Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Aug. 04, 2018 | Aug. 31, 2018 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Aug. 4, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | RH | |
Entity Registrant Name | RH | |
Entity Central Index Key | 1,528,849 | |
Current Fiscal Year End Date | --02-02 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 22,233,789 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Aug. 04, 2018 | Feb. 03, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 22,199,000 | $ 17,907,000 |
Accounts receivable—net | 40,706,000 | 31,412,000 |
Merchandise inventories | 551,343,000 | 527,026,000 |
Prepaid expense and other current assets | 78,254,000 | 68,585,000 |
Total current assets | 692,502,000 | 644,930,000 |
Property and equipment—net | 833,232,000 | 800,698,000 |
Goodwill | 141,835,000 | 141,893,000 |
Trademarks and other intangible assets | 100,663,000 | 100,702,000 |
Deferred tax assets | 29,437,000 | 23,311,000 |
Other non-current assets | 16,438,000 | 21,332,000 |
Total assets | 1,814,107,000 | 1,732,866,000 |
Current liabilities: | ||
Accounts payable and accrued expenses | 284,942,000 | 318,765,000 |
Deferred revenue and customer deposits | 164,979,000 | 149,404,000 |
Other current liabilities | 51,354,000 | 51,166,000 |
Total current liabilities | 836,945,000 | 519,335,000 |
Asset based credit facility | 0 | 279,469,000 |
Term loan—net | 79,499,000 | |
Financing obligations under build-to-suit lease transactions | 225,700,000 | 229,323,000 |
Deferred rent and lease incentives | 54,821,000 | 54,983,000 |
Other non-current obligations | 47,847,000 | 76,367,000 |
Total liabilities | 1,668,046,000 | 1,740,202,000 |
Commitments and contingencies (Note 14) | ||
Stockholders’ equity (deficit): | ||
Preferred stock, $0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of August 4, 2018 and February 3, 2018 | ||
Common stock, $0.0001 par value per share, 180,000,000 shares authorized, 42,452,371 shares issued and 22,229,439 shares outstanding as of August 4, 2018; 41,737,470 shares issued and 21,517,338 shares outstanding as of February 3, 2018 | 2,000 | 2,000 |
Additional paid-in capital | 944,610,000 | 860,288,000 |
Accumulated other comprehensive loss | (1,918,000) | (171,000) |
Retained earnings | 223,459,000 | 152,394,000 |
Treasury stock—at cost, 20,222,932 shares as of August 4, 2018 and 20,220,132 shares as of February 3, 2018 | (1,020,092,000) | (1,019,849,000) |
Total stockholders’ equity (deficit) | 146,061,000 | (7,336,000) |
Total liabilities and stockholders’ equity (deficit) | 1,814,107,000 | 1,732,866,000 |
Asset Based Credit Facility [Member] | ||
Current liabilities: | ||
Asset based credit facility | 199,970,000 | |
Convertible Senior Notes Due 2019 [Member] | ||
Current liabilities: | ||
Convertible senior notes due-net | 335,670,000 | |
Convertible senior notes due-net | 327,731,000 | |
Convertible Senior Notes Due 2020 [Member] | ||
Current liabilities: | ||
Convertible senior notes due-net | 261,929,000 | $ 252,994,000 |
Convertible Senior Notes Due 2023 [Member] | ||
Current liabilities: | ||
Convertible senior notes due-net | $ 240,804,000 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Aug. 04, 2018 | Feb. 03, 2018 |
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 | 42,452,371 | 41,737,470 |
Common stock, shares outstanding | 22,229,439 | 21,517,338 |
Treasury stock, shares | 20,222,932 | 20,220,132 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Income Statement [Abstract] | ||||
Net revenues | $ 640,798 | $ 615,326 | $ 1,198,204 | $ 1,177,406 |
Cost of goods sold | 369,198 | 409,513 | 714,569 | 801,337 |
Gross profit | 271,600 | 205,813 | 483,635 | 376,069 |
Selling, general and administrative expenses | 186,225 | 193,690 | 344,659 | 357,050 |
Income from operations | 85,375 | 12,123 | 138,976 | 19,019 |
Other expenses | ||||
Interest expense—net | 17,480 | 14,402 | 34,515 | 26,581 |
Loss on extinguishment of debt | 917 | 917 | ||
Total other expenses | 18,397 | 14,402 | 35,432 | 26,581 |
Income (loss) before income taxes | 66,978 | (2,279) | 103,544 | (7,562) |
Income tax expense | 2,936 | 5,583 | 11,443 | 3,670 |
Net income (loss) | $ 64,042 | $ (7,862) | $ 92,101 | $ (11,232) |
Weighted-average shares used in computing basic net income (loss) per share | 21,925,702 | 28,398,307 | 21,735,364 | 35,667,217 |
Basic net income (loss) per share | $ 2.92 | $ (0.28) | $ 4.24 | $ (0.31) |
Weighted-average shares used in computing diluted net income (loss) per share | 27,496,561 | 28,398,307 | 26,363,395 | 35,667,217 |
Diluted net income (loss) per share | $ 2.33 | $ (0.28) | $ 3.49 | $ (0.31) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 64,042 | $ (7,862) | $ 92,101 | $ (11,232) |
Net gains (losses) from foreign currency translation | (482) | 2,069 | (1,747) | 877 |
Net unrealized holding gains on available-for-sale investments | 11 | |||
Total comprehensive income (loss) | $ 63,560 | $ (5,793) | $ 90,354 | $ (10,344) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Aug. 04, 2018 | Jul. 29, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ 92,101 | $ (11,232) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization | 34,803 | 32,546 |
Lease impairment adjustment | (1,157) | |
Non-cash charges resulting from inventory step-up | 380 | 1,860 |
Amortization of debt discount | 17,645 | 15,018 |
Stock-based compensation expense | 14,092 | 36,166 |
Loss on extinguishment of debt | 917 | |
Other non-cash interest expense | 2,902 | 2,314 |
Change in assets and liabilities: | ||
Accounts receivable | (9,350) | (617) |
Merchandise inventories | (24,995) | 140,331 |
Prepaid expense and other assets | (43,174) | 35,287 |
Accounts payable and accrued expenses | (42,717) | 29,874 |
Deferred revenue and customer deposits | 20,800 | 30,349 |
Other current liabilities | 9,895 | 2,269 |
Deferred rent and lease incentives | (81) | 1,166 |
Other non-current obligations | (1,832) | (975) |
Net cash provided by operating activities | 70,229 | 314,356 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Capital expenditures | (61,212) | (56,697) |
Proceeds from sale of assets held for sale—net | 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 | (61,212) | 134,227 |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowing under promissory and equipment security notes | 14,000 | |
Repayments under promissory and equipment security notes | (31,974) | (117) |
Proceeds from issuance of convertible senior notes | 335,000 | |
Proceeds from issuance of warrants | 51,021 | |
Purchase of convertible note hedges | (91,857) | |
Debt issuance costs | (7,939) | |
Repurchases of common stock—including commissions | (1,000,326) | |
Proceeds from exercise of stock options | 29,209 | 11,170 |
Tax withholdings related to issuance of stock-based awards | (7,863) | (3,106) |
Payments on build-to-suit lease transactions | (6,190) | (4,601) |
Payments on capital leases | (290) | (158) |
Net cash used in financing activities | (9,263) | (528,077) |
Effects of foreign currency exchange rate translation | (124) | 55 |
Net decrease in cash and cash equivalents and restricted cash equivalents | (370) | (79,439) |
Cash and cash equivalents | ||
Beginning of period—cash and cash equivalents | 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 | 25,314 | 115,067 |
End of period—cash and cash equivalents | 22,199 | 21,637 |
End of period—restricted cash equivalents (construction related deposits) | 2,745 | 13,991 |
End of period—cash and cash equivalents and restricted cash equivalents | 24,944 | 35,628 |
Non-cash transactions: | ||
Property and equipment additions in accounts payable and accrued expenses at period-end | 24,896 | 23,860 |
Property and equipment additions due to build-to-suit lease transactions | 2,478 | 27,340 |
Property and equipment acquired under capital lease | 1,191 | 753 |
Property and equipment additions from unpaid construction related deposits | 517 | 5,848 |
Issuance of non-current notes payable related to share repurchases from former employees | 243 | |
Convertible Senior Notes [Member] | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Debt issuance costs | (6,349) | |
Asset Based Credit Facility [Member] | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowing | 510,000 | 323,000 |
Repayments | (709,970) | (40,000) |
Term Loan [Member] | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Borrowing | $ 180,000 | |
Repayments | $ (80,000) |
The Company
The Company | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Policies [Abstract] | |
The Company | NOTE 1—THE COMPANY Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories including furniture, lighting, textiles, bathware, décor, outdoor and garden, tableware, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites. As of August 4, 2018, the Company operated a total of 85 retail Galleries and 36 outlet stores in 32 states, the District of Columbia and Canada, and includes 15 Waterworks showrooms in the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from the Company’s records and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state the Company’s financial position as of August 4, 2018, and the results of operations for the three and six months ended August 4, 2018 and July 29, 2017. The Company’s current fiscal year, which consists of 52 weeks, ends on February 2, 2019 (“fiscal 2018”). Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2018 (the “2017 Form 10-K”). Certain prior year amounts have been reclassified for consistency with the current period presentation. This reclassification had no effect on the previously reported consolidated financial position or consolidated results of operations, and did not have a material effect on the previously reported consolidated cash flows. The results of operations for the three and six months ended August 4, 2018 presented herein are not necessarily indicative of the results to be expected for the full fiscal year. Convertible Senior Notes 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 (collectively, the “2023 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 $91.9 million. In addition, the Company sold warrants for which it received aggregate proceeds of $51.0 million. Taken together, the Company received total cash proceeds of $287.8 million, net of discounts upon original issuance and offering costs of $6.3 million. Refer to Note 7— Convertible Senior Notes |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Changes And Error Corrections [Abstract] | |
Recently Issued Accounting Standards | NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board issued their converged accounting standards update on revenue recognition, Accounting Standards Update 2014-09—Revenue from Contracts with Customers (Topic 606) . This guidance outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Under the new guidance, transfer of control is no longer the same as transfer of risks and rewards as indicated in the prior guidance. Adoption and Accounting Policy The Company adopted Topic 606 on February 4, 2018 using the modified retrospective transition method and recorded a decrease to opening retained earnings of $21.0 million, inclusive of the tax impact. Results reported within the Company’s condensed consolidated financial statements for reporting periods beginning February 4, 2018 are presented under Topic 606 while prior periods are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605 —Revenue Recognition (Topic 605) . Under Topic 606, changes were made to the recognition timing or classification of revenues and expenses for the following: Description Policy under Topic 605 Policy under Topic 606 Advertising expenses Costs associated with Source Books were capitalized and amortized over their expected period of future benefit. Expense was amortized based upon the ratio of actual revenues to the total of actual and estimated future revenues on an individual Source Book basis, generally over a twelve-month period after they were mailed. Costs associated with Source Books are expensed 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. Gift card breakage Recognized gift card breakage (amounts not expected to be redeemed) within selling, general and administrative expenses. Recognize gift card breakage within net revenues proportional to actual gift card redemptions. Membership revenue Annual fees for new memberships in the RH Members Program and renewals were recorded as deferred revenue when collected from customers and recognized as revenue on a straight-line basis over the twelve month membership period. Annual fees for new memberships in the RH Members Program are recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, using historical trends of sales to members. RH Members Program renewal fees are recorded as deferred revenue when collected from customers and will continue to be recognized as revenue on a straight-line basis over the twelve month