operating lease right-of-use assets | 440,504 | 410,904 | |||
Goodwill | 124,379 | 124,367 | |||
Tradenames, trademarks and domain names | 86,022 | ||||
Deferred tax assets | 35,603 | 45,005 | |||
Other non-current assets | 79,586 | 214,845 | |||
Total assets | 2,423,018 | 2,445,694 | |||
Current liabilities: | |||||
Accounts payable and accrued expenses | 320,497 | 330,309 | |||
Deferred revenue and customer deposits | 152,595 | 162,433 | |||
Operating lease liabilities | 66,249 | 58,924 | |||
Other current liabilities | 109,456 | 140,714 | |||
Total current liabilities | 992,586 | 982,912 | |||
Asset based credit facility | 57,500 | 53,062 | |||
Non-current operating lease liabilities | 437,557 | 409,930 | |||
Non-current finance lease liabilities | 421,245 | 442,988 | |||
Other non-current obligations | 32,512 | 28,520 | |||
Total liabilities | 2,461,708 | 2,427,043 | |||
Stockholders' (deficit): | |||||
Preferred stock | |||||
Common stock | 2 | 2 | |||
Additional paid-in capital | 356,422 | 430,662 | |||
Accumulated other comprehensive loss | (2,334) | (2,760) | |||
Accumulated deficit | (392,537) | (409,253) | |||
Treasury stock | (243) | ||||
Total stockholders' (deficit) | (38,690) | (8,155) | 18,651 | $ 923,829 | |
Total liabilities and stockholders' (deficit) | 2,423,018 | 2,445,694 | |||
Convertible senior notes due 2019 | |||||
Current liabilities: | |||||
Convertible senior notes due-net | 343,789 | ||||
Convertible senior notes due 2020 | |||||
Current liabilities: | |||||
Convertible senior notes due-net | 290,532 | ||||
Convertible senior notes due-net | 271,157 | ||||
Convertible senior notes due 2023 | |||||
Current liabilities: | |||||
Convertible senior notes due-net | 249,151 | 266,658 | |||
As Reported | |||||
Current assets: | |||||
Cash and cash equivalents | 5,803 | ||||
Accounts receivable-net | 40,224 | ||||
Merchandise inventories | 531,947 | ||||
Prepaid expense and other current assets | 104,719 | ||||
Total current assets | 682,693 | ||||
Property and equipment-net | 863,562 | ||||
Goodwill | 124,379 | ||||
Tradenames, trademarks and domain names | 86,022 | ||||
Deferred tax assets | 30,033 | ||||
Other non-current assets | 19,345 | ||||
Total assets | 1,806,034 | ||||
Current liabilities: | |||||
Accounts payable and accrued expenses | 320,441 | ||||
Deferred revenue and customer deposits | 152,595 | ||||
Other current liabilities | 101,347 | ||||
Total current liabilities | 918,172 | ||||
Asset based credit facility | 57,500 | ||||
Financing obligations under build-to-suit lease transactions | 228,928 | ||||
Deferred rent and lease incentives | 53,742 | ||||
Other non-current obligations | 50,346 | ||||
Total liabilities | 1,828,996 | ||||
Stockholders' (deficit): | |||||
Common stock | 2 | ||||
Additional paid-in capital | 356,422 | ||||
Accumulated other comprehensive loss | (2,333) | ||||
Accumulated deficit | (376,810) | 152,400 | |||
Treasury stock | (243) | ||||
Total stockholders' (deficit) | (22,962) | ||||
Total liabilities and stockholders' (deficit) | 1,806,034 | ||||
Cumulative Effect On Retained Earnings Net Of Tax1 | 4,000 | 4,000 | |||
As Reported | Convertible senior notes due 2019 | |||||
Current liabilities: | |||||
Convertible senior notes due-net | 343,789 | ||||
As Reported | Convertible senior notes due 2020 | |||||
Current liabilities: | |||||
Convertible senior notes due-net | 271,157 | ||||
As Reported | Convertible senior notes due 2023 | |||||
Current liabilities: | |||||
Convertible senior notes due-net | 249,151 | ||||
Adjustment | |||||
Current assets: | |||||
Asset held for sale | 21,795 | ||||
Prepaid expense and other current assets | (521) | ||||
Total current assets | 21,274 | ||||
Property and equipment-net | 89,395 | ||||
Operating lease right-of-use assets | 440,504 | ||||
Deferred tax assets | 5,570 | ||||
Other non-current assets | 60,241 | ||||
Total assets | 616,984 | ||||
Current liabilities: | |||||
Accounts payable and accrued expenses | 56 | ||||
Operating lease liabilities | 66,249 | ||||
Other current liabilities | 8,109 | ||||
Total current liabilities | 74,414 | ||||
Financing obligations under build-to-suit lease transactions | (228,928) | ||||
Deferred rent and lease incentives | (53,742) | ||||
Non-current operating lease liabilities | 437,557 | ||||
Non-current finance lease liabilities | 421,245 | ||||
Other non-current obligations | (17,834) | ||||
Total liabilities | 632,712 | ||||
Stockholders' (deficit): | |||||
Accumulated other comprehensive loss | (1) | ||||
Accumulated deficit | (15,727) | ||||
Total stockholders' (deficit) | (15,728) | ||||
Total liabilities and stockholders' (deficit) | 616,984 | ||||
Accounting Standards Update 2016-02 | |||||
Stockholders' (deficit): | |||||
Cumulative Effect On Retained Earnings Net Of Tax1 | $ 4,000 | ||||
Adjustments | Accounting Standards Update 2014-09 | |||||
Current assets: | |||||
Prepaid expense and other current assets | 33,587 | 30,980 | |||
Deferred tax assets | (6,561) | (6,561) | |||
Current liabilities: | |||||
Accounts payable and accrued expenses | (686) | (570) | |||
Deferred revenue and customer deposits | 9,304 | 7,894 | |||
Other current liabilities | (2,806) | (10,634) | |||
Stockholders' (deficit): | |||||
Accumulated deficit | 21,214 | 27,729 | |||
Cumulative Effect On Retained Earnings Net Of Tax1 | $ 21,000 | ||||
Balances without Adoption of Topic 606 | Accounting Standards Update 2014-09 | |||||
Current assets: | |||||
Prepaid expense and other current assets | 137,785 | 92,599 | |||
Deferred tax assets | 29,042 | 38,444 | |||
Current liabilities: | |||||
Accounts payable and accrued expenses | 319,811 | 329,739 | |||
Deferred revenue and customer deposits | 161,899 | 170,327 | |||
Other current liabilities | 106,650 | 130,080 | |||
Stockholders' (deficit): | |||||
Accumulated deficit | $ (371,323) | $ (381,524) |
Prepaid Expense and Other Cur_3
Prepaid Expense and Other Current Assets - Prepaid Expense and Other Current Assets (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Prepaid Expense And Other Assets Current [Abstract] | ||
Prepaid expense and other current assets | $ 30,678 | $ 15,439 |
Capitalized catalog costs | 13,740 | 16,178 |
Vendor deposits | 11,258 | 11,836 |
Right of return asset for merchandise | 5,746 | 5,883 |
Federal and state tax receivable | 197 | 4,862 |
Insurance recovery receivable | 50,000 | |
Total prepaid expense and other current assets | $ 61,619 | $ 104,198 |
Prepaid Expense and Other Cur_4
Prepaid Expense and Other Current Assets - Schedule of Other Non-Current Assets (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Other Assets Noncurrent [Abstract] | ||
Landlord assets under construction | $ 138,315 | $ 63,159 |
Deposits on asset under construction | 60,000 | |
Promissory note receivable, including interest | 5,354 | 5,104 |
Other deposits | 5,157 | 5,068 |
Deferred financing fees | 2,602 | 3,415 |
Other non-current assets | 3,417 | 2,840 |
Total other non-current assets | $ 214,845 | $ 79,586 |
Property and Equipment - Proper
Property and Equipment - Property and Equipment (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 1,379,182 | $ 1,297,832 |
Less-accumulated depreciation and amortization | (411,583) | (344,875) |
Property, Plant and Equipment, Net, Total | 967,599 | 952,957 |
Finance lease right-of-use assets | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 734,425 | 702,379 |
Less-accumulated depreciation and amortization | (92,300) | (55,500) |
Leasehold Improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 318,313 | 311,416 |
Computer software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 138,328 | 143,776 |
Furniture, fixtures and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 79,575 | 76,194 |
Machinery, equipment and aircraft | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 66,228 | 54,207 |
Land | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 6,061 | 7,110 |
Building and building improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 33,370 | 2,750 |
Built-to-suit property | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | 2,882 | |
Construction in Progress | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 16,000 | $ 14,700 |
Property and Equipment - Narrat
Property and Equipment - Narrative (Detail) - USD ($) $ in Millions | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Property and Equipment | |||
Depreciation expense | $ 63.7 | $ 62.6 | $ 63.7 |
Goodwill and Tradenames, Trad_2
Goodwill and Tradenames, Trademarks and Domain Names - Goodwill and Tradenames, Trademarks and Domain Names Activity (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Feb. 02, 2019 | Feb. 03, 2018 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Indefinite Lived Intangible Assets by Major Class | |||||
Beginning Balance | $ 124,379 | ||||
Impairment | $ (51,100) | ||||
Ending Balance | $ 124,379 | 124,367 | 124,379 | ||
Beginning Balance | 86,022 | ||||
Ending Balance | 86,022 | 86,022 | 86,022 | ||
RH Segment | |||||
Indefinite Lived Intangible Assets by Major Class | |||||
Beginning Balance | 124,379 | 124,448 | |||
Foreign Currency Translation | (12) | (69) | |||
Ending Balance | 124,379 | $ 124,448 | 124,367 | 124,379 | $ 124,448 |
Beginning Balance | 48,563 | 48,563 | |||
Ending Balance | 48,563 | 48,563 | 48,563 | 48,563 | 48,563 |
Waterworks | |||||
Indefinite Lived Intangible Assets by Major Class | |||||
Beginning Balance | 17,445 | 51,100 | |||
Impairment | (17,400) | (33,700) | (17,445) | (33,700) | |