membership period. Revenue recognition Revenue for merchandise that is not delivered via the home-delivery channel was recognized upon delivery. Revenue for merchandise that is not delivered via the home-delivery channel will be recognized upon shipment. Allowance for sales returns Recognized an allowance for sales returns as a net liability within other current liabilities. Recognize an allowance for sales returns on a gross basis as a liability within other current liabilities and a right of return asset for merchandise within prepaid expense and other current assets. Advertising expenses — The adoption of Topic 606 materially impacts the timing of recognizing advertising expense related to direct response advertising, including costs associated with the Company’s Source Books. Under Topic 606, the Company will recognize expense associated with the Source Books 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. Prior to adoption of Topic 606, costs associated with Source Books were capitalized and amortized over their expected period of future benefit. Such amortization was based upon the ratio of actual revenues to the total of actual and estimated future revenues on an individual Source Book basis. Each Source Book was generally fully amortized within a twelve-month period after they were mailed and the majority of the amortization occurred within the first five to nine months, with the exception of the Holiday Source Books, which were generally fully amortized within a three-month period after they were mailed . Upon adoption of Topic 606, capitalized costs associated with Source Books of $37.8 million that had been delivered to the carrier prior to or on February 3, 2018 were reclassified to retained earnings on the consolidated balance sheets, resulting in a decrease to the opening retained earnings balance . Gift card breakage — Under Topic 606, the Company recognizes gift card breakage proportional to actual gift card redemptions and such breakage is recorded within net revenues on the condensed consolidated statements of operations. Gift card breakage was previously recorded as a reduction to selling, general and administrative expenses when the likelihood of redemption was remote. Upon adoption of Topic 606, gift card liabilities of $6.0 million were reclassified to retained earnings on the consolidated balance sheets , resulting in an increase to the opening retained earnings balance . Membership revenue — Under Topic 606, the annual fee for new memberships in the RH Members Program is recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, using historical trends of sales to members. Prior to the adoption of Topic 606, new memberships were recorded as deferred revenue when collected from customers and recognized as revenue on a straight-line basis over the twelve month membership period. This will result in a majority of revenue being recognized during the first six months of the membership period. The adoption of Topic 606 will not have an impact on membership renewal fees, which will continue to be recognized as revenue on a straight-line basis over the twelve month membership period, until the Company has more information regarding membership renewal purchasing trends. Upon adoption of Topic 606, deferred membership revenue of $3.8 million was reclassified to retained earnings on the consolidated balance sheets, resulting in an increase to the opening retained earnings balance. Revenue recognition — Under Topic 606, the Company will continue to recognize revenue for merchandise delivered via the home-delivery channel upon delivery. Under Topic 606, revenue for merchandise delivered via all other delivery channels will be recognized upon shipment , whereas previously such revenue was recognized upon delivery . Upon adoption of Topic 606, deferred revenue (net of cost of goods sold) of $1.3 million was reclassified to retained earnings on the consolidated balance sheets , resulting in an increase to the opening retained earnings balance . The Company adopted the practical expedient related to shipping and handling activities. Under this option, 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 will be accrued for in the same period. Costs of shipping and handling continue to be included in cost of goods sold. Allowance for sales returns — In connection with adoption of Topic 606, the Company is required to recognize its allowance for sales returns on a gross basis rather than as a net liability. Upon adoption, this resulted in an increase to prepaid and other current assets (“right of return asset for merchandise”), with a corresponding increase to other current liabilities on the consolidated balance sheets, and did not impact the consolidated statements of operations. As of August 4, 2018, the right of return asset for merchandise was $6.9 million . Sales tax collection from customers — Under Topic 606, the Company has not changed its policy regarding sales tax collected from customers. 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. In connection with adoption of Topic 606, the Company recorded a $6.6 million tax adjustment associated with the charges listed above to retained earnings on the consolidated balance sheets, resulting in an increase to the opening retained earnings balance . Contract Liabilities The Company defers revenue associated with merchandise delivered via the home-delivery channel. As the Company recognizes revenue when the merchandise is delivered to our customers, it is included as deferred revenue on the consolidated balance sheets while in-transit. Customer deposits represent payments made by customers on custom orders. At the time of order placement the Company collects deposits for all custom orders equivalent to 50% of the purchase price. Custom order deposits are recognized as revenue when a customer obtains control of the merchandise. In addition, the Company collects annual membership fees related to the RH Members Program. 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, using 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. The Company expects that substantially all of the deferred revenue, customer deposits and deferred membership fees as of August 4, 2018 will be recognized within the next six months as the performance obligations are satisfied. In addition, the Company defers revenue when cash payments are received in advance of performance for unsatisfied obligations related to its gift cards and merchandise credits. Customer liabilities related to gift cards and merchandise credits was $19.1 million and $24.1 million as of August 4, 2018 and February 3, 2018, respectively. As discussed above, $6.0 million of the decrease was due to the reclassification of gift card liabilities to retained earnings upon adoption of Topic 606. During the three and six months ended August 4, 2018, the Company recognized $4.8 million and $9.7 million of revenue related to previous deferrals related to its gift cards and merchandise credits, respectively, and recorded gift card breakage of $0.4 million and $0.8 million, respectively. 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. Disaggregated Revenue The Company recognizes revenue from its stores and direct sales channels. Stores net revenues represent sales originating in retail stores, including Waterworks showrooms, and outlet stores. Direct net revenues include sales through the Company’s Source Books, websites, and phone orders, including its Contract business and a portion of its Trade business. During the three months ended August 4, 2018, net revenues recognized from the stores and direct sales channels were $361.9 million and $278.9 million, respectively. During the six months ended August 4, 2018, net revenues recognized from the stores and direct sales channels were $676.4 million and $521.8 million, respectively. Adoption Impact on Fiscal 2018 Results The following tables summarize the impact of adopting Topic 606 on the Company’s condensed consolidated statements of operations ( in thousands Three Months Ended August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Net revenues $ 640,798 $ (1,685 ) $ 639,113 Cost of goods sold 369,198 (662 ) 368,536 Gross profit 271,600 (1,023 ) 270,577 Selling, general and administrative expenses 186,225 (11,105 ) 175,120 Income from operations 85,375 10,082 95,457 Other expenses Interest expense—net 17,480 — 17,480 Loss on extinguishment of debt 917 — 917 Total other expenses 18,397 — 18,397 Income before income taxes 66,978 10,082 77,060 Income tax expense 2,936 455 3,391 Net income $ 64,042 $ 9,627 $ 73,669 Six Months Ended August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Net revenues $ 1,198,204 $ (9,295 ) $ 1,188,909 Cost of goods sold 714,569 (3,650 ) 710,919 Gross profit 483,635 (5,645 ) 477,990 Selling, general and administrative expenses 344,659 (7,302 ) 337,357 Income from operations 138,976 1,657 140,633 Other expenses Interest expense—net 34,515 — 34,515 Loss on extinguishment of debt 917 — 917 Total other expenses 35,432 — 35,432 Income before income taxes 103,544 1,657 105,201 Income tax expense 11,443 (1,495 ) 9,948 Net income $ 92,101 $ 3,152 $ 95,253 The following table summarizes the impact of adopting Topic 606 on certain line items of the Company’s condensed consolidated balance sheets ( in thousands As of August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Prepaid expense and other current assets $ 78,254 $ 36,012 $ 114,266 Deferred tax assets 29,437 (6,561 ) 22,876 Accounts payable and accrued expenses 284,942 (732 ) 284,210 Deferred revenue and customer deposits 164,979 9,860 174,839 Other current liabilities 51,354 (3,865 ) 47,489 Retained earnings 223,459 24,188 247,647 Financial Instruments In January 2016, the FASB issued Accounting Standards Update 2016-01—Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, Cash Flow Classification In August 2016, the FASB issued Accounting Standards Update No. 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued Accounting Standards Update No. 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash Income Taxes: Intra-Entity Asset Transfers In October 2016, the FASB issued Accounting Standards Update No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory Stock-Based Compensation In May 2017, the FASB issued Accounting Standards Update No. 2017-09—Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting . The new guidance clarifies when modification accounting should be applied for changes to terms or conditions of a share-based payment award. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The standard will be applied prospectively. The Company adopted this new accounting standard in the first quarter of fiscal 2018 and such adoption did not have an impact on its consolidated financial statements . Accounting for Leases In February 2016, the FASB issued Accounting Standards Update 2016-02—Leases, Accounting Standards Update 2018-10 — Codification Improvements to Topic 842 (Leases) Accounting Standards Update 2018-11 — Leases (Topic 842) — Targeted Improvements |
Prepaid Expense and Other Asset
Prepaid Expense and Other Assets | 6 Months Ended |
Aug. 04, 2018 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Prepaid Expense and Other Assets | NOTE 3—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consist of the following ( in thousands August 4, February 3, 2018 2018 Vendor deposits $ 20,767 $ 9,701 Capitalized catalog costs 14,285 44,122 Federal and state tax receivable 9,682 — Right of return asset for merchandise 6,888 — Prepaid expense and other current assets 26,632 14,762 Total prepaid expense and other current assets $ 78,254 $ 68,585 Other non-current assets consist of the following ( in thousands August 4, February 3, 2018 2018 Deferred financing fees $ 3,915 $ 4,446 Construction related deposits 2,745 7,407 Other deposits 5,139 4,997 Other non-current assets 4,639 4,482 Total other non-current assets $ 16,438 $ 21,332 |
Goodwill and Trademarks and Dom
Goodwill and Trademarks and Domain Names | 6 Months Ended |
Aug. 04, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Trademarks and Domain Names | NOTE 4—GOODWILL AND TRADEMARKS AND DOMAIN NAMES The following sets forth the goodwill and trademarks and domain names activity for the RH Segment and Waterworks for the six months ended August 4, 2018 ( in thousands Foreign February 3, Currency August 4, 2018 Translation 2018 RH Segment Goodwill $ 124,448 $ (58 ) $ 124,390 Trademarks and domain names 48,563 — 48,563 Waterworks Goodwill (1) 17,445 — 17,445 Trademarks 52,100 — 52,100 (1) T he Waterworks reporting unit goodwill is presented net of an impairment charge of $33.7 million, which was recorded in fiscal 2017 |
Accounts Payable, Accrued Expen
Accounts Payable, Accrued Expenses and Other Current Liabilities | 6 Months Ended |
Aug. 04, 2018 | |
Payables And Accruals [Abstract] | |