Ending Balance | 17,445 | 17,445 | |||
Beginning Balance | 37,459 | 52,100 | |||
Impairment | (14,641) | ||||
Ending Balance | $ 37,459 | $ 52,100 | $ 37,459 | $ 37,459 | $ 52,100 |
Goodwill, Tradenames, Tradema_2
Goodwill, Tradenames, Trademarks and Domain Names - Narrative (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Feb. 02, 2019 | Feb. 03, 2018 | Feb. 02, 2019 | Feb. 03, 2018 | Feb. 01, 2020 | Jan. 28, 2017 | |
Finite Lived Intangible Assets | ||||||
Goodwill | $ 124,379 | $ 124,379 | $ 124,367 | |||
Goodwill impairment charge | 51,100 | |||||
Waterworks | ||||||
Finite Lived Intangible Assets | ||||||
Goodwill | $ 17,445 | $ 17,445 | $ 51,100 | |||
Goodwill impairment charge | $ 17,400 | $ 33,700 | 17,445 | $ 33,700 | ||
Tradename impairment charge | $ 14,641 |
Accounts Payable, Accrued Exp_3
Accounts Payable, Accrued Expenses and Other Current Liabilities - Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||
Accounts payable | $ 180,714 | $ 183,039 |
Accrued compensation | 64,659 | 64,192 |
Accrued freight and duty | 25,170 | 20,787 |
Accrued sales taxes | 19,618 | 18,354 |
Accrued occupancy | 12,067 | 10,839 |
Accrued catalog costs | 8,267 | 10,276 |
Accrued professional fees | 4,381 | 2,050 |
Other accrued expenses | 15,433 | 10,960 |
Total accounts payable and accrued expenses | $ 330,309 | $ 320,497 |
Accounts Payable, Accrued Exp_4
Accounts Payable, Accrued Expenses and Other Current Liabilities - Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 |
Accounts Payable, Accrued Expenses and Other Current Liabilities | ||||
Promissory note on asset under construction | $ 53,000 | |||
Current portion of debt | 22,009 | $ 892 | ||
Allowance for sales returns | 19,206 | 19,821 | $ 10,565 | $ 10,077 |
Unredeemed gift card and merchandise credit liability | 16,625 | 17,192 | ||
Federal and state taxes payable | 13,591 | 719 | ||
Finance lease liabilities | 9,188 | 9,184 | ||
Product recall reserves | 2,055 | 7,767 | ||
Other current liabilities | 5,040 | 3,881 | ||
Provision for legal settlement | 50,000 | |||
Total other current liabilities | $ 140,714 | $ 109,456 |
Other Non-Current Obligations_2
Other Non-Current Obligations (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Other Non-Current Obligations | ||
Notes payable for share repurchases | $ 18,741 | $ 18,741 |
Rollover units and profit interests | 3,064 | 2,637 |
Unrecognized tax benefits | 3,020 | 2,992 |
Deferred contract incentive | 595 | 2,976 |
Other non-current obligations | 3,100 | 5,166 |
Total other non-current obligations | $ 28,520 | $ 32,512 |
Other Non-Current Obligations -
Other Non-Current Obligations - Schedule Footnotes (Detail) | 12 Months Ended |
Feb. 01, 2020 | |
Other Non-Current Obligations | |
Incentive payment service agreement period | 5 years |
Leases - Narrative (Detail)
Leases - Narrative (Detail) | 12 Months Ended |
Feb. 01, 2020 | |
Lessee, Lease, Description | |
Renewal options, operating lease | true |
Renewal options, finance lease | true |
Renewal term, operating lease | 25 years |
Minimum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 10 years |
Maximum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 15 years |
Finance leased Equipment | Minimum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 3 years |
Finance leased Equipment | Maximum | |
Lessee, Lease, Description | |
Initial lease terms, operating lease | 7 years |
Leases - Lease Costs (Detail)
Leases - Lease Costs (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Lease costs: | |||
Operating lease cost | $ 86,448 | $ 87,742 | $ 95,499 |
Finance lease costs, Amortization of leased assets | 36,991 | 28,848 | 19,542 |
Finance lease costs, Interest on lease liabilities | 22,608 | 16,785 | 11,154 |
Variable lease costs | 23,471 | 21,889 | 23,280 |
Sublease income | (9,609) | (7,794) | (1,003) |
Total lease cost-net | 159,909 | 147,470 | 148,472 |
Variable lease payments | 14,600 | 13,000 | 13,800 |
Common area maintenance | $ 8,900 | $ 8,900 | $ 9,500 |
Leases - Lease Right-of-Use Ass
Leases - Lease Right-of-Use Assets and Lease Liabilities (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Assets and Liabilities, Lessee [Abstract] | ||
Operating leases | $ 410,904 | $ 440,504 |
Classification of operating leases right of use asset | us-gaap:OperatingLeaseRightOfUseAsset | us-gaap:OperatingLeaseRightOfUseAsset |
Finance leases | $ 642,117 | $ 646,875 |
Classification of finance leases | us-gaap:PropertyPlantAndEquipmentNet | |
Total lease right-of-use assets | $ 1,053,021 | 1,087,379 |
Operating leases, current | $ 58,924 | $ 66,249 |
Classification of operating leases current | us-gaap:OperatingLeaseLiabilityCurrent | us-gaap:OperatingLeaseLiabilityCurrent |
Finance leases, current | $ 9,188 | $ 9,184 |
Classification of finance leases, current | us-gaap:OtherLiabilitiesCurrent | us-gaap:OtherLiabilitiesCurrent |
Total lease liabilities-current | $ 68,112 | $ 75,433 |
Operating leases, noncurrent | $ 409,930 | $ 437,557 |
Classification of operating leases noncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent | us-gaap:OperatingLeaseLiabilityNoncurrent |
Finance leases, noncurrent | $ 442,988 | $ 421,245 |
Classification of finance leases, noncurrent | us-gaap:FinanceLeaseLiabilityNoncurrent | us-gaap:FinanceLeaseLiabilityNoncurrent |
Total lease liabilities-non-current | $ 852,918 | $ 858,802 |
Total lease liabilities | 921,030 | 934,235 |
Finance lease right-of-use assets, accumulated amortization | $ 92,300 | $ 55,500 |
Leases - Maturities of Lease Li
Leases - Maturities of Lease Liabilities (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 01, 2020 | Feb. 02, 2019 | |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2020 | $ 75,634 | |
2021 | 69,343 | |
2022 | 60,711 | |
2023 | 56,266 | |
2024 | 52,424 | |
Thereafter | 246,482 | |
Total lease payments | 560,860 | |
Less-imputed interest | (92,006) | |
Present value of lease liabilities | 468,854 | |
Finance Lease, Liability, Payment, Due [Abstract] | ||
2020 | 32,138 | |
2021 | 35,323 | |
2022 | 35,747 | |
2023 | 36,170 | |
2024 | 36,660 | |
Thereafter | 568,856 | |
Total lease payments | 744,894 | |
Less-imputed interest | (292,718) | |
Present value of lease liabilities | 452,176 | |
Operating And Finance Lease Liabilities, Payments, Due [Abstract] | ||
2020 | 107,772 | |
2021 | 104,666 | |
2022 | 96,458 | |
2023 | 92,436 | |
2024 | 89,084 | |
Thereafter | 815,338 | |
Total lease payments | 1,305,754 | |
Less-imputed interest | (384,724) | |
Present value of lease liabilities | 921,030 | $ 934,235 |
Legally binding payments for leases signed but not yet commenced | 360,900 | |
Future commitments under short-term lease agreements | $ 900 | |
Short-term lease agreements, commitments | true |
Leases - Supplemental Informati
Leases - Supplemental Information Related to Leases (Detail) | Feb. 01, 2020 | Feb. 02, 2019 |
Leases | ||
Operating leases, Weighted-average remaining lease term (years) | 8 years 10 months 24 days | 9 years 2 months 12 days |
Finance leases, Weighted-average remaining lease term (years) | 18 years 7 months 6 days | 19 years 7 months 6 days |
Operating leases, Weighted-average discount rate | 3.82% | 3.78% |
Finance leases, Weighted-average discount rate | 5.25% | 5.28% |
Leases - Other Information Rela
Leases - Other Information Related to Leases (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Leases | |||
Operating cash flows from operating leases | $ (95,329) | $ (91,965) | $ (95,279) |
Operating cash flows from finance leases | (25,260) | (16,785) | (11,154) |
Principal payments under finance leases | (9,682) | (6,885) | (6,105) |
Total cash outflows from leases | (130,271) | (115,635) | (112,538) |
Finance leases, Lease right-of-use assets obtained in exchange for lease obligations -net of lease terminations (non-cash) | 34,063 | 174,977 | 26,770 |
Operating leases, Lease right-of-use assets obtained in exchange for lease obligations -net of lease terminations (non-cash) | $ 42,122 | $ 33,790 | $ 33,710 |
Leases - Assets Held for Sale a
Leases - Assets Held for Sale and Sale-Leaseback Transaction (Detail) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |
Oct. 31, 2019 | Feb. 01, 2020 | Feb. 02, 2019 | |
Sale Leaseback Transaction [Line Items] | |||
Renewal term, operating lease | 25 years | ||
Sale-leaseback Transaction | Yountville Design Gallery | |||
Sale Leaseback Transaction [Line Items] | |||
Net gain (loss) related to the sale-leaseback transaction | $ 23.5 | ||
Operating Leaseback Arrangement | Yountville Design Gallery | |||
Sale Leaseback Transaction [Line Items] | |||
Initial lease terms, operating lease | 15 years | ||
Renewal term, operating lease | 30 years | ||
Selling, general and administrative expenses | Operating Leaseback Arrangement | Yountville Design Gallery | |||
Sale Leaseback Transaction [Line Items] | |||
Net gain (loss) related to the sale-leaseback transaction | $ 1.2 | ||
RH Segment | Yountville Design Gallery | |||
Sale Leaseback Transaction [Line Items] | |||
Impairment charges | $ 8.5 |
Convertible Senior Notes - Narr
Convertible Senior Notes - Narrative (Detail) | Sep. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2015 | Jun. 18, 2014USD ($)derivative$ / derivative | Sep. 30, 2019USD ($)item$ / sharesshares | Jun. 30, 2019USD ($)shares | Jun. 30, 2018USD ($)derivative$ / shares$ / derivativeshares | Jun. 30, 2015USD ($)derivative$ / shares$ / derivativeshares | Jun. 30, 2014USD ($)$ / shares | Feb. 01, 2020USD ($)$ / shares$ / derivativeshares | Feb. 02, 2019USD ($) | Feb. 03, 2018USD ($) | Dec. 31, 2017 | Aug. 01, 2015USD ($) | Jul. 31, 2015USD ($) |