Accounts Payable, Accrued Expenses and Other Current Liabilities | NOTE 5—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accounts payable and accrued expenses consist of the following ( in thousands August 4, February 3, 2018 2018 Accounts payable $ 164,706 $ 195,313 Accrued compensation 47,562 47,534 Accrued freight and duty 20,412 23,757 Accrued sales taxes 17,346 19,525 Accrued occupancy 12,460 8,612 Accrued catalog costs 10,427 9,000 Accrued professional fees 2,971 3,555 Other accrued expenses 9,058 11,469 Total accounts payable and accrued expenses $ 284,942 $ 318,765 Other current liabilities consist of the following ( in thousands August 4, February 3, 2018 2018 Allowance for sales returns $ 23,069 $ 10,565 Unredeemed gift card and merchandise credit liability 19,110 24,138 Product recall reserves 3,501 1,201 Current portion of non-current debt 892 6,033 Federal and state tax payable — 5,391 Other current liabilities 4,782 3,838 Total other current liabilities $ 51,354 $ 51,166 |
Other Non-Current Obligations
Other Non-Current Obligations | 6 Months Ended |
Aug. 04, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Other Non-Current Obligations | NOTE 6—OTHER NON-CURRENT OBLIGATIONS Other non-current obligations consist of the following ( in thousands August 4, February 3, 2018 2018 Notes payable for share repurchases $ 18,741 $ 19,390 Capital lease obligations—non-current 8,012 7,509 Lease loss liabilities 7,393 9,684 Deferred contract incentive (1) 4,167 5,358 Unrecognized tax benefits 3,955 3,728 Rollover units and profit interests (2) 2,424 2,211 Other non-current obligations 3,155 2,996 Equipment security notes (3) — 13,864 Promissory note (4) — 11,627 Total other non-current obligations $ 47,847 $ 76,367 (1) Represents the non-current portion of an incentive payment received in relation to a 5-year service agreement. The amount will be amortized over the term of the agreement. (2) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 13 — Stock-Based Compensation (3) Represents the non-current portion of equipment security notes secured by certain of the Company’s distribution center property and equipment. The equipment security notes were repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt. (4) Represents the non-current portion of a promissory note secured by the Company’s aircraft. The promissory note was repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt. |
Convertible Senior Notes
Convertible Senior Notes | 6 Months Ended |
Aug. 04, 2018 | |
Debt Disclosure [Abstract] | |
Convertible Senior Notes | NOTE 7—CONVERTIBLE SENIOR NOTES 0.00% Convertible Senior Notes due 2023 In June 2018, the Company issued in a private offering $300 million principal amount of 0.00% convertible senior notes due 2023 and issued an additional $35 million principal amount in connection with the overallotment option granted to the initial purchasers as part of the offering (collectively, the “2023 Notes”). The 2023 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2023 Notes will mature on June 15, 2023, unless earlier purchased by the Company or converted. The 2023 Notes will not bear interest, except that the 2023 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2023 Notes. The 2023 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2023 Notes, which may result in the acceleration of the maturity of the 2023 Notes, as described in the indenture governing the 2023 Notes. The initial conversion rate applicable to the 2023 Notes is 5.1640 shares of common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $193.65 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2023 Notes in connection with such make-whole fundamental change. Prior to March 15, 2023, the 2023 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2018, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2023 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of August 4, 2018, none of these conditions have occurred and, as a result, the 2023 Notes are not convertible as of August 4, 2018. 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 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. 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. 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. Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2023 balance on the condensed consolidated balance sheets. During both the three and six months ended August 4, 2018, the Company recorded $0.1 million related to the amortization of debt issuance costs. The carrying values of the 2023 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands August 4, 2018 Liability component Principal $ 335,000 Less: Debt discount (89,217 ) Net carrying amount $ 245,783 Equity component (1) $ 90,990 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. The Company recorded interest expense of $1.8 million for the amortization of the debt discount related to the 2023 Notes during both the three and six months ended August 4, 2018. 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 1.7 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 $91.9 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 1.7 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 3.5 million shares of common stock (which cap may also be subject to adjustment). The Company received $51.0 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2023 Notes until the Company’s common stock is above approximately $309.84 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The Company recorded a deferred tax liability of $22.3 million in connection with the debt discount associated with the 2023 Notes and recorded a deferred tax asset of $22.5 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the condensed consolidated balance sheets. 0.00% Convertible Senior Notes due 2020 In June 2015, the Company issued in a private offering $250 million principal amount of 0.00% convertible senior notes due 2020 and, in July 2015, the Company issued an additional $50 million principal amount pursuant to the exercise of the overallotment option granted to the initial purchasers as part of its June 2015 offering (collectively, the “2020 Notes”). The 2020 Notes are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2020 Notes will mature on July 15, 2020, unless earlier purchased by the Company or converted. The 2020 Notes will not bear interest, except that the 2020 Notes will be subject to “special interest” in certain limited circumstances in the event of the failure of the Company to perform certain of its obligations under the indenture governing the 2020 Notes. The 2020 Notes are unsecured obligations and do not contain any financial covenants or restrictions on the payments of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by the Company or any of its subsidiaries. Certain events are also considered “events of default” under the 2020 Notes, which may result in the acceleration of the maturity of the 2020 Notes, as described in the indenture governing the 2020 Notes. The 2020 Notes are guaranteed by the Company’s primary operating subsidiary, Restoration Hardware, Inc., as Guarantor. The guarantee is the unsecured obligation of the Guarantor and is subordinated to the Guarantor’s obligations from time to time with respect to its credit agreement and ranks equal in right of payment with respect to Guarantor’s other obligations. The initial conversion rate applicable to the 2020 Notes is 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $118.13 per share. The conversion rate will be subject to adjustment upon the occurrence of certain specified events, but will not be adjusted for any accrued and unpaid special interest. In addition, upon the occurrence of a “make-whole fundamental change” as defined in the indenture, the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2020 Notes in connection with such make-whole fundamental change. Prior to March 15, 2020, the 2020 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2015, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2020 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of August 4, 2018, none of these conditions have occurred and, as a result, the 2020 Notes are not convertible as of August 4, 2018. On and after March 15, 2020, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2020 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2020 Notes will be settled, at the Company’s election, in cash, shares of the Company’s common stock, or a combination of cash and shares of the Company’s common stock. If the Company has not delivered a notice of its election of settlement method prior to the final conversion period it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $1,000. The Company may not redeem the 2020 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the 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. 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. 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. Discounts and third party offering costs attributable to the liability component are recorded as a contra-liability and are presented net against the convertible senior notes due 2020 balance on the condensed consolidated balance sheets. During both the three months ended August 4, 2018 and July 29, 2017, the Company recorded $0.3 million related to the amortization of debt issuance costs. During both the six months ended August 4, 2018 and July 29, 2017, the Company recorded $0.5 million related to the amortization of debt issuance costs. The carrying values of the 2020 Notes, excluding the discounts upon original issuance and third party offering costs, are as follows ( in thousands August 4, February 3, 2018 2018 Liability component Principal $ 300,000 $ 300,000 Less: Debt discount (35,745 ) (44,135 ) Net carrying amount $ 264,255 $ 255,865 Equity component (1) $ 84,003 $ 84,003 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. The Company recorded interest expense of $4.2 million and $4.0 million for the amortization of the debt discount related to the 2020 Notes during the three months ended August 4, 2018 and July 29, 2017, respectively. The Company recorded interest expense of $8.4 million and $7.9 million during the six months ended August 4, 2018 and July 29, 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 2.5 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 $68.3 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 2.5 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 5.1 million shares of common stock (which cap may also be subject to adjustment). The Company received $30.4 million in cash proceeds from the sale of these warrants. Taken together, the purchase of the convertible note hedges and sale of the warrants are intended to offset any actual earnings dilution from the conversion of the 2020 Notes until the Company’s common stock is above approximately $189.00 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The Company recorded a deferred tax liability of $32.8 million in connection with the debt discount associated with the 2020 Notes and recorded a deferred tax asset of $26.6 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax asset are recorded in deferred tax assets on the condensed consolidated balance sheets. 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 are governed by the terms of an indenture between the Company and U.S. Bank National Association, as the Trustee. The 2019 Notes will mature on June 15, 2019, unless earlier purchased by the Company or converted. The 2019 Notes will not bear interest, except that the 2019 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 2019 Notes. The 2019 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 2019 Notes, which may result in the acceleration of the maturity of the 2019 Notes, as described in the indenture governing the 2019 Notes. The initial conversion rate applicable to the 2019 Notes is 8.6143 shares of common stock per $1,000 principal amount of 2019 Notes, which is equivalent to an initial conversion price of approximately $116.09 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,” the Company will, in certain circumstances, increase the conversion rate by a number of additional shares for a holder that elects to convert its 2019 Notes in connection with such make-whole fundamental change. Prior to March 15, 2019, the 2019 Notes will be convertible only under the following circumstances: (1) during any calendar quarter commencing after September 30, 2014, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of the Company’s common stock on such trading day is greater than or equal to 130% of the applicable conversion price on such trading day; (2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $1,000 principal amount of 2019 Notes for such trading day was less than 98% of the product of the last reported sale price of the Company’s common stock and the applicable conversion rate on such trading day; or (3) upon the occurrence of specified corporate transactions. As of August 4, 2018, none of these conditions have occurred and, as a result, the 2019 Notes are not convertible as of August 4, 2018. On and after March 15, 2019, 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 2019 Notes at any time, regardless of the foregoing circumstances. Upon conversion, the 2019 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 2019 Notes; however, upon the occurrence of a fundamental change (as defined in the indenture governing the notes), holders may require the Company to purchase all or a portion of their 2019 Notes for cash at a price equal to 100% of the principal amount of the 2019 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 2019 Notes, the Company separated the 2019 Notes into liability and equity components. The carrying amount of the liability component was calculated by measuring the fair value of a similar liability that does not have an associated convertible feature. The carrying amount of the equity component, which is recognized as a debt discount, represents the difference between the proceeds from the issuance of the 2019 Notes and the fair value of the liability component of the 2019 Notes. The debt discount will be amortized to interest expense using an effective interest rate of 4.51% over the expected life of the 2019 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the debt issuance costs related to the issuance of the 2019 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 2019 Notes, and debt issuance costs attributable to the equity component are netted with the equity component in stockholders’ equity. Debt issuance costs related to the 2019 Notes were comprised of discounts and commissions payable to the initial purchasers of $4.4 million and third party offering costs of $1.0 million. Discounts, commissions payable to the initial purchasers 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 2019 balance on the condensed consolidated balance sheets. During the three months ended August 4, 2018 and July 29, 2017, the Company recorded $0.3 million and $0.2 million, respectively, related to the amortization of debt issuance costs. During the six months ended August 4, 2018 and July 29, 2017, the Company recorded $0.5 million and $0.4 million, respectively, related to the amortization of debt issuance costs. The carrying values of the 2019 Notes, excluding the discounts and commissions payable to the initial purchasers and third party offering costs, are as follows ( in thousands August 4, February 3, 2018 2018 Liability component Principal $ 350,000 $ 350,000 Less: Debt discount (13,506 ) (20,988 ) Net carrying amount $ 336,494 $ 329,012 Equity component (1) $ 70,482 $ 70,482 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. The Company recorded interest expense of $3.8 million and $3.6 million for the amortization of the debt discount related to the 2019 Notes during the three months ended August 4, 2018 and July 29, 2017, respectively. The Company recorded interest expense of $7.5 million and $7.2 million for the amortization of the debt discount related to the 2019 Notes during the six months ended August 4, 2018 and July 29, 2017, respectively. 2019 Notes—Convertible Bond Hedge and Warrant Transactions In connection with the offering of the 2019 Notes, the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 3.0 million shares of its common stock at a price of approximately $116.09 per share. The total cost of the convertible note hedge transactions was $73.3 million. In addition, the Company sold warrants whereby the holders of the warrants have the option to purchase a total of approximately 3.0 million shares of the Company’s common stock at a price of $171.98 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 6.0 million shares of common stock (which cap may also be subject to adjustment). The Company received $40.4 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 dilution from the conversion of the 2019 Notes and to effectively increase the overall conversion price from $116.09 per share to $171.98 per share. As these transactions meet certain accounting criteria, the convertible note hedges and warrants are recorded in stockholders’ equity, are not accounted for as derivatives and are not remeasured each reporting period. The net costs incurred in connection with the convertible note hedge and warrant transactions were recorded as a reduction to additional paid-in capital on the condensed consolidated balance sheets. The Company recorded a deferred tax liability of $27.5 million in connection with the debt discount associated with the 2019 Notes and recorded a deferred tax asset of $28.6 million in connection with the convertible note hedge transactions. The deferred tax liability and deferred tax assets are included in deferred tax assets on the condensed consolidated balance sheets. |
Credit Facilities
Credit Facilities | 6 Months Ended |
Aug. 04, 2018 | |
Debt Disclosure [Abstract] | |
Credit Facilities | NOTE 8—CREDIT FACILITIES There were no balances outstanding under the Company’s credit facilities as of August 4, 2018. Balances outstanding under the Company’s credit facilities as of February 3, 2018 were as follows ( in thousands February 3, 2018 Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Asset based credit facility $ 199,970 $ — $ 199,970 LILO term loan 80,000 (501 ) 79,499 Total credit facilities $ 279,970 $ (501 ) $ 279,469 Asset Based Credit Facility & LILO Term Loan In August 2011, Restoration Hardware, Inc., along with its Canadian subsidiary, Restoration Hardware Canada, Inc., entered into a credit agreement with Bank of America, N.A., as administrative agent, and certain other lenders. On June 28, 2017, Restoration Hardware, Inc. entered into an eleventh amended and restated credit agreement among Restoration Hardware, Inc., Restoration Hardware Canada, Inc., various subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and Bank of America, N.A. as administrative agent and collateral agent (the “credit agreement”). The credit agreement has a revolving line of credit with 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 million if and to the extent the lenders revise their credit commitments to encompass a larger facility. In addition, the credit agreement established an $80.0 million LILO term loan facility. The credit agreement and LILO term loan have a maturity date of 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, 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 “Amendment”) to credit agreement. The Amendment (i) changes 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 (ii) clarifies 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. Borrowings under the revolving line of credit are subject to interest, at the borrowers’ option, at either the bank’s reference rate or 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. As of August 4, 2018, was in compliance with all applicable covenants of the credit agreement. As of August 4, 2018, the Company had no outstanding borrowings and $437.8 million of availability under the revolving line of credit, net of $12.8 million in outstanding letters of credit. As a result of the consolidated fixed-charge coverage ratio (“FCCR”) restriction that limits the last 10% of borrowing availability, actual incremental borrowing available to the Company and the other affiliated parties under the revolving line of credit was $392.8 million as of August 4, 2018. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Aug. 04, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 9—FAIR VALUE OF FINANCIAL INSTRUMENTS Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value due to the short-term nature of activity within these accounts. The estimated fair value and carrying value of the 2019 Notes, 2020 Notes and 2023 Notes were as follows ( in thousands August 4, February 3, 2018 2018 Fair Value Carrying Value (1) Fair Value Carrying Value (1) Convertible senior notes due 2019 $ 332,232 $ 336,494 $ 324,866 $ 329,012 Convertible senior notes due 2020 265,796 264,255 261,047 255,865 Convertible senior notes due 2023 245,275 245,783 — — (1) Carrying value represents the principal amount less the equity component of the 2019 Notes, 2020 Notes and 2023 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. The fair value of each of the 2019 Notes, 2020 Notes and 2023 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). |
Income Taxes
Income Taxes | 6 Months Ended |
Aug. 04, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 10—INCOME TAXES The Company recorded income tax expense of $2.9 million and $5.6 million in the three months ended August 4, 2018 and July 29, 2017, respectively. The Company recorded income tax expense of $11.4 million and $3.7 million in the six months ended August 4, 2018 and July 29, 2017. The effective tax rate was 4.4% and -245.0% for the three months ended August 4, 2018 and July 29, 2017, respectively. The effective tax rate was 11.1% and -48.5% for the six months ended August 4, 2018 and July 29, 2017. The effective tax rate in the three and six months ended August 4, 2018 was significantly impacted by discrete tax benefits related to net excess tax windfalls from stock-based compensation resulting from increased option exercise activity and appreciation of the stock price, the reduction in the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018 due to the passage of the Tax Cuts and Jobs Act (the “Tax Act”), and discrete tax impact related to a legal settlement. The effective tax rate in the three and six months ended July 29, 2017 was significantly impacted by non-deductible stock-based compensation, as well as the Company reporting a net loss before income taxes and, to a lesser extent, the net excess tax benefits from stock-based compensation. On December 22, 2017, the Tax Act was enacted in the United States. The Company recognized the income tax effects of the Tax Act in its fiscal 2017 financial statements in accordance with Staff Accounting Bulletin 118, which provides SEC staff guidance for the application of ASC Topic 740, Income Taxes, in the reporting period in which the Tax Act was signed into law. As noted in its fiscal 2017 consolidated financial statements, the Company was able to reasonably estimate certain effects and, therefore, recorded provisional amounts associated with the one-time transition tax on indefinitely reinvested foreign earnings and the adjustment to our deferred tax assets and liabilities for the reduction in the corporate income tax rate. The Company has not made any additional measurement period adjustments related to these items during the three and six months ended August 4, 2018. As the Company continues its analysis of the Tax Act and interprets any additional guidance, it may make adjustments to the provisional amounts that have been recorded that may materially impact the Company's provision for income taxes. As of August 4, 2018, the Company had $8.4 million of unrecognized tax benefits, of which $6.8 million would reduce income tax expense and the effective tax rate, if recognized. As of February 3, 2018, the Company had $8.2 million of unrecognized tax benefits, of which $6.5 million would reduce income tax expense and the effective tax rate, if recognized. The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized. As of August 4, 2018, the Company had $0.4 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 6 Months Ended |
Aug. 04, 2018 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | NOTE 11—NET INCOME (LOSS) PER SHARE The weighted-average shares used for net income (loss) per share is presented in the table below. As the Company was in a net loss position for the three and six months ended July 29, 2017, the weighted-average shares outstanding for basic and diluted are the same. Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Weighted-average shares—basic 21,925,702 28,398,307 21,735,364 35,667,217 Effect of dilutive stock-based awards 5,158,591 — 4,421,897 — Effect of dilutive convertible senior notes (1) 412,268 — 206,134 — Weighted-average shares—diluted 27,496,561 28,398,307 26,363,395 35,667,217 (1) The 2019 Notes, 2020 Notes and 2023 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share and $193.65 per share, respectively. 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: Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Options 209,441 8,997,210 347,978 8,997,210 Restricted stock units — 838,377 5,250 838,377 Total anti-dilutive stock-based awards 209,441 9,835,587 353,228 9,835,587 |
Share Repurchases
Share Repurchases | 6 Months Ended |
Aug. 04, 2018 | |
Equity [Abstract] | |