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 350,000,000 | $ 350,000,000 | $ 350,000,000 | |||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, conversion principal amount | $ 1,000,000 | $ 1,000,000 | ||||||||||||
Conversion price per share | $ / shares | $ 211.40 | $ 211.40 | ||||||||||||
Discounts and commissions payable | 81,634,000 | |||||||||||||
Amortization of debt discount | 46,245,000 | $ 41,868,000 | $ 30,457,000 | |||||||||||
(Gain) Loss on extinguishment of debt | (6,472,000) | (917,000) | $ (4,880,000) | |||||||||||
Total cost of convertible note hedge transactions | 91,350,000 | 91,857,000 | ||||||||||||
Cash proceeds from sale of warrants | $ 50,225,000 | $ 51,021,000 | ||||||||||||
U.S. corporate income tax rate | 21.00% | 21.00% | 33.70% | 35.00% | ||||||||||
Maximum | ||||||||||||||
Debt default conditions | ||||||||||||||
U.S. corporate income tax rate | 35.00% | |||||||||||||
Convertible bond hedge and warrant transactions | ||||||||||||||
Debt default conditions | ||||||||||||||
Shares issued upon exercise of warrants | shares | 167,100 | |||||||||||||
Deferred tax asset | $ 22,700,000 | |||||||||||||
Convertible senior notes due 2024 | ||||||||||||||
Debt Instrument | ||||||||||||||
Aggregate principal amount | $ 350,000,000 | |||||||||||||
Debt default conditions | ||||||||||||||
Debt default, minimum aggregate principal amount | $ 20,000,000 | |||||||||||||
Default event, continual period after written notice is delivered | 30 days | |||||||||||||
Percentage of aggregate principal amount of notes outstanding | 25.00% | |||||||||||||
Debt instrument, initial conversion rate | 4.7304 | |||||||||||||
Premium on stock trigger price | 25.00% | 100.00% | ||||||||||||
Debt instrument, convertible, stock price trigger | $ / shares | $ 169.12 | $ 169.12 | ||||||||||||
Debt instrument, effective interest rate | 5.74% | 5.74% | ||||||||||||
Discounts and commissions payable | $ 3,500,000 | $ 3,500,000 | ||||||||||||
Third party offering costs | $ 1,300,000 | $ 1,300,000 | ||||||||||||
Amortization of debt issuance costs | $ 200,000 | |||||||||||||
Amortization of debt discount | 5,600,000 | |||||||||||||
Shares issued upon conversion | shares | 1,656,000 | |||||||||||||
Cash proceeds from sale of warrants | $ 304,100,000 | |||||||||||||
Deferred tax liability | $ 21,700,000 | |||||||||||||
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | ||||||||||||||
Debt default conditions | ||||||||||||||
Conversion price per share | $ / shares | $ 211.40 | $ 211.40 | ||||||||||||
Shares issued upon conversion | shares | 1,656,000 | |||||||||||||
Convertible note hedge, number of shares | 1,656,000 | 1,656,000 | ||||||||||||
Total cost of convertible note hedge transactions | $ 91,400,000 | |||||||||||||
Cash proceeds from sale of warrants | $ 50,200,000 | |||||||||||||
Warrants price per share | $ / shares | $ 338.24 | $ 338.24 | ||||||||||||
Convertible senior notes due 2024 | Convertible bond hedge and warrant transactions | Maximum | ||||||||||||||
Debt default conditions | ||||||||||||||
Warrants sold to purchase common stock | shares | 3,300,000 | 3,300,000 | ||||||||||||
Convertible senior notes due 2024 | Convertible debt instrument conversion period one | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible trading days | item | 20 | |||||||||||||
Debt instrument, convertible consecutive trading days | item | 30 | |||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | |||||||||||||
Convertible senior notes due 2024 | Convertible debt instrument conversion period two | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible trading days | item | 5 | |||||||||||||
Debt instrument, convertible consecutive trading days | item | 10 | |||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | |||||||||||||
Convertible senior notes due 2024 | Common Stock | ||||||||||||||
Debt default conditions | ||||||||||||||
Conversion price per share | $ / shares | $ 211.40 | |||||||||||||
Convertible senior notes due 2023 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 335,000,000 | $ 335,000,000 | ||||||||||||
Debt default conditions | ||||||||||||||
Debt default, minimum aggregate principal amount | $ 20,000,000 | |||||||||||||
Default event, continual period after written notice is delivered | 30 days | |||||||||||||
Percentage of aggregate principal amount of notes outstanding | 25.00% | |||||||||||||
Debt instrument, initial conversion rate | 100 | |||||||||||||
Debt instrument, conversion principal amount | $ 1,000,000 | |||||||||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | |||||||||||||
Debt instrument, effective interest rate | 6.35% | |||||||||||||
Discounts and commissions payable | $ 1,700,000 | 64,729,000 | 81,311,000 | |||||||||||
Third party offering costs | $ 4,600,000 | |||||||||||||
Amortization of debt issuance costs | 900,000 | 500,000 | ||||||||||||
Amortization of debt discount | $ 16,500,000 | 9,700,000 | ||||||||||||
Warrants sold to purchase common stock | shares | 1,730,000 | |||||||||||||
Cash proceeds from sale of warrants | $ 50,200,000 | $ 51,000,000 | ||||||||||||
Warrants price per share | $ / shares | $ 309.84 | |||||||||||||
Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | ||||||||||||||
Debt default conditions | ||||||||||||||
Conversion price per share | $ / shares | $ 309.84 | |||||||||||||
Convertible note hedge, number of shares | derivative | 1,730,000 | |||||||||||||
Convertible note hedge, price per share | $ / derivative | 193.65 | |||||||||||||
Convertible note hedge, description | the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 1.730 million shares of its common stock at a price of approximately $193.65 per share | |||||||||||||
Total cost of convertible note hedge transactions | $ 91,400,000 | $ 91,900,000 | ||||||||||||
Deferred tax liability | $ 22,300,000 | |||||||||||||
Deferred tax asset | $ 22,500,000 | |||||||||||||
Convertible senior notes due 2023 | Convertible bond hedge and warrant transactions | Warrants Subject to Certain Adjustment Mechanisms | Maximum | ||||||||||||||
Debt default conditions | ||||||||||||||
Warrants sold to purchase common stock | shares | 3,500,000 | |||||||||||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period one | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible trading days | 20 | |||||||||||||
Debt instrument, convertible consecutive trading days | 30 | |||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | |||||||||||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period two | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible trading days | 5 | |||||||||||||
Debt instrument, convertible consecutive trading days | 10 | |||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | |||||||||||||
Convertible senior notes due 2023 | Convertible debt instrument conversion period three | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible earliest date | Mar. 15, 2023 | |||||||||||||
Convertible senior notes due 2023 | Common Stock | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, initial conversion rate | 5.1640 | |||||||||||||
Debt instrument, conversion principal amount | $ 1,000 | |||||||||||||
Conversion price per share | $ / shares | $ 193.65 | $ 193.65 | ||||||||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2023 Notes is 5.1640 shares of common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $193.65 per share. | |||||||||||||
Convertible senior notes due 2020 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 300,000,000 | 300,000,000 | $ 300,000,000 | |||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, initial conversion rate | 100 | |||||||||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | |||||||||||||
Debt instrument, effective interest rate | 6.47% | |||||||||||||
Discounts and commissions payable | $ 3,800,000 | $ 8,890,000 | 27,081,000 | |||||||||||
Third party offering costs | $ 2,300,000 | |||||||||||||
Amortization of debt issuance costs | 1,200,000 | 1,100,000 | $ 1,000,000 | |||||||||||
Amortization of debt discount | $ 18,200,000 | 17,100,000 | 16,000,000 | |||||||||||
Warrants sold to purchase common stock | shares | 2,540,000 | |||||||||||||
Cash proceeds from sale of warrants | $ 30,400,000 | |||||||||||||
Warrants price per share | $ / shares | $ 189 | |||||||||||||
Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | ||||||||||||||
Debt default conditions | ||||||||||||||
Conversion price per share | $ / shares | $ 189 | |||||||||||||
Convertible note hedge, number of shares | derivative | 2,540,000 | |||||||||||||
Convertible note hedge, price per share | $ / derivative | 118.13 | |||||||||||||
Convertible note hedge, description | the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 2.540 million shares of its common stock at a price of approximately $118.13 per share. | |||||||||||||
Total cost of convertible note hedge transactions | $ 68,300,000 | |||||||||||||
Deferred tax liability | $ 32,800,000 | |||||||||||||
Deferred tax asset | $ 26,600,000 | |||||||||||||
Tax act, provisional income tax expense | (1,100,000) | |||||||||||||
Convertible senior notes due 2020 | Convertible bond hedge and warrant transactions | Warrants Subject to Certain Adjustment Mechanisms | Maximum | ||||||||||||||
Debt default conditions | ||||||||||||||
Warrants sold to purchase common stock | shares | 5,100,000 | |||||||||||||
Convertible senior notes due 2020 | Convertible debt instrument conversion period one | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible trading days | 20 | |||||||||||||
Debt instrument, convertible consecutive trading days | 30 | |||||||||||||
Debt instrument, convertible percentage of stock price | 130.00% | |||||||||||||
Convertible senior notes due 2020 | Convertible debt instrument conversion period two | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible trading days | 5 | |||||||||||||
Debt instrument, convertible consecutive trading days | 10 | |||||||||||||
Debt instrument, convertible percentage of stock price | 98.00% | |||||||||||||
Convertible senior notes due 2020 | Convertible debt instrument conversion period three | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, convertible earliest date | Mar. 15, 2020 | |||||||||||||
Convertible senior notes due 2020 | Common Stock | ||||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, initial conversion rate | 8.4656 | |||||||||||||
Debt instrument, conversion principal amount | $ 1,000 | |||||||||||||
Conversion price per share | $ / shares | $ 118.13 | $ 118.13 | ||||||||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2020 Notes is 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $118.13 per share. | |||||||||||||
Convertible senior notes due 2019 | ||||||||||||||
Debt Instrument | ||||||||||||||
Aggregate principal amount | $ 350,000,000 | |||||||||||||
Debt instrument, principal amount | $ 350,000,000 | 350,000,000 | ||||||||||||
Debt instrument, interest rate | 0.00% | |||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, effective interest rate | 4.51% | |||||||||||||
Discounts and commissions payable | $ 4,400,000 | 5,854,000 | ||||||||||||
Third party offering costs | 1,000,000 | |||||||||||||
Amortization of debt issuance costs | $ 400,000 | 900,000 | 900,000 | |||||||||||
Amortization of debt discount | 5,900,000 | $ 15,100,000 | 14,500,000 | |||||||||||
Debt amount settled in cash | $ 349,000,000 | |||||||||||||
Aggregate amounts outstanding | 0 | |||||||||||||
Shares issued upon conversion | shares | 42 | |||||||||||||
(Gain) Loss on extinguishment of debt | $ 1,000,000 | |||||||||||||
Convertible senior notes due 2019 | Convertible bond hedge and warrant transactions | ||||||||||||||
Debt default conditions | ||||||||||||||
Convertible note hedge, number of shares | derivative | 3,015,000 | |||||||||||||
Convertible note hedge, price per share | $ / derivative | 116.09 | 116.09 | ||||||||||||
Convertible note hedge, description | the Company entered into convertible note hedge transactions whereby the Company had the option to purchase a total of approximately 3.015 million shares of its common stock at a price of approximately $116.09 per share. | |||||||||||||
Total cost of convertible note hedge transactions | $ 73,300,000 | |||||||||||||
Warrants sold to purchase common stock | shares | 3,015,000 | |||||||||||||
Cash proceeds from sale of warrants | $ 40,400,000 | |||||||||||||
Warrants price per share | $ / shares | $ 171.98 | |||||||||||||
Deferred tax liability | $ 27,500,000 | |||||||||||||
Deferred tax asset | $ 28,600,000 | |||||||||||||
Tax act, provisional income tax expense | $ 100,000 | |||||||||||||
Convertible note hedge, overall price per share | $ / shares | $ 171.98 | |||||||||||||
Convertible senior notes due 2019 | Common Stock | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 1,000 | |||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, initial conversion rate | 8.6143 | |||||||||||||
Conversion price per share | $ / shares | $ 116.09 | $ 116.09 | ||||||||||||
Private Placement | Convertible senior notes due 2024 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, interest rate | 0.00% | 0.00% | ||||||||||||
Private Placement | Convertible senior notes due 2023 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 350,000,000 | $ 350,000,000 | $ 300,000,000 | |||||||||||
Debt instrument, interest rate | 0.00% | 0.00% | 0.00% | |||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, maturity date | Jun. 15, 2023 | |||||||||||||
Private Placement | Convertible senior notes due 2020 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 250,000,000 | |||||||||||||
Debt instrument, interest rate | 0.00% | |||||||||||||
Debt default conditions | ||||||||||||||
Debt instrument, maturity date | Jul. 15, 2020 | |||||||||||||
Over Allotment Option in Private Placement | Convertible senior notes due 2023 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 35,000,000 | |||||||||||||
Exercise of Over Allotment Option in Private Placement | Convertible senior notes due 2020 | ||||||||||||||
Debt Instrument | ||||||||||||||
Debt instrument, principal amount | $ 50,000,000 |
Convertible Senior Notes - Carr
Convertible Senior Notes - Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Sep. 30, 2019 | Feb. 02, 2019 | Jun. 30, 2018 | Aug. 01, 2015 | Jun. 30, 2015 |
Liability component | ||||||
Principal | $ 350,000 | $ 350,000 | ||||
Less: Debt discount | (81,634) | |||||
Net carrying amount | 268,366 | |||||
Equity component | 87,252 | |||||
Convertible senior notes due 2024 | ||||||
Liability component | ||||||
Less: Debt discount | $ (3,500) | |||||
Convertible senior notes due 2023 | ||||||
Liability component | ||||||
Principal | 335,000 | $ 335,000 | ||||
Less: Debt discount | (64,729) | (81,311) | $ (1,700) | |||
Net carrying amount | 270,271 | 253,689 | ||||
Equity component | 90,990 | 90,990 | ||||
Convertible senior notes due 2020 | ||||||
Liability component | ||||||
Principal | 300,000 | 300,000 | $ 300,000 | |||
Less: Debt discount | (8,890) | (27,081) | $ (3,800) | |||
Net carrying amount | 291,110 | 272,919 | ||||
Equity component | $ 84,003 | $ 84,003 |
Convertible Senior Notes - Ca_2
Convertible Senior Notes - Carrying Value of Notes Excluding the Discounts and Commissions Payable to the Initial Purchasers and Third Party Offering Costs (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Sep. 30, 2019 | Feb. 02, 2019 | Jun. 30, 2014 |
Liability component | ||||
Principal | $ 350,000 | $ 350,000 | ||
Less: Debt discount | (81,634) | |||
Net carrying amount | 268,366 | |||
Equity component | $ 87,252 | |||
Convertible senior notes due 2019 | ||||
Liability component | ||||
Principal | $ 350,000 | $ 350,000 | ||
Less: Debt discount | (5,854) | $ (4,400) | ||
Net carrying amount | 344,146 | |||
Equity component | $ 70,482 |
Credit Facilities - Credit Faci
Credit Facilities - Credit Facilities (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Line of Credit Facility | ||
Outstanding Amount | $ 53,372 | $ 57,500 |
Unamortized Debt Issuance Costs | (310) | |
Net Carrying Amount | 53,062 | 57,500 |
Asset based credit facility | ||
Line of Credit Facility | ||
Outstanding Amount | 57,500 | |
Net Carrying Amount | $ 57,500 | |
Equipment promissory notes | ||
Line of Credit Facility | ||
Outstanding Amount | 53,372 | |
Unamortized Debt Issuance Costs | (310) | |
Net Carrying Amount | $ 53,062 |
Credit Facilities - Narrative (
Credit Facilities - Narrative (Detail) - USD ($) | Sep. 20, 2019 | Apr. 10, 2019 | Apr. 04, 2019 | Jun. 28, 2017 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Nov. 23, 2018 |
Line of Credit Facility | ||||||||
Outstanding amount | $ 53,372,000 | $ 57,500,000 | ||||||
Availability under revolving line of credit for extensions of credit, percentage of sum of lesser of aggregate revolving commitments and aggregate revolving borrowing base plus lesser of outstanding LILO term loan or LILO term loan borrowing base | 10.00% | |||||||
Fixed charge coverage ratio, fixed amount available under revolving line of credit | $ 40,000,000 | |||||||
Availability under revolving line of credit for extensions of credit, fixed amount | $ 40,000,000 | |||||||
Fixed charge coverage ratio, percentage of sum of lesser of aggregate revolving commitments and aggregate revolving borrowing base plus lesser of outstanding LILO term loan or LILO term loan borrowing base | 10.00% | |||||||
Availability under revolving line of credit for extensions of credit, sweep cash to prepayment of loan description | The Credit Agreement requires a daily sweep of all cash receipts and collections to prepay the loans under the agreement while (i) an event of default exists or (ii) the availability under the revolving line of credit for extensions of credit is less than the greater of (A) $40.0 million and (B) 10% of the sum of (a) the lesser of (x) the aggregate revolving commitments under the Credit Agreement and (y) the aggregate revolving borrowing base, plus (b) the lesser of (x) the then outstanding amount of the LILO term loan or (y) the LILO term loan borrowing base | |||||||
Loss on extinguishment of debt-net | $ 6,472,000 | 917,000 | $ 4,880,000 | |||||
Outstanding revolving line of credit | $ 53,062,000 | 57,500,000 | ||||||
Restoration Hardware Canada, Inc. | ||||||||
Line of Credit Facility | ||||||||
Line of credit | $ 120,000,000 | |||||||
Interest rate greater than interest rate under the revolving credit facility | 1.25% | |||||||
Acceleration of amortization of debt issuance costs | $ 800,000 | |||||||
Credit Agreement | ||||||||
Line of Credit Facility | ||||||||
Agreement, date | Jun. 28, 2017 | |||||||
Credit Agreement | Maximum | ||||||||
Line of Credit Facility | ||||||||
Annual restricted payments | $ 3,000,000 | |||||||
Equipment Loan Facility | ||||||||