Share Repurchases | NOTE 12—SHARE REPURCHASES $700 Million Share Repurchase Program On May 2, 2017, the Company’s Board of Directors authorized a stock 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, during the three months ended July 29, 2017. As the $700 Million Repurchase Program was completed during the three months ended July 29, 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 stock 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, during the three months ended April 29, 2017. As the $300 Million Repurchase Program was completed during the three months ended April 29, 2017 there will be no repurchases in future periods under this repurchase authorization. Share Repurchases Under Equity Plans As of August 4, 2018 and February 3, 2018, the aggregate unpaid principal amount of the notes payable for share repurchases was $19.6 million and $19.4 million, respectively. As of August 4, 2018, $0.9 million and $18.7 million were included in other current liabilities and other non-current obligations on the condensed consolidated balance sheets. As of February 3, 2018, $19.4 million was included in other non-current obligations. During both the three months ended August 4, 2018 and July 29, 2017, the Company recorded interest expense on the outstanding notes of $0.3 million. During both the six months ended August 4, 2018 and July 29, 2017, the Company recorded interest expense on the outstanding notes of $0.5 million. Of the $19.6 million and $19.4 million notes payable for share repurchases outstanding as of August 4, 2018 and February 3, 2018, respectively, $15.5 million was due to a current board member of the Company. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Aug. 04, 2018 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Stock-Based Compensation | NOTE 13—STOCK-BASED COMPENSATION The Company estimates the value of equity grants based upon an option-pricing model (“OPM”) and recognizes this estimated value as compensation expense over the vesting periods. The Company recognizes expense associated with performance-based awards when it becomes probable that the performance condition will be met. Once it becomes probable that an award will vest, the Company recognizes compensation expense equal to the number of shares which are probable to vest multiplied by the fair value of the related shares measured at the grant date. Stock-based compensation expense is included in selling, general and administrative expenses on the condensed consolidated statements of operations. The Company recorded stock-based compensation expense of $6.1 million and $30.9 million during the three months ended August 4, 2018 and July 29, 2017, respectively. The Company recorded stock-based compensation expense of $14.1 million and $36.2 million during the six months ended August 4, 2018 and July 29, 2017, respectively. No stock-based compensation cost has been capitalized in the accompanying condensed consolidated financial statements. 2012 Stock Incentive Plan and 2012 Stock Option Plan As of August 4, 2018, 8,031,998 options were outstanding with a weighted-average exercise price of $52.63 per share and 6,125,419 options were vested with a weighted-average exercise price of $52.03 per share. The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of August 4, 2018 was $660.2 million, $605.6 million, and $506.6 million, respectively. Stock options exercisable as of August 4, 2018 had a weighted-average remaining contractual life of 5.62 years. As of August 4, 2018, the total unrecognized compensation expense related to unvested options was $25.6 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 2.90 years. As of August 4, 2018, the Company had 594,408 restricted stock units outstanding with a weighted-average grant date fair value of $52.74 per share. During the three months ended August 4, 2018, 132,660 restricted stock units vested with a weighted-average grant date and vest date fair value of $58.73 per share. During the six months ended August 4, 2018, 163,275 restricted stock units vested with a weighted-average grant date and vest date fair value of $57.54 per share. As of August 4, 2018, there was $16.4 million of total unrecognized compensation expense related to unvested restricted stock and restricted stock units which is expected to be recognized over a weighted-average period of 2.57 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 one-time non-cash stock compensation charge of $23.9 million in the three and six months ended July 29, 2017. 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 of these first four performance years, the stock price objective can be achieved in any subsequent year until the 8th anniversary of the date of grant. Rollover Units In connection with the acquisition of Waterworks in May 2016, $1.5 million rollover units in the Waterworks subsidiary (the “Rollover Units”) were recorded as part of the transaction. The Rollover Units are subject to the terms of the Waterworks LLC agreement, including redemption rights at an amount equal to the greater of (i) the $1.5 million remitted as consideration in the business combination or (ii) an amount based on the percentage interest represented in the overall valuation of the Waterworks subsidiary (the “Appreciation Rights”). The Appreciation Rights are measured at fair value and are subject to fair value measurements during the expected life of the Rollover Units, with changes to fair value recorded in the condensed consolidated statements of 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 the three and six months ended August 4, 2018 and July 29, 2017. As of both August 4, 2018 and February 3, 2018, the liability associated with the Rollover Units and related Appreciation Rights was $1.5 million, which is included in other non-current obligations on the condensed consolidated balance sheets. Profit Interests In connection with the acquisition of Waterworks in May 2016, profit interests units in the Waterworks subsidiary (the “Profit Interests”) were issued to certain Waterworks associates. The Profit Interests are measured at their grant date fair value and expensed on a straight-line basis over their expected life, or five years. The Profit Interests are subject to fair value measurements during their expected life, with changes to fair value recorded in the condensed consolidated statements of operations. The fair value of the Profit Interests is determined based on an OPM. For both the three months ended August 4, 2018 and July 29, 2017, the Company recorded $0.1 million related to the Profit Interests, which is included in selling, general and administrative expenses on the condensed consolidated statements of operations. For both the six months ended August 4, 2018 and July 29, 2017, the Company recorded $0.2 million related to the Profit Interests, which is included in selling, general and administrative expenses on the condensed consolidated statements of operations. As of August 4, 2018 and February 3, 2018, the liability associated with the Profit Interests was $0.9 million and $0.7 million, respectively, which is included in other non-current obligations on the condensed consolidated balance sheets. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Aug. 04, 2018 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 14—COMMITMENTS AND CONTINGENCIES Commitments The Company had no material off balance sheet commitments as of August 4, 2018. Contingencies The Company is involved in lawsuits, claims and proceedings incident to the ordinary course of its business. These disputes are increasing in number as the business expands and the Company grows larger. Litigation is inherently unpredictable. As a result, the outcome of matters in which the Company is involved could result in unexpected expenses and liability that could adversely affect the Company’s operations. In addition, any claims against the Company, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The Company reviews the need for any loss contingency reserves and establishes reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters, particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that the Company does establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what the Company accrues from time to time. The Company believes that the ultimate resolution of its current matters will not have a material adverse effect on its condensed consolidated financial statements. Securities Class Action On February 2, 2017, City of Miami General Employees’ & Sanitation Employees’ Retirement Trust filed a class action complaint in the United States District Court, Northern District of California, against the Company, Gary Friedman, and Karen Boone. On March 16, 2017, Peter J. Errichiello, Jr. filed a similar class action complaint in the same forum and against the same parties. On April 26, 2017, the court consolidated the two actions. The consolidated action is captioned In re RH, Inc. Securities Litigation. An amended consolidated complaint was filed in June 2017 asserting claims under sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The complaint asserts claims purportedly on behalf of a class of purchasers of Company common stock from March 26, 2015 to June 8, 2016. The alleged misstatements relate to statements regarding the roll out of the RH Modern product line and the Company’s inventory levels. The complaint seeks class certification, monetary damages, and other appropriate relief, including an award of costs and attorneys’ fees. On February 26, 2018, the Court filed an order denying the Company’s motion to dismiss the complaint and the case is in discovery. While the outcome of litigation is inherently uncertain, the Company and its officers intend to vigorously defend the claims and believe the complaint lacks merit . 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). The suit names the Company as nominal defendant and also names as defendants Gary Friedman, Karen Boone, Carlos Alberini, Keith Belling, Eri Chaya, Mark Demilio, Katie Mitic, Ali Rowghani, and Leonard Schlesinger. On June 29, 2018, Hosrof Izmirliyan filed a similar purported shareholder derivative complaint in the same forum against Gary Friedman, Karen Boone, Carlos Alberini, Eri Chaya, Mark Demilio, Katie Mitic, Ali Rowghani and Leonard Schlesinger, 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. The allegations in the complaints 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. Magnani also alleges insider trading and misappropriation of information claims against two of the individual defendants. On August 24, 2018, plaintiffs filed an amended complaint. 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. |
Segment Reporting
Segment Reporting | 6 Months Ended |
Aug. 04, 2018 | |
Segment Reporting [Abstract] | |
Segment Reporting | NOTE 15—SEGMENT REPORTING The Company defines reportable and operating segments on the same basis that it uses to evaluate performance internally by the Chief Operating Decision Maker (the “CODM”). The Company has determined that the Chief Executive Officer is its CODM. As of August 4, 2018, the Company had two operating segments: RH Segment and Waterworks. The two operating segments include all sales channels accessed by the Company’s customers, including sales through catalogs, sales through the Company’s websites, sales through stores, and sales through the commercial channel . The Company’s two operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared management team and customer base, the Company has determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors. The Company uses operating income to evaluate segment profitability. Operating income is defined as net income (loss) before interest expense—net, loss on extinguishment of debt and income tax expense. Segment Information The following tables present the statements of operations metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting (in thousands) Three Months Ended August 4, July 29, 2018 2017 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 607,604 $ 33,194 $ 640,798 $ 583,793 $ 31,533 $ 615,326 Gross profit 258,181 13,419 271,600 192,996 12,817 205,813 Depreciation and amortization 16,638 1,118 17,756 15,386 1,140 16,526 Six Months Ended August 4, July 29, 2018 2017 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 1,133,611 $ 64,593 $ 1,198,204 $ 1,117,321 $ 60,085 $ 1,177,406 Gross profit 457,216 26,419 483,635 352,623 23,446 376,069 Depreciation and amortization 32,573 2,230 34,803 30,287 2,259 32,546 The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting (in thousands) August 4, February 3, 2018 2018 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 124,390 $ 17,445 $ 141,835 $ 124,448 $ 17,445 $ 141,893 Trademarks and domain names 48,563 52,100 100,663 48,563 52,100 100,663 Total assets 1,685,089 129,018 1,814,107 1,608,290 124,576 1,732,866 (1) The Waterworks reporting unit goodwill is presented net of an impairment charge of $33.7 million, which was recorded in fiscal 2017. The Company uses segment operating income to evaluate segment performance and allocate resources. Segment operating income excludes (i) The following table presents segment operating income (loss) and income (loss) before tax ( in thousands Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Operating income (loss): RH Segment $ 78,777 $ 39,550 $ 132,673 $ 49,608 Waterworks 241 358 (275 ) (1,424 ) Legal settlement 7,204 — 5,289 — Distribution center closures — — 2,072 — Recall accrual 1,064 (4,733 ) 1,318 (4,733 ) Reorganization related costs (1,721 ) — (1,721 ) — Impact of inventory step-up (190 ) (480 ) (380 ) (1,860 ) Non-cash compensation — (23,872 ) — (23,872 ) Gain on sale of building and land — 1,300 — 1,300 Operating income 85,375 12,123 138,976 19,019 Interest expense—net 17,480 14,402 34,515 26,581 Loss on extinguishment of debt 917 — 917 — Income (loss) before tax $ 66,978 $ (2,279 ) $ 103,544 $ (7,562 ) The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor furniture. Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor. Net revenues in each category were as follows ( in thousands Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Furniture $ 430,196 $ 388,983 $ 782,842 $ 741,939 Non-furniture 210,602 226,343 415,362 435,467 Total net revenues $ 640,798 $ 615,326 $ 1,198,204 $ 1,177,406 The Company is domiciled in the United States and primarily operates its retail and outlet stores in the United States. As of August 4, 2018, the Company operates 4 retail and 2 outlet stores in Canada and 1 retail store in the U.K. Revenues from Canadian and U.K. operations, and the long-lived assets in Canada and the U.K., are not material to the Company. Canada and U.K. geographic revenues are based upon revenues recognized at the retail store locations in the respective country. No single customer accounted for more than 10% of the Company’s revenues in the three and six months ended August 4, 2018 or July 29, 2017. |
The Company (Policies)
The Company (Policies) | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Policies [Abstract] | |
Nature of Business | Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, the “Company”), is a luxury home furnishings retailer that offers a growing number of categories including furniture, lighting, textiles, bathware, décor, outdoor and garden, tableware, and child and teen furnishings. These products are sold through the Company’s stores, catalogs and websites. As of August 4, 2018, the Company operated a total of 85 retail Galleries and 36 outlet stores in 32 states, the District of Columbia and Canada, and includes 15 Waterworks showrooms in the United States and in the U.K., and had sourcing operations in Shanghai and Hong Kong. |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from the Company’s records and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state the Company’s financial position as of August 4, 2018, and the results of operations for the three and six months ended August 4, 2018 and July 29, 2017. The Company’s current fiscal year, which consists of 52 weeks, ends on February 2, 2019 (“fiscal 2018”). Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2018 (the “2017 Form 10-K”). Certain prior year amounts have been reclassified for consistency with the current period presentation. This reclassification had no effect on the previously reported consolidated financial position or consolidated results of operations, and did not have a material effect on the previously reported consolidated cash flows. The results of operations for the three and six months ended August 4, 2018 presented herein are not necessarily indicative of the results to be expected for the full fiscal year. |
Convertible Senior Notes | Convertible Senior Notes 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 (collectively, the “2023 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 $91.9 million. In addition, the Company sold warrants for which it received aggregate proceeds of $51.0 million. Taken together, the Company received total cash proceeds of $287.8 million, net of discounts upon original issuance and offering costs of $6.3 million. Refer to Note 7— Convertible Senior Notes |
Recently Issued Accounting Standards | Revenue from Contracts with Customers In May 2014, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board issued their converged accounting standards update on revenue recognition, Accounting Standards Update 2014-09—Revenue from Contracts with Customers (Topic 606) . This guidance outlines a single comprehensive model for companies to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that revenue is recognized when a customer obtains control of a good or service. A customer obtains control when it has the ability to direct the use of and obtain the benefits from the good or service. Under the new guidance, transfer of control is no longer the same as transfer of risks and rewards as indicated in the prior guidance. Adoption and Accounting Policy The Company adopted Topic 606 on February 4, 2018 using the modified retrospective transition method and recorded a decrease to opening retained earnings of $21.0 million, inclusive of the tax impact. Results reported within the Company’s condensed consolidated financial statements for reporting periods beginning February 4, 2018 are presented under Topic 606 while prior periods are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605 —Revenue Recognition (Topic 605) . Under Topic 606, changes were made to the recognition timing or classification of revenues and expenses for the following: Description Policy under Topic 605 Policy under Topic 606 Advertising expenses Costs associated with Source Books were capitalized and amortized over their expected period of future benefit. Expense was amortized based upon the ratio of actual revenues to the total of actual and estimated future revenues on an individual Source Book basis, generally over a twelve-month period after they were mailed. Costs associated with Source Books are expensed 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. Gift card breakage Recognized gift card breakage (amounts not expected to be redeemed) within selling, general and administrative expenses. Recognize gift card breakage within net revenues proportional to actual gift card redemptions. Membership revenue Annual fees for new memberships in the RH Members Program and renewals were recorded as deferred revenue when collected from customers and recognized as revenue on a straight-line basis over the twelve month membership period. Annual fees for new memberships in the RH Members Program are recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, using historical trends of sales to members. RH Members Program renewal fees are recorded as deferred revenue when collected from customers and will continue to be recognized as revenue on a straight-line basis over the twelve month membership period. Revenue recognition Revenue for merchandise that is not delivered via the home-delivery channel was recognized upon delivery. Revenue for merchandise that is not delivered via the home-delivery channel will be recognized upon shipment. Allowance for sales returns Recognized an allowance for sales returns as a net liability within other current liabilities. Recognize an allowance for sales returns on a gross basis as a liability within other current liabilities and a right of return asset for merchandise within prepaid expense and other current assets. Advertising expenses — The adoption of Topic 606 materially impacts the timing of recognizing advertising expense related to direct response advertising, including costs associated with the Company’s Source Books. Under Topic 606, the Company will recognize expense associated with the Source Books 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. Prior to adoption of Topic 606, costs associated with Source Books were capitalized and amortized over their expected period of future benefit. Such amortization was based upon the ratio of actual revenues to the total of actual and estimated future revenues on an individual Source Book basis. Each Source Book was generally fully amortized within a twelve-month period after they were mailed and the majority of the amortization occurred within the first five to nine months, with the exception of the Holiday Source Books, which were generally fully amortized within a three-month period after they were mailed . Upon adoption of Topic 606, capitalized costs associated with Source Books of $37.8 million that had been delivered to the carrier prior to or on February 3, 2018 were reclassified to retained earnings on the consolidated balance sheets, resulting in a decrease to the opening retained earnings balance . Gift card breakage — Under Topic 606, the Company recognizes gift card breakage proportional to actual gift card redemptions and such breakage is recorded within net revenues on the condensed consolidated statements of operations. Gift card breakage was previously recorded as a reduction to selling, general and administrative expenses when the likelihood of redemption was remote. Upon adoption of Topic 606, gift card liabilities of $6.0 million were reclassified to retained earnings on the consolidated balance sheets , resulting in an increase to the opening retained earnings balance . Membership revenue — Under Topic 606, the annual fee for new memberships in the RH Members Program is recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, using historical trends of sales to members. Prior to the adoption of Topic 606, new memberships were recorded as deferred revenue when collected from customers and recognized as revenue on a straight-line basis over the twelve month membership period. This will result in a majority of revenue being recognized during the first six months of the membership period. The adoption of Topic 606 will not have an impact on membership renewal fees, which will continue to be recognized as revenue on a straight-line basis over the twelve month membership period, until the Company has more information regarding membership renewal purchasing trends. Upon adoption of Topic 606, deferred membership revenue of $3.8 million was reclassified to retained earnings on the consolidated balance sheets, resulting in an increase to the opening retained earnings balance. Revenue recognition — Under Topic 606, the Company will continue to recognize revenue for merchandise delivered via the home-delivery channel upon delivery. Under Topic 606, revenue for merchandise delivered via all other delivery channels will be recognized upon shipment , whereas previously such revenue was recognized upon delivery . Upon adoption of Topic 606, deferred revenue (net of cost of goods sold) of $1.3 million was reclassified to retained earnings on the consolidated balance sheets , resulting in an increase to the opening retained earnings balance . The Company adopted the practical expedient related to shipping and handling activities. Under this option, 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 will be accrued for in the same period. Costs of shipping and handling continue to be included in cost of goods sold. Allowance for sales returns — In connection with adoption of Topic 606, the Company is required to recognize its allowance for sales returns on a gross basis rather than as a net liability. Upon adoption, this resulted in an increase to prepaid and other current assets (“right of return asset for merchandise”), with a corresponding increase to other current liabilities on the consolidated balance sheets, and did not impact the consolidated statements of operations. As of August 4, 2018, the right of return asset for merchandise was $6.9 million . Sales tax collection from customers — Under Topic 606, the Company has not changed its policy regarding sales tax collected from customers. 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. In connection with adoption of Topic 606, the Company recorded a $6.6 million tax adjustment associated with the charges listed above to retained earnings on the consolidated balance sheets, resulting in an increase to the opening retained earnings balance . Contract Liabilities The Company defers revenue associated with merchandise delivered via the home-delivery channel. As the Company recognizes revenue when the merchandise is delivered to our customers, it is included as deferred revenue on the consolidated balance sheets while in-transit. Customer deposits represent payments made by customers on custom orders. At the time of order placement the Company collects deposits for all custom orders equivalent to 50% of the purchase price. Custom order deposits are recognized as revenue when a customer obtains control of the merchandise. In addition, the Company collects annual membership fees related to the RH Members Program. 