Line of Credit Facility | ||||||||
Aggregate amounts outstanding | $ 53,400,000 | |||||||
Weighted-average interest rate | 4.56% | |||||||
Equipment Loan Facility | Maximum | ||||||||
Line of Credit Facility | ||||||||
Maturity term | 4 years | |||||||
Equipment Loan Facility | Minimum | ||||||||
Line of Credit Facility | ||||||||
Maturity term | 3 years | |||||||
Asset based credit facility | ||||||||
Line of Credit Facility | ||||||||
Deferred financing fees | $ 2,600,000 | 3,400,000 | ||||||
Outstanding amount | 57,500,000 | |||||||
Repaid amount of loan | 380,000,000 | 1,008,970,000 | $ 400,030,000 | |||||
Outstanding revolving line of credit | 57,500,000 | |||||||
Revolving Credit Facility | ||||||||
Line of Credit Facility | ||||||||
Aggregate amounts outstanding | 0 | |||||||
Availability under the revolving line of credit | 321,700,000 | |||||||
Outstanding letters of credit | $ 13,200,000 | |||||||
Revolving Credit Facility | Credit Agreement | Scenario, Plan Subject to Satisfaction of Conditions | ||||||||
Line of Credit Facility | ||||||||
Increase in revolving line of credit | $ 200,000,000 | |||||||
Revolving Credit Facility | Credit Agreement | Maximum | ||||||||
Line of Credit Facility | ||||||||
Availability under the revolving line of credit | 600,000,000 | |||||||
Revolving Credit Facility | Credit Agreement | Maximum | Scenario, Plan Subject to Satisfaction of Conditions | ||||||||
Line of Credit Facility | ||||||||
Line of credit | 800,000,000 | |||||||
Revolving Credit Facility | Credit Agreement | Minimum | ||||||||
Line of Credit Facility | ||||||||
Line of credit | 600,000,000 | |||||||
Revolving Credit Facility | Credit Agreement | Restoration Hardware Canada, Inc. | ||||||||
Line of Credit Facility | ||||||||
Availability under the revolving line of credit | 10,000,000 | |||||||
LILO Term Loan Facility | ||||||||
Line of Credit Facility | ||||||||
Loss on extinguishment of debt-net | $ 500,000 | |||||||
LILO Term Loan Facility | Credit Agreement | ||||||||
Line of Credit Facility | ||||||||
Line of credit facility, maximum borrowing capacity | $ 80,000,000 | |||||||
Second lien term loan | ||||||||
Line of Credit Facility | ||||||||
Line of credit facility, maximum borrowing capacity | $ 200,000,000 | |||||||
Line of credit facility, maturity date | Apr. 9, 2024 | |||||||
Repaid amount of loan | $ 200,000,000 | |||||||
Loss on extinguishment of debt-net | 6,700,000 | |||||||
Prepayment penalty | 4,000,000 | |||||||
Amortization of debt issuance costs | $ 2,700,000 | |||||||
Interest rate description | annual rate generally based on LIBOR plus 6.50% | |||||||
Debt instrument, basis spread on variable rate | 6.50% | |||||||
Variable interest rate description | one-month LIBOR plus 6.50% | |||||||
Equipment promissory notes | ||||||||
Line of Credit Facility | ||||||||
2021 | $ 23,000,000 | |||||||
2022 | 7,900,000 | |||||||
2023 | 500,000 | |||||||
Outstanding amount | 53,372,000 | |||||||
Outstanding revolving line of credit | 53,062,000 | |||||||
Equipment promissory notes | Other current liabilities | ||||||||
Line of Credit Facility | ||||||||
Aggregate amounts outstanding | 22,000,000 | |||||||
Equipment promissory notes | Other non-current obligations | ||||||||
Line of Credit Facility | ||||||||
Aggregate amounts outstanding | $ 31,400,000 |
Fair Value Measurements - Estim
Fair Value Measurements - Estimated Fair Value and Carrying Value of Notes (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 |
Convertible senior notes due 2019 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | $ 334,756 | |
Convertible senior notes, Carrying Value | 344,146 | |
Convertible senior notes due 2020 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | $ 295,573 | 260,258 |
Convertible senior notes, Carrying Value | 291,110 | 272,919 |
Convertible senior notes due 2023 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | 272,623 | 230,684 |
Convertible senior notes, Carrying Value | 270,271 | $ 253,689 |
Convertible senior notes due 2024 | ||
Fair Value Balance Sheet Grouping Financial Statement Captions | ||
Convertible senior notes, Fair Value | 255,849 | |
Convertible senior notes, Carrying Value | $ 268,366 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Detail) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Oct. 31, 2017 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Dec. 31, 2017 | |
Income tax expense | $ 48,807 | $ 25,233 | $ 25,132 | ||
Effective income tax rate | 18.10% | 15.70% | 111.50% | ||
U.S. corporate income tax rate | 21.00% | 21.00% | 33.70% | 35.00% | |
Tax act, provisional income tax expense, remeasurement of net deferred tax assets | $ 6,100 | ||||
Tax Cuts and Jobs Act, Incomplete Accounting, Change in Tax Rate, Deferred Tax Asset, Provisional Income Tax Expense | 6,100 | ||||
Tax Cuts and Jobs Act, Income Tax Expense (Benefit) | $ 500 | ||||
Tax act, income tax expense, decrease in remeasurement of net deferred tax assets | (500) | ||||
Tax act, cumulative impact to income tax expense for remeasurement of deferred tax assets and liabilities | 6,600 | 6,600 | |||
Tax act, provisional income tax expense, of transition tax | 1,000 | ||||
Tax act, cumulative impact to provisional income tax expense, of transition tax | $ 1,000 | ||||
State net operating loss carryovers | $ 6,500 | ||||
Equity Method Investment, Ownership Percentage | 50.00% | ||||
Foreign net operating loss carryovers | $ 8,200 | ||||
Expiration of federal and state net operating loss carryovers | The state net operating loss carryovers will begin to expire in 2022, and the foreign net operating loss carryovers will begin to expire in 2023. | ||||
Valuation allowances retained against deferred tax assets | $ 1,007 | 1,623 | 1,190 | ||
Unrecognized tax benefits | 8,500 | ||||
Tax expense and the effective tax rate, if recognized | 7,800 | ||||
Amended federal tax return claiming refund | $ 5,400 | ||||
Income tax benefit from amended tax return | 0 | 0 | $ 0 | ||
Exposures related to unrecognized tax benefits | 6,300 | ||||
Unrecognized Tax Benefits, Income Tax Penalties and Interest Accrued | $ 500 | 500 | |||
Tax year open to examination in United States and various states and foreign jurisdictions | 2015 2016 2017 2018 | ||||
Period of unrecognized tax benefits change | 12 years | ||||
State And Foreign Country | |||||
Valuation allowances retained against deferred tax assets | $ 1,000 | $ 1,600 |
Income Taxes - Income Before In
Income Taxes - Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Income Taxes | |||
Domestic | $ 267,538 | $ 157,827 | $ 21,241 |
Foreign | 1,644 | 3,137 | 1,292 |
Income before income taxes | $ 269,182 | $ 160,964 | $ 22,533 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Current | |||
Current, Federal | $ 45,985 | $ 24,012 | $ 18,593 |
Current, State | 10,806 | 6,275 | 2,761 |
Current, Foreign | 403 | 1,270 | 933 |
Total current tax expense | 57,194 | 31,557 | 22,287 |
Deferred | |||
Deferred, Federal | (7,173) | (4,428) | 3,692 |
Deferred, State | (1,477) | (2,049) | (844) |
Deferred, Foreign | 263 | 153 | (3) |
Total deferred tax expense (benefit) | (8,387) | (6,324) | 2,845 |
Income Tax Expense (Benefit), Total | $ 48,807 | $ 25,233 | $ 25,132 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of Federal Statutory Tax Rate to Company's Effective Tax Rate (Detail) | 12 Months Ended | |||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Dec. 31, 2017 | |
Income Tax Contingency [Line Items] | ||||
U.S. corporate income tax rate | 21.00% | 21.00% | 33.70% | 35.00% |
State income taxes-net of federal tax impact | 2.50% | 1.70% | 4.70% | |
Meals and entertainment | 0.10% | 0.30% | 1.90% | |
Tax rate adjustments | 0.20% | 0.10% | (0.80%) | |
Aircraft expenses | 0.10% | 0.10% | 4.80% | |
Stock compensation-excess benefits | (6.60%) | (9.90%) | (27.90%) | |
Goodwill impairment | 1.80% | 23.90% | ||
Valuation allowance | 27.40% | |||
Non-deductible stock-based compensation | 4.40% | |||
Federal statutory tax rate change | 1.90% | |||
Foreign income inclusion-transition tax | 0.30% | 1.50% | ||
Net adjustments to tax accruals and other | 35.70% | |||
Foreign income | (0.20%) | |||
Donation of appreciated property | (1.30%) | |||
Other permanent items | 0.80% | 0.30% | 1.80% | |
Effective Income Tax Rate Reconciliation, Percent, Total | 18.10% | 15.70% | 111.50% | |
Maximum | ||||
Income Tax Contingency [Line Items] | ||||
U.S. corporate income tax rate | 35.00% |
Income Taxes - Components of De
Income Taxes - Components of Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 |
Non-current deferred tax assets (liabilities) | |||
Lease liabilities | $ 249,243 | $ 253,826 | |
Stock-based compensation | 22,400 | 22,721 | |
Accrued expense | 21,362 | 16,657 | |
Merchandise inventories | 8,028 | 14,735 | |
Deferred lease credits | 6,395 | 1,188 | |
Deferred revenue | 2,235 | ||
Net operating loss carryforwards | 1,763 | 1,654 | |
convertible senior notes | 717 | ||
Other | 1,846 | 2,591 | |
Non-current deferred tax assets | 313,989 | 313,372 | |
Valuation allowance | (1,007) | (1,623) | $ (1,190) |
Net non-current deferred tax assets | 312,982 | 311,749 | |
Property and equipment | (137,448) | (137,240) | |
Lease right-of-use assets | (110,075) | (118,549) | |
Tradenames, trademarks and intangibles | (13,026) | (12,386) | |
Prepaid expense and other | (4,882) | (4,209) | |
State tax benefit | (2,546) | (2,556) | |
Convertible senior notes | (1,054) | ||
Deferred revenue | (152) | ||
Non-current deferred tax assets | (267,977) | (276,146) | |