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, using 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. The Company expects that substantially all of the deferred revenue, customer deposits and deferred membership fees as of August 4, 2018 will be recognized within the next six months as the performance obligations are satisfied. In addition, the Company defers revenue when cash payments are received in advance of performance for unsatisfied obligations related to its gift cards and merchandise credits. Customer liabilities related to gift cards and merchandise credits was $19.1 million and $24.1 million as of August 4, 2018 and February 3, 2018, respectively. As discussed above, $6.0 million of the decrease was due to the reclassification of gift card liabilities to retained earnings upon adoption of Topic 606. During the three and six months ended August 4, 2018, the Company recognized $4.8 million and $9.7 million of revenue related to previous deferrals related to its gift cards and merchandise credits, respectively, and recorded gift card breakage of $0.4 million and $0.8 million, respectively. 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. Disaggregated Revenue The Company recognizes revenue from its stores and direct sales channels. Stores net revenues represent sales originating in retail stores, including Waterworks showrooms, and outlet stores. Direct net revenues include sales through the Company’s Source Books, websites, and phone orders, including its Contract business and a portion of its Trade business. During the three months ended August 4, 2018, net revenues recognized from the stores and direct sales channels were $361.9 million and $278.9 million, respectively. During the six months ended August 4, 2018, net revenues recognized from the stores and direct sales channels were $676.4 million and $521.8 million, respectively. Adoption Impact on Fiscal 2018 Results The following tables summarize the impact of adopting Topic 606 on the Company’s condensed consolidated statements of operations ( in thousands Three Months Ended August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Net revenues $ 640,798 $ (1,685 ) $ 639,113 Cost of goods sold 369,198 (662 ) 368,536 Gross profit 271,600 (1,023 ) 270,577 Selling, general and administrative expenses 186,225 (11,105 ) 175,120 Income from operations 85,375 10,082 95,457 Other expenses Interest expense—net 17,480 — 17,480 Loss on extinguishment of debt 917 — 917 Total other expenses 18,397 — 18,397 Income before income taxes 66,978 10,082 77,060 Income tax expense 2,936 455 3,391 Net income $ 64,042 $ 9,627 $ 73,669 Six Months Ended August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Net revenues $ 1,198,204 $ (9,295 ) $ 1,188,909 Cost of goods sold 714,569 (3,650 ) 710,919 Gross profit 483,635 (5,645 ) 477,990 Selling, general and administrative expenses 344,659 (7,302 ) 337,357 Income from operations 138,976 1,657 140,633 Other expenses Interest expense—net 34,515 — 34,515 Loss on extinguishment of debt 917 — 917 Total other expenses 35,432 — 35,432 Income before income taxes 103,544 1,657 105,201 Income tax expense 11,443 (1,495 ) 9,948 Net income $ 92,101 $ 3,152 $ 95,253 The following table summarizes the impact of adopting Topic 606 on certain line items of the Company’s condensed consolidated balance sheets ( in thousands As of August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Prepaid expense and other current assets $ 78,254 $ 36,012 $ 114,266 Deferred tax assets 29,437 (6,561 ) 22,876 Accounts payable and accrued expenses 284,942 (732 ) 284,210 Deferred revenue and customer deposits 164,979 9,860 174,839 Other current liabilities 51,354 (3,865 ) 47,489 Retained earnings 223,459 24,188 247,647 Financial Instruments In January 2016, the FASB issued Accounting Standards Update 2016-01—Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, Cash Flow Classification In August 2016, the FASB issued Accounting Standards Update No. 2016-15—Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments In November 2016, the FASB issued Accounting Standards Update No. 2016-18—Statement of Cash Flows (Topic 230): Restricted Cash Income Taxes: Intra-Entity Asset Transfers In October 2016, the FASB issued Accounting Standards Update No. 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory Stock-Based Compensation In May 2017, the FASB issued Accounting Standards Update No. 2017-09—Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting . The new guidance clarifies when modification accounting should be applied for changes to terms or conditions of a share-based payment award. The new guidance is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period, with early adoption permitted. The standard will be applied prospectively. The Company adopted this new accounting standard in the first quarter of fiscal 2018 and such adoption did not have an impact on its consolidated financial statements . Accounting for Leases In February 2016, the FASB issued Accounting Standards Update 2016-02—Leases, Accounting Standards Update 2018-10 — Codification Improvements to Topic 842 (Leases) Accounting Standards Update 2018-11 — Leases (Topic 842) — Targeted Improvements |
Commitments and Contingencies | The Company reviews the need for any loss contingency reserves and establishes reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Generally, in view of the inherent difficulty of predicting the outcome of those matters, particularly in cases in which claimants seek substantial or indeterminate damages, it is not possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that the Company does establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what the Company accrues from time to time. The Company believes that the ultimate resolution of its current matters will not have a material adverse effect on its condensed consolidated financial statements. |
Recently Issued Accounting St23
Recently Issued Accounting Standards (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Accounting Standards Update 2014-09 [Member] | |
Summary of Impact of Adopting Topic 606 Condensed Consolidated Statements of Operations and Balance Sheets | The following tables summarize the impact of adopting Topic 606 on the Company’s condensed consolidated statements of operations ( in thousands Three Months Ended August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Net revenues $ 640,798 $ (1,685 ) $ 639,113 Cost of goods sold 369,198 (662 ) 368,536 Gross profit 271,600 (1,023 ) 270,577 Selling, general and administrative expenses 186,225 (11,105 ) 175,120 Income from operations 85,375 10,082 95,457 Other expenses Interest expense—net 17,480 — 17,480 Loss on extinguishment of debt 917 — 917 Total other expenses 18,397 — 18,397 Income before income taxes 66,978 10,082 77,060 Income tax expense 2,936 455 3,391 Net income $ 64,042 $ 9,627 $ 73,669 Six Months Ended August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Net revenues $ 1,198,204 $ (9,295 ) $ 1,188,909 Cost of goods sold 714,569 (3,650 ) 710,919 Gross profit 483,635 (5,645 ) 477,990 Selling, general and administrative expenses 344,659 (7,302 ) 337,357 Income from operations 138,976 1,657 140,633 Other expenses Interest expense—net 34,515 — 34,515 Loss on extinguishment of debt 917 — 917 Total other expenses 35,432 — 35,432 Income before income taxes 103,544 1,657 105,201 Income tax expense 11,443 (1,495 ) 9,948 Net income $ 92,101 $ 3,152 $ 95,253 The following table summarizes the impact of adopting Topic 606 on certain line items of the Company’s condensed consolidated balance sheets ( in thousands As of August 4, 2018 As Reported Adjustments Balances without Adoption of Topic 606 Prepaid expense and other current assets $ 78,254 $ 36,012 $ 114,266 Deferred tax assets 29,437 (6,561 ) 22,876 Accounts payable and accrued expenses 284,942 (732 ) 284,210 Deferred revenue and customer deposits 164,979 9,860 174,839 Other current liabilities 51,354 (3,865 ) 47,489 Retained earnings 223,459 24,188 247,647 |
Prepaid Expense and Other Ass24
Prepaid Expense and Other Assets (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Deferred Costs Capitalized Prepaid And Other Assets Disclosure [Abstract] | |
Prepaid Expense and Other Current Assets | Prepaid expense and other current assets consist of the following ( in thousands August 4, February 3, 2018 2018 Vendor deposits $ 20,767 $ 9,701 Capitalized catalog costs 14,285 44,122 Federal and state tax receivable 9,682 — Right of return asset for merchandise 6,888 — Prepaid expense and other current assets 26,632 14,762 Total prepaid expense and other current assets $ 78,254 $ 68,585 |
Schedule of Other Non-Current Assets | Other non-current assets consist of the following ( in thousands August 4, February 3, 2018 2018 Deferred financing fees $ 3,915 $ 4,446 Construction related deposits 2,745 7,407 Other deposits 5,139 4,997 Other non-current assets 4,639 4,482 Total other non-current assets $ 16,438 $ 21,332 |
Goodwill and Trademarks and D25
Goodwill and Trademarks and Domain Names (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill and Trademarks and Domain Names Activity | The following sets forth the goodwill and trademarks and domain names activity for the RH Segment and Waterworks for the six months ended August 4, 2018 ( in thousands Foreign February 3, Currency August 4, 2018 Translation 2018 RH Segment Goodwill $ 124,448 $ (58 ) $ 124,390 Trademarks and domain names 48,563 — 48,563 Waterworks Goodwill (1) 17,445 — 17,445 Trademarks 52,100 — 52,100 (1) T he Waterworks reporting unit goodwill is presented net of an impairment charge of $33.7 million, which was recorded in fiscal 2017 |
Accounts Payable, Accrued Exp26
Accounts Payable, Accrued Expenses and Other Current Liabilities (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Payables And Accruals [Abstract] | |
Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consist of the following ( in thousands August 4, February 3, 2018 2018 Accounts payable $ 164,706 $ 195,313 Accrued compensation 47,562 47,534 Accrued freight and duty 20,412 23,757 Accrued sales taxes 17,346 19,525 Accrued occupancy 12,460 8,612 Accrued catalog costs 10,427 9,000 Accrued professional fees 2,971 3,555 Other accrued expenses 9,058 11,469 Total accounts payable and accrued expenses $ 284,942 $ 318,765 |
Schedule of Other Current Liabilities | Other current liabilities consist of the following ( in thousands August 4, February 3, 2018 2018 Allowance for sales returns $ 23,069 $ 10,565 Unredeemed gift card and merchandise credit liability 19,110 24,138 Product recall reserves 3,501 1,201 Current portion of non-current debt 892 6,033 Federal and state tax payable — 5,391 Other current liabilities 4,782 3,838 Total other current liabilities $ 51,354 $ 51,166 |
Other Non-Current Obligations (
Other Non-Current Obligations (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Non-Current Obligations | Other non-current obligations consist of the following ( in thousands August 4, February 3, 2018 2018 Notes payable for share repurchases $ 18,741 $ 19,390 Capital lease obligations—non-current 8,012 7,509 Lease loss liabilities 7,393 9,684 Deferred contract incentive (1) 4,167 5,358 Unrecognized tax benefits 3,955 3,728 Rollover units and profit interests (2) 2,424 2,211 Other non-current obligations 3,155 2,996 Equipment security notes (3) — 13,864 Promissory note (4) — 11,627 Total other non-current obligations $ 47,847 $ 76,367 (1) Represents the non-current portion of an incentive payment received in relation to a 5-year service agreement. The amount will be amortized over the term of the agreement. (2) Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 13 — Stock-Based Compensation (3) Represents the non-current portion of equipment security notes secured by certain of the Company’s distribution center property and equipment. The equipment security notes were repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt. (4) Represents the non-current portion of a promissory note secured by the Company’s aircraft. The promissory note was repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt. |
Convertible Senior Notes (Table
Convertible Senior Notes (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Convertible Senior Notes Due 2023 [Member] | |
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 August 4, 2018 Liability component Principal $ 335,000 Less: Debt discount (89,217 ) Net carrying amount $ 245,783 Equity component (1) $ 90,990 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Convertible Senior Notes Due 2020 [Member] | |
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 August 4, February 3, 2018 2018 Liability component Principal $ 300,000 $ 300,000 Less: Debt discount (35,745 ) (44,135 ) Net carrying amount $ 264,255 $ 255,865 Equity component (1) $ 84,003 $ 84,003 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Convertible Senior Notes Due 2019 [Member] | |