Total net non-current deferred tax assets | 45,005 | 35,603 | |
State And Foreign Country | |||
Non-current deferred tax assets (liabilities) | |||
Valuation allowance | $ (1,000) | $ (1,600) |
Income Taxes - Reconciliation_2
Income Taxes - Reconciliation of Valuation Allowance (Detail) - USD ($) $ in Thousands | 12 Months Ended | |
Feb. 01, 2020 | Feb. 02, 2019 | |
Income Taxes | ||
Balance at beginning of fiscal year | $ 1,623 | $ 1,190 |
Net changes in deferred tax assets and liabilities | (616) | 433 |
Balance at end of fiscal year | $ 1,007 | $ 1,623 |
Income Taxes - Reconciliation_3
Income Taxes - Reconciliation of Unrecognized Tax Benefits (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Income Taxes | |||
Balance at beginning of fiscal year | $ 8,459 | $ 8,152 | $ 2,190 |
Gross increases-prior period tax positions | 239 | 5,491 | |
Gross decreases-prior period tax positions | (2) | ||
Gross increases-current period tax positions | 438 | 375 | 471 |
Lapses in statute of limitations | (381) | (307) | |
Balance at end of fiscal year | $ 8,514 | $ 8,459 | $ 8,152 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Weighted-Average Shares Used for Net Income per Share (Detail) - shares | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 01, 2020 | Nov. 02, 2019 | Aug. 03, 2019 | May 04, 2019 | Feb. 02, 2019 | Nov. 03, 2018 | Aug. 04, 2018 | May 05, 2018 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Net Income (Loss) Per Share | |||||||||||
Weighted-average shares-basic | 19,120,709 | 18,765,769 | 18,465,876 | 19,976,858 | 20,901,841 | 22,082,141 | 21,925,702 | 21,545,025 | 19,082,303 | 21,613,678 | 27,053,616 |
Effect of dilutive stock-based awards | 4,554,682 | 4,567,303 | |||||||||
Effect of dilutive convertible senior notes | 662,049 | 352,244 | |||||||||
Weighted-average shares-diluted | 25,767,864 | 24,170,172 | 22,324,112 | 24,933,987 | 25,702,791 | 27,703,319 | 27,496,561 | 25,230,228 | 24,299,034 | 26,533,225 | 27,053,616 |
Net Income (Loss) Per Share -_2
Net Income (Loss) Per Share - Schedule of Weighted-Average Shares Used for Net Income per Share Footnotes (Detail) - $ / shares | Feb. 01, 2020 | Sep. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2015 | Jun. 30, 2014 |
Earnings Per Share Diluted | |||||
Conversion price per share | $ 211.40 | ||||
Convertible senior notes due 2019 | Common Stock | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | $ 116.09 | $ 116.09 | |||
Convertible senior notes due 2020 | Common Stock | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | 118.13 | $ 118.13 | |||
Convertible senior notes due 2023 | Common Stock | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | 193.65 | $ 193.65 | |||
Convertible senior notes due 2024 | Common Stock | |||||
Earnings Per Share Diluted | |||||
Conversion price per share | $ 211.40 |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Anti-Dilutive Securities Excluded from Diluted Net Income per Share (Detail) - shares | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 360,496 | 353,770 | 3,124,779 |
Stock Options | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 360,496 | 351,145 | 2,895,471 |
Restricted Stock Units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share | |||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 2,625 | 229,308 |
Share Repurchases and Share R_2
Share Repurchases and Share Retirements (Detail) $ / shares in Units, $ in Thousands, $ in Millions | 12 Months Ended | |||||||
Feb. 01, 2020USD ($)$ / sharesshares | Feb. 02, 2019USD ($)$ / sharesshares | Feb. 03, 2018CAD ($)shares | Feb. 03, 2018USD ($)$ / sharesshares | May 25, 2019USD ($) | Oct. 10, 2018USD ($) | May 02, 2017USD ($) | Feb. 21, 2017USD ($) | |
Share Repurchase Program and Equity Plans | ||||||||
Shares of common stock purchased under repurchase program | $ 250,032 | $ 250,243 | $ 1,000,328 | |||||
Treasury stock, shares retired | shares | 294,888 | 294,888 | ||||||
Treasury stock reclassified, amount | 250,300 | 1,250,300 | ||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,741 | 18,741 | ||||||
Additional Paid-In Capital | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock reclassified, amount | 13,180 | 591,519 | $ 19,523 | |||||
Retained Earnings (Accumulated Deficit) | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Treasury stock reclassified, amount | 237,091 | $ 658,807 | ||||||
Fiscal 2019 $950 repurchase Program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | $ 950,000 | |||||||
Shares of common stock purchased under repurchase program, shares | shares | 2,200,000 | |||||||
Shares of common stock purchased at an average price per share under repurchase program | $ / shares | $ 115.36 | |||||||
Shares of common stock purchased under repurchase program | $ 250,000 | |||||||
Treasury stock, shares retired | shares | 2,170,154 | |||||||
Amount of shares available under repurchase program | $ 450,000 | |||||||
Fiscal 2018 $700 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Shares of common stock purchased under repurchase program, shares | shares | 2,000,000 | |||||||
Shares of common stock purchased at an average price per share under repurchase program | $ / shares | $ 122.10 | |||||||
Shares of common stock purchased under repurchase program | $ 250,000 | |||||||
Treasury stock, shares retired | shares | 22,267,711 | |||||||
Fiscal 2017 $700 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | 700,000 | $ 700,000 | ||||||
Shares of common stock purchased under repurchase program, shares | shares | 12,400,000 | 12,400,000 | ||||||
Shares of common stock purchased at an average price per share under repurchase program | $ / shares | $ 56.60 | |||||||
Shares of common stock purchased under repurchase program | $ 700 | |||||||
Fiscal 2017 $300 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | 300,000 | $ 300,000 | ||||||
Shares of common stock purchased under repurchase program, shares | shares | 7,800,000 | 7,800,000 | ||||||
Shares of common stock purchased at an average price per share under repurchase program | $ / shares | $ 38.24 | |||||||
Shares of common stock purchased under repurchase program | $ 300,000 | |||||||
Share repurchases under equity plans | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,700 | $ 19,600 | ||||||
Interest expense related to notes payable for share repurchases | 900 | 1,000 | $ 1,000 | |||||
Share repurchases under equity plans | Other current liabilities | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 900 | |||||||
Share repurchases under equity plans | Other non-current obligations | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Aggregate unpaid principal amount of notes payable for share repurchases | 18,700 | 18,700 | ||||||
Board of Directors (CEO) | Fiscal 2019 $950 repurchase Program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | 950,000 | $ 950,000 | ||||||
Board of Directors (CEO) | Maximum | Fiscal 2018 $700 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | 700,000 | $ 700,000 | ||||||
Board of Directors (CEO) | Maximum | Fiscal 2017 $700 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | 700,000 | $ 700,000 | ||||||
Board of Directors (CEO) | Maximum | Fiscal 2017 $300 million repurchase program | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Share repurchase program authorized amount | $ 300,000 | |||||||
Director | Share repurchases under equity plans | ||||||||
Share Repurchase Program and Equity Plans | ||||||||
Aggregate unpaid principal amount of notes payable for share repurchases | $ 15,500 | $ 15,500 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Detail) - USD ($) | Mar. 03, 2020 | Feb. 04, 2019 | May 02, 2017 | Nov. 01, 2012 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 |
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | $ 21,832,000 | $ 23,983,000 | $ 50,709,000 | ||||
Stock-based compensation cost capitalized | 0 | 0 | 0 | ||||
Rollover units and profit interests | 3,064,000 | 2,637,000 | |||||
Selling, general and administrative expenses | $ 732,180,000 | 723,841,000 | 722,183,000 | ||||
Design Investors WW Acquisition Company, LLC | Profit interests | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Profit interest expected life | 5 years | ||||||
Selling, general and administrative expenses | $ 500,000 | 400,000 | 400,000 | ||||
Design Investors WW Acquisition Company, LLC | Profit interests | Other non-current obligations | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Liability associated with the profit interests | $ 1,600,000 | 1,100,000 | |||||
Chairman and chief executive officer | Stock Options | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | 37,500,000 | ||||||
Stock Options | Chairman and chief executive officer | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 1,000,000 | ||||||
Exercise price of option granted | $ 50 | ||||||
Time based restricted | Chairman and chief executive officer | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Number of share lapse per year | 250,000 | ||||||
Time based restricted | Chairman and chief executive officer | Stock Options | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option vesting period | 4 years | ||||||
Performance based restricted | Chairman and chief executive officer | Stock Options | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Expected vested exercise price description | performance-based restrictions linked to achieving the Company’s common stock price objectives of $100, $125 and $150 per share. | ||||||
Appreciation rights | Design Investors WW Acquisition Company, LLC | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Rollover units and profit interests | $ 1,500,000 | 1,500,000 | |||||
Appreciation rights | Design Investors WW Acquisition Company, LLC | Rollover Units | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | 0 | 0 | 0 | ||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Officer | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 6,829,041 | ||||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Stock Options | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | $ 14,000,000 | $ 13,600,000 | 37,500,000 | ||||
Outstanding shares | 7,134,735 | 7,499,416 | |||||
Options outstanding, weighted-average exercise price per share | $ 58.34 | $ 54.37 | |||||
Aggregate intrinsic value of options outstanding | $ 1,073,500,000 | ||||||
Aggregate intrinsic value of options vested or expected to vest | 1,035,600,000 | ||||||
Aggregate intrinsic value of options exercisable | $ 891,500,000 | ||||||
Weighted-average remaining contractual life of options exercisable | 4 years 1 month 6 days | ||||||
Unrecognized compensation expense related to unvested options | $ 35,500,000 | ||||||
Unrecognized compensation expense with weighted-average period | 3 years 1 month 17 days | ||||||
Option to purchase of common stock | 534,050 | ||||||
Exercise price of option granted | $ 110.17 | ||||||
2012 Stock Incentive Plan and 2012 Stock Option Plan | Stock Options | Chairman and chief executive officer | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | 23,900,000 | ||||||
2012 Stock Incentive Plan | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 1,829,108 | 1,419,552 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 384,734 | 409,556 | 1,630,107 | ||||
2012 Stock Incentive Plan | Restricted stock and restricted stock unit | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | $ 7,300,000 | $ 10,000,000 | $ 12,800,000 | ||||
Unrecognized compensation expense with weighted-average period | 1 year 5 months 19 days | ||||||
Outstanding shares | 219,985 | 415,469 | |||||
Restricted stock awards outstanding with weighted-average grant date fair value per share | $ 49 | $ 52.40 | |||||
Vested restricted stock unit | 176,508 | ||||||
Weighted-average fair value per share of awards granted | $ 129.21 | $ 111.38 | $ 55.31 | ||||
Weighted-average Grant Date Fair Value, Released | $ 59.61 | ||||||
Unrecognized compensation expense related to unvested options | $ 5,500,000 | ||||||
Time-Based Restrictions and Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Stock-based compensation expense | $ 23,900,000 | ||||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Common stock, lapse description | The stock price objectives are measured each year and are set at prices for the Company’s common stock of $100, $125 and $150 per share. If all three stock price objectives are met in the first performance year, restrictions will lapse as to 250,000 shares in aggregate at the end of such year, with 83,333 shares tied to a $100 price per share, 83,333 shares tied to a $125 price per share and 83,334 shares tied to a $150 price per share. | ||||||
Profit interest expected life | 8 years | ||||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | Price Objective 1 | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 83,333 | ||||||
Exercise price of option granted | $ 100 | $ 100 | |||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | Price Objective 2 | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 83,333 | ||||||
Exercise price of option granted | $ 125 | 125 | |||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | Price Objective 3 | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 83,334 | ||||||
Exercise price of option granted | $ 150 | $ 150 | |||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | First performance year | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance years | 1 year | ||||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | Second performance year | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | Third performance year | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance-Based Restrictions | Chairman and chief executive officer | Stock Options | Fourth performance year | |||||||
Share Based Compensation Arrangement By Share Based Payment Award | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance years | 4 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Detail) - 2012 Stock Incentive Plan and 2012 Stock Option Plan - Stock Options | 12 Months Ended |
Feb. 01, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Beginning Balance | shares | 7,499,416 |
Options, Granted | shares | 534,050 |
Options, Exercised | shares | (643,090) |
Options, Cancelled | shares | (255,641) |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance | shares | 7,134,735 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Beginning Balance | $ / shares | $ 54.37 |
Weighted-Average Exercise Price, Granted | $ / shares | 110.17 |
Weighted-Average Exercise Price, Exercised | $ / shares | 42.20 |
Weighted-Average Exercise Price, Cancelled | $ / shares | 90.88 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price, Ending Balance | $ / shares | $ 58.34 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used to Estimate Fair Value of Stock Options Issued (Detail) | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Stock-Based Compensation. | |||
Expected volatility | 55.70% | 54.70% | 48.30% |
Expected life (years) | 7 years 1 month 6 days | 6 years 8 months 12 days | 9 years 3 months 18 days |
Risk-free interest rate | 2.30% | 2.90% | 2.20% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information about Stock Options (Detail) - Stock Options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Weighted-average fair value per share of stock options granted | $ 63.35 | $ 69.60 | $ 24.24 |
Aggregate intrinsic value of stock options exercised | $ 82,718 | $ 77,311 | $ 27,362 |
Fair value of stock options vested | $ 11,816 | $ 13,915 | $ 38,402 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Options Outstanding, Vested or Expected to Vest, and Exercisable (Detail) - Stock Options | 12 Months Ended |
Feb. 01, 2020$ / sharesshares | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 7,134,735 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 4 years 9 months |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 58.34 |
Options Exercisable, Number of Options | shares | 5,733,710 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 53.27 |
Vested or expected to vest, Number of Options | shares | 6,819,795 |
Vested or expected to vest, Weighted-Average Exercise Price | $ / shares | $ 56.93 |
Range of Exercise Prices $25.39 - $44.52 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 1,011,010 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 6 years 29 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 35.59 |
Options Exercisable, Number of Options | shares | 431,410 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 34.70 |
Range of Exercise Prices $45.21 - $45.82 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 2,876,826 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 2 years 9 months |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 46.50 |
Options Exercisable, Number of Options | shares | 2,876,826 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 46.50 |
Range of Exercise Prices $46.50 - $46.50 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 1,294,395 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 6 years 7 months 20 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 52.47 |
Options Exercisable, Number of Options | shares | 1,270,635 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 52.38 |
Range of Exercise Prices $47.53 - $61.30 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 1,160,604 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 3 years 8 months 4 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 77.21 |
Options Exercisable, Number of Options | shares | 1,101,689 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 76.67 |
Range of Exercise Prices $64.65 - $90.92 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 781,900 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 8 years 9 months 14 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 110.66 |
Options Exercisable, Number of Options | shares | 53,150 |
Options Exercisable, Weighted-Average Exercise Price | $ / shares | $ 107.11 |
Range of Exercise Prices $91.69 - $159.00 [Member] | |
Share Based Compensation Arrangement By Share Based Payment Award | |
Options Outstanding, Number of Options | shares | 10,000 |
Options Outstanding, Weighted-Average Remaining Contractual Life (in years) | 9 years 10 months 2 days |
Options Outstanding, Weighted-Average Exercise Price | $ / shares | $ 241.97 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Award Activity (Detail) - Restricted stock and restricted stock unit - 2012 Stock Incentive Plan - USD ($) | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Awards, Outstanding - Beginning balance | 415,469 | ||
Awards, Granted | 7,014 | ||
Awards, Released | (176,508) | ||
Awards, Cancelled | (25,990) | ||
Awards, Outstanding - Ending balance | 219,985 | 415,469 | |
Weighted-Average Grant Date Fair Value, Outstanding - Beginning balance | $ 52.40 | ||
Weighted-Average Grant Date Fair Value, Granted | 129.21 | $ 111.38 | $ 55.31 |
Weighted-average Grant Date Fair Value, Released | 59.61 | ||
Weighted-Average Grant Date Fair Value, Cancelled | 53.05 | ||
Weighted-Average Grant Date Fair Value, Outstanding - Ending balance | $ 49 | $ 52.40 | |
Intrinsic Value, Outstanding | $ 45,921,869 |
Stock-Based Compensation - Ad_2
Stock-Based Compensation - Additional Information about Restricted Stock Awards (Detail) - 2012 Stock Incentive Plan - Restricted stock and restricted stock unit - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award | |||
Weighted-average fair value per share of awards granted | $ 129.21 | $ 111.38 | $ 55.31 |
Grant date fair value of awards released | $ 10,522 | $ 11,477 | $ 16,839 |
Employee Benefit Plans (Detail)
Employee Benefit Plans (Detail) | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Compensation And Retirement Disclosure [Abstract] | |||
Employee's contribution to 401(k) plan | 50.00% | ||
Employer's contribution to 401(k) plan | 0.00% | 0.00% | 0.00% |
Commitments and Contingencies (
Commitments and Contingencies (Detail) | Mar. 21, 2019USD ($) | Feb. 01, 2020USD ($) | Feb. 02, 2019USD ($) | Apr. 26, 2017action |
Loss Contingencies | ||||
Material off balance sheet commitments | $ 0 | |||
Number of actions consolidated | action | 2 | |||
Aggregate settlement amount | $ 50,000,000 | |||
Provision for legal settlement | $ 50,000,000 | |||
Litigation insurance recovery receivable | 50,000,000 | |||
Other current liabilities | ||||
Loss Contingencies | ||||
Provision for legal settlement | 50,000,000 | |||
Prepaid expenses and other current assets | ||||
Loss Contingencies | ||||
Litigation insurance recovery receivable | $ 50,000,000 |
Segment Reporting - Narrative (
Segment Reporting - Narrative (Detail) | 12 Months Ended | ||
Feb. 01, 2020segmentstorecustomer | Feb. 02, 2019customer | Feb. 03, 2018customer | |
Segment Reporting Information | |||
Number of operating segments | segment | 2 | ||
Number of RH outlet stores | 38 | ||
Number of customers accounted for more than 10% of Company's revenues | customer | 0 | 0 | 0 |
Sales | Customer concentration risk | |||
Segment Reporting Information | |||
Portion of specified customers portion in total revenues | 10.00% | 10.00% | 10.00% |
Canada | |||
Segment Reporting Information | |||
Number of retail stores | 4 | ||
Number of RH outlet stores | 2 | ||
U.K | |||
Segment Reporting Information | |||
Number of retail stores | 1 |
Segment Reporting - Statements
Segment Reporting - Statements of Operations Metrics Reviewed by CODM to Evaluate Performance Internally or as Required under ASC 280 (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 01, 2020 | Nov. 02, 2019 | Aug. 03, 2019 | May 04, 2019 | Feb. 02, 2019 | Nov. 03, 2018 | Aug. 04, 2018 | May 05, 2018 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information | |||||||||||
Net revenues | $ 2,647,437 | $ 2,505,653 | $ 2,440,174 | ||||||||
Gross profit | $ 283,073 | $ 284,166 | $ 294,958 | $ 232,814 | $ 257,879 | $ 250,021 | $ 268,344 | $ 209,333 | 1,095,011 | 985,577 | 839,298 |
Depreciation and amortization | 100,739 | 91,372 | 83,176 | ||||||||
RH Segment | |||||||||||
Segment Reporting Information | |||||||||||
Net revenues | 2,514,296 | 2,375,472 | 2,319,332 | ||||||||
Gross profit | 1,038,722 | 933,805 | 791,730 | ||||||||
Depreciation and amortization | 96,148 | 86,719 | 78,772 | ||||||||
Waterworks | |||||||||||
Segment Reporting Information | |||||||||||
Net revenues | 133,141 | 130,181 | 120,842 | ||||||||
Gross profit | 56,289 | 51,772 | 47,568 | ||||||||
Depreciation and amortization | $ 4,591 | $ 4,653 | $ 4,404 |
Segment Reporting - Balance She
Segment Reporting - Balance Sheet Metrics as Required Under ASC 280 (Detail) - USD ($) $ in Thousands | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | Jan. 28, 2017 |
Segment Reporting Information | ||||
Goodwill | $ 124,367 | $ 124,379 | ||
Trademarks and domain names | 86,022 | 86,022 | ||
Total assets | 2,445,694 | 2,423,018 | ||
RH Segment | ||||
Segment Reporting Information | ||||
Goodwill | 124,367 | 124,379 | $ 124,448 | |
Trademarks and domain names | 48,563 | 48,563 | 48,563 | |
Total assets | 2,301,823 | 2,273,951 | ||
Waterworks | ||||
Segment Reporting Information | ||||
Goodwill | 17,445 | $ 51,100 | ||
Trademarks and domain names | 37,459 | 37,459 | $ 52,100 | |
Total assets | $ 143,871 | $ 149,067 |
Segment Reporting - Balance S_2
Segment Reporting - Balance Sheet Metrics as Required Under ASC 280 Footnotes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Feb. 02, 2019 | Feb. 03, 2018 | Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information | ||||
Goodwill impairment | $ 51,100 | |||
Waterworks | ||||
Segment Reporting Information | ||||
Goodwill impairment | $ 17,400 | $ 33,700 | 17,445 | $ 33,700 |
Tradename impairment charge | $ 14,641 |
Segment Reporting - Segment Ope
Segment Reporting - Segment Operating Income and Income Before Income Taxes (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information | |||
Income from operations | $ 362,831 | $ 261,736 | $ 117,115 |
Asset impairments and lease losses | (21,899) | (7,218) | (4,417) |
Reorganization related costs | (1,075) | (9,977) | (949) |
Recall accrual | (3,988) | 1,619 | 7,707 |
Asset held for sale gain (loss) | (1,529) | 8,497 | |
Legal settlements | 1,193 | 5,289 | |
Distribution center closures | 3,046 | 7,230 | |
Impact of inventory step-up | (380) | (2,527) | |
Executive non-cash compensation | (23,872) | ||
Anti-dumping exposure | 2,202 | ||
Gain on sale of building and land | 2,119 | ||
Interest expense-net | 87,177 | 67,769 | 56,002 |
Goodwill And Tradename Impairment | 32,086 | 33,700 | |
Loss on extinguishment of debt-net | 6,472 | 917 | 4,880 |
Income before income taxes | 269,182 | 160,964 | 22,533 |
Operating segments | RH Segment | |||
Segment Reporting Information | |||
Income from operations | 375,315 | 288,106 | 161,111 |
Operating segments | Waterworks | |||
Segment Reporting Information | |||
Income from operations | $ 3,780 | $ (922) | $ (1,615) |
Segment Reporting - Net Revenue
Segment Reporting - Net Revenues, Categories (Detail) - USD ($) $ in Thousands | 12 Months Ended | ||
Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Segment Reporting Information | |||
Total net revenues | $ 2,647,437 | $ 2,505,653 | $ 2,440,174 |
Furniture | |||
Segment Reporting Information | |||
Total net revenues | 1,794,317 | 1,625,553 | 1,543,404 |
Non-furniture | |||
Segment Reporting Information | |||
Total net revenues | $ 853,120 | $ 880,100 | $ 896,770 |
Subsequent Event (Detail)
Subsequent Event (Detail) - USD ($) | Mar. 27, 2020 | Feb. 01, 2020 | Sep. 30, 2019 | Feb. 02, 2019 | Nov. 23, 2018 | Jun. 28, 2017 | Aug. 01, 2015 |
Subsequent Event [Line Items] | |||||||
Principal | $ 350,000,000 | $ 350,000,000 | |||||
Outstanding amount | 53,372,000 | $ 57,500,000 | |||||
Convertible senior notes due 2020 | |||||||
Subsequent Event [Line Items] | |||||||
Principal | 300,000,000 | 300,000,000 | $ 300,000,000 | ||||
Credit Agreement | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Outstanding amount | $ 35,000,000 | ||||||
Maximum | Credit Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Annual restricted payments | $ 3,000,000 | ||||||
Asset based credit facility | |||||||
Subsequent Event [Line Items] | |||||||
Outstanding amount | $ 57,500,000 | ||||||
Revolving Credit Facility | |||||||
Subsequent Event [Line Items] | |||||||
Availability under the revolving line of credit | 321,700,000 | ||||||
Outstanding letters of credit | $ 13,200,000 | ||||||
Revolving Credit Facility | Subsequent Event | |||||||
Subsequent Event [Line Items] | |||||||
Availability under the revolving line of credit | 307,900,000 | ||||||
Outstanding letters of credit | $ 13,200,000 | ||||||
Revolving Credit Facility | Maximum | Credit Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Availability under the revolving line of credit | $ 600,000,000 |
Selected Quarterly Financial _3
Selected Quarterly Financial Data (Unaudited) (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Feb. 01, 2020 | Nov. 02, 2019 | Aug. 03, 2019 | May 04, 2019 | Feb. 02, 2019 | Nov. 03, 2018 | Aug. 04, 2018 | May 05, 2018 | Feb. 01, 2020 | Feb. 02, 2019 | Feb. 03, 2018 | |
Selected Quarterly Financial Data (Unaudited) | |||||||||||
Net revenues | $ 664,976 | $ 677,526 | $ 706,514 | $ 598,421 | $ 670,891 | $ 636,558 | $ 640,798 | $ 557,406 | $ 2,647,437 | $ 2,505,653 | |
Gross profit | 283,073 | 284,166 | 294,958 | 232,814 | 257,879 | 250,021 | 268,344 | 209,333 | 1,095,011 | 985,577 | $ 839,298 |
Net income | $ 68,433 | $ 52,463 | $ 63,757 | $ 35,722 | $ 27,250 | $ 20,114 | $ 62,906 | $ 25,461 | $ 220,375 | $ 135,731 | $ (2,599) |
Weighted-average shares used in computing basic net income (loss) per share | 19,120,709 | 18,765,769 | 18,465,876 | 19,976,858 | 20,901,841 | 22,082,141 | 21,925,702 | 21,545,025 | 19,082,303 | 21,613,678 | 27,053,616 |
Basic net income (loss) per share | $ 3.58 | $ 2.80 | $ 3.45 | $ 1.79 | $ 1.30 | $ 0.91 | $ 2.87 | $ 1.18 | $ 11.55 | $ 6.28 | $ (0.10) |
Weighted-average shares used in computing diluted net income (loss) per share | 25,767,864 | 24,170,172 | 22,324,112 | 24,933,987 | 25,702,791 | 27,703,319 | 27,496,561 | 25,230,228 | 24,299,034 | 26,533,225 | 27,053,616 |
Diluted net income (loss) per share | $ 2.66 | $ 2.17 | $ 2.86 | $ 1.43 | $ 1.06 | $ 0.73 | $ 2.29 | $ 1.01 | $ 9.07 | $ 5.12 | $ (0.10) |