Carrying Values of Notes Excluding the Discounts upon Original Issuance and Third Party Offering Costs | The carrying values of the 2019 Notes, excluding the discounts and commissions payable to the initial purchasers and third party offering costs, are as follows ( in thousands August 4, February 3, 2018 2018 Liability component Principal $ 350,000 $ 350,000 Less: Debt discount (13,506 ) (20,988 ) Net carrying amount $ 336,494 $ 329,012 Equity component (1) $ 70,482 $ 70,482 (1) Included in additional paid-in capital on the condensed consolidated balance sheets. |
Credit Facilities (Tables)
Credit Facilities (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Credit Facilities | Balances outstanding under the Company’s credit facilities as of February 3, 2018 were as follows ( in thousands February 3, 2018 Outstanding Unamortized Debt Net Carrying Amount Issuance Costs Amount Asset based credit facility $ 199,970 $ — $ 199,970 LILO term loan 80,000 (501 ) 79,499 Total credit facilities $ 279,970 $ (501 ) $ 279,469 |
Fair Value of Financial Instr30
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Fair Value Disclosures [Abstract] | |
Estimated Fair Value and Carrying Value of Notes | The estimated fair value and carrying value of the 2019 Notes, 2020 Notes and 2023 Notes were as follows ( in thousands August 4, February 3, 2018 2018 Fair Value Carrying Value (1) Fair Value Carrying Value (1) Convertible senior notes due 2019 $ 332,232 $ 336,494 $ 324,866 $ 329,012 Convertible senior notes due 2020 265,796 264,255 261,047 255,865 Convertible senior notes due 2023 245,275 245,783 — — (1) Carrying value represents the principal amount less the equity component of the 2019 Notes, 2020 Notes and 2023 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. |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Weighted Average Shares Used for Net Income (Loss) per Share | The weighted-average shares used for net income (loss) per share is presented in the table below. As the Company was in a net loss position for the three and six months ended July 29, 2017, the weighted-average shares outstanding for basic and diluted are the same. Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Weighted-average shares—basic 21,925,702 28,398,307 21,735,364 35,667,217 Effect of dilutive stock-based awards 5,158,591 — 4,421,897 — Effect of dilutive convertible senior notes (1) 412,268 — 206,134 — Weighted-average shares—diluted 27,496,561 28,398,307 26,363,395 35,667,217 (1) The 2019 Notes, 2020 Notes and 2023 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share and $193.65 per share, respectively. |
Anti-Dilutive Securities Excluded from Diluted Net Income (Loss) per Share | 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: Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Options 209,441 8,997,210 347,978 8,997,210 Restricted stock units — 838,377 5,250 838,377 Total anti-dilutive stock-based awards 209,441 9,835,587 353,228 9,835,587 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 6 Months Ended |
Aug. 04, 2018 | |
Segment Reporting [Abstract] | |
Summary of Statements of Operations Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting | The following tables present the statements of operations metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting (in thousands) Three Months Ended August 4, July 29, 2018 2017 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 607,604 $ 33,194 $ 640,798 $ 583,793 $ 31,533 $ 615,326 Gross profit 258,181 13,419 271,600 192,996 12,817 205,813 Depreciation and amortization 16,638 1,118 17,756 15,386 1,140 16,526 Six Months Ended August 4, July 29, 2018 2017 RH Segment Waterworks Total RH Segment Waterworks Total Net revenues $ 1,133,611 $ 64,593 $ 1,198,204 $ 1,117,321 $ 60,085 $ 1,177,406 Gross profit 457,216 26,419 483,635 352,623 23,446 376,069 Depreciation and amortization 32,573 2,230 34,803 30,287 2,259 32,546 |
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) August 4, February 3, 2018 2018 RH Segment Waterworks Total RH Segment Waterworks Total Goodwill (1) $ 124,390 $ 17,445 $ 141,835 $ 124,448 $ 17,445 $ 141,893 Trademarks and domain names 48,563 52,100 100,663 48,563 52,100 100,663 Total assets 1,685,089 129,018 1,814,107 1,608,290 124,576 1,732,866 (1) The Waterworks reporting unit goodwill is presented net of an impairment charge of $33.7 million, which was recorded in fiscal 2017. |
Schedule of Segment Operating Income (Loss) and Income (Loss) Before Tax | The following table presents segment operating income (loss) and income (loss) before tax ( in thousands Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Operating income (loss): RH Segment $ 78,777 $ 39,550 $ 132,673 $ 49,608 Waterworks 241 358 (275 ) (1,424 ) Legal settlement 7,204 — 5,289 — Distribution center closures — — 2,072 — Recall accrual 1,064 (4,733 ) 1,318 (4,733 ) Reorganization related costs (1,721 ) — (1,721 ) — Impact of inventory step-up (190 ) (480 ) (380 ) (1,860 ) Non-cash compensation — (23,872 ) — (23,872 ) Gain on sale of building and land — 1,300 — 1,300 Operating income 85,375 12,123 138,976 19,019 Interest expense—net 17,480 14,402 34,515 26,581 Loss on extinguishment of debt 917 — 917 — Income (loss) before tax $ 66,978 $ (2,279 ) $ 103,544 $ (7,562 ) |
Net Revenues | Net revenues in each category were as follows ( in thousands Three Months Ended Six Months Ended August 4, July 29, August 4, July 29, 2018 2017 2018 2017 Furniture $ 430,196 $ 388,983 $ 782,842 $ 741,939 Non-furniture 210,602 226,343 415,362 435,467 Total net revenues $ 640,798 $ 615,326 $ 1,198,204 $ 1,177,406 |
The Company - Additional Inform
The Company - Additional Information (Detail) $ in Thousands | 1 Months Ended | 6 Months Ended |
Jun. 30, 2018USD ($) | Aug. 04, 2018USD ($)GalleryStoreStateShowroom | |
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||
Number of retail Galleries | Gallery | 85 | |
Number of outlet stores | Store | 36 | |
Number of states | State | 32 | |
Number of waterworks showrooms | Showroom | 15 | |
Total cost of convertible note hedge transactions | $ 91,857 | |
Cash proceeds from sale of warrants | 51,021 | |
Total cash proceeds, net of discounts upon original issuance and offering costs | $ 287,800 | |
Discounts upon original issuance and offering costs | 6,300 | |
Convertible Senior Notes Due 2023 [Member] | ||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||
Debt instrument, principal amount | $ 335,000 | |
Cash proceeds from sale of warrants | 51,000 | |
Convertible Senior Notes Due 2023 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | ||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||
Total cost of convertible note hedge transactions | 91,900 | |
Private Placement [Member] | Convertible Senior Notes Due 2023 [Member] | ||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||
Debt instrument, principal amount | $ 300,000 | |
Debt instrument, interest rate | 0.00% | |
Over Allotment Option in Private Placement [Member] | Convertible Senior Notes Due 2023 [Member] | ||
Organization Consolidation and Presentation of Financial Statements [Line Items] | ||
Debt instrument, principal amount | $ 35,000 |
Recently Issued Accounting St34
Recently Issued Accounting Standards - Additional Information (Detail) - USD ($) $ in Thousands | Feb. 04, 2018 | Aug. 04, 2018 | Aug. 04, 2018 | Jul. 29, 2017 | Feb. 03, 2018 | Jan. 28, 2017 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Gift card liabilities | $ 19,110 | $ 19,110 | $ 24,138 | |||
Right of return for asset merchandise | 6,888 | $ 6,888 | ||||
Customer deposits | 50.00% | |||||
Revenue recognized on membership period | 1 year | |||||
Deferred revenue, revenue recognized | 4,800 | $ 9,700 | ||||
Gift card breakage | 400 | 800 | ||||
Net revenue recognized | 640,798 | 1,198,204 | ||||
Cash and cash equivalents and restricted cash equivalents | 24,944 | 24,944 | $ 35,628 | 25,314 | $ 115,067 | |
Stores [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Net revenue recognized | 361,900 | 676,400 | ||||
Direct Sales [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Net revenue recognized | 278,900 | $ 521,800 | ||||
Deferred Revenue, Customer Deposits and Deferred Membership Fees [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Expected satisfied period for recognized of performance obligation | 6 months | |||||
Gift Card and Merchandise Credit [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Percentage of remaining revenue recognized on gift card and merchandise credit | 70.00% | |||||
Accounting Standards Update 2014-09 [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Right of return for asset merchandise | 6,900 | $ 6,900 | ||||
Tax adjustment to retained earnings | 6,600 | |||||
Accounting Standards Update 2014-09 [Member] | Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Decrease to cumulative effect adjustment of retained earnings | $ (21,000) | |||||
Capitalized catalog cost | $ 37,800 | |||||
Gift card liabilities | 6,000 | |||||
Deferred membership revenue | 3,800 | |||||
Deferred revenue | $ 1,300 | |||||
Net revenue recognized | $ (1,685) | $ (9,295) | ||||
Accounting Standards Update 2016-18 [Member] | ||||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||||
Cash and cash equivalents and restricted cash equivalents | 14,000 | $ 28,000 | ||||
Increase in capital expenditures | 17,300 | |||||
Decrease in construction related deposits | $ (5,300) |
Recently Issued Accounting St35
Recently Issued Accounting Standards - Summary of Impact of Adopting Topic 606 Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net revenues | $ 640,798 | $ 1,198,204 | ||
Cost of goods sold | 369,198 | $ 409,513 | 714,569 | $ 801,337 |
Gross profit | 271,600 | 205,813 | 483,635 | 376,069 |
Selling, general and administrative expenses | 186,225 | 193,690 | 344,659 | 357,050 |
Income from operations | 85,375 | 12,123 | 138,976 | 19,019 |
Other expenses | ||||
Interest expense—net | 17,480 | 14,402 | 34,515 | 26,581 |
Loss on extinguishment of debt | 917 | 917 | ||
Total other expenses | 18,397 | 14,402 | 35,432 | 26,581 |
Income before income taxes | 66,978 | (2,279) | 103,544 | (7,562) |
Income tax expense | 2,936 | 5,583 | 11,443 | 3,670 |
Net income (loss) | 64,042 | $ (7,862) | 92,101 | $ (11,232) |
Adjustments [Member] | Accounting Standards Update 2014-09 [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net revenues | (1,685) | (9,295) | ||
Cost of goods sold | (662) | (3,650) | ||
Gross profit | (1,023) | (5,645) | ||
Selling, general and administrative expenses | (11,105) | (7,302) | ||
Income from operations | 10,082 | 1,657 | ||
Other expenses | ||||
Income before income taxes | 10,082 | 1,657 | ||
Income tax expense | 455 | (1,495) | ||
Net income (loss) | 9,627 | 3,152 | ||
Balances without Adoption of Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||||
Net revenues | 639,113 | 1,188,909 | ||
Cost of goods sold | 368,536 | 710,919 | ||
Gross profit | 270,577 | 477,990 | ||
Selling, general and administrative expenses | 175,120 | 337,357 | ||
Income from operations | 95,457 | 140,633 | ||
Other expenses | ||||
Interest expense—net | 17,480 | 34,515 | ||
Loss on extinguishment of debt | 917 | 917 | ||
Total other expenses | 18,397 | 35,432 | ||
Income before income taxes | 77,060 | 105,201 | ||
Income tax expense | 3,391 | 9,948 | ||
Net income (loss) | $ 73,669 | $ 95,253 |
Recently Issued Accounting St36
Recently Issued Accounting Standards - Summary of Impact of Adopting Topic 606 Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Prepaid expense and other current assets | $ 78,254 | $ 68,585 |
Deferred tax assets | 29,437 | 23,311 |
Accounts payable and accrued expenses | 284,942 | 318,765 |
Deferred revenue and customer deposits | 164,979 | 149,404 |
Other current liabilities | 51,354 | 51,166 |
Retained earnings | 223,459 | $ 152,394 |
Adjustments [Member] | Accounting Standards Update 2014-09 [Member] | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Prepaid expense and other current assets | 36,012 | |
Deferred tax assets | (6,561) | |
Accounts payable and accrued expenses | (732) | |
Deferred revenue and customer deposits | 9,860 | |
Other current liabilities | (3,865) | |
Retained earnings | 24,188 | |
Balances without Adoption of Topic 606 [Member] | Accounting Standards Update 2014-09 [Member] | ||
New Accounting Pronouncements Or Change In Accounting Principle [Line Items] | ||
Prepaid expense and other current assets | 114,266 | |
Deferred tax assets | 22,876 | |
Accounts payable and accrued expenses | 284,210 | |
Deferred revenue and customer deposits | 174,839 | |
Other current liabilities | 47,489 | |
Retained earnings | $ 247,647 |
Prepaid Expense and Other Ass37
Prepaid Expense and Other Assets - Prepaid Expense and Other Current Assets (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
Prepaid Expense And Other Assets Current [Abstract] | ||
Vendor deposits | $ 20,767 | $ 9,701 |
Capitalized catalog costs | 14,285 | 44,122 |
Federal and state tax receivable | 9,682 | |
Right of return asset for merchandise | 6,888 | |
Prepaid expense and other current assets | 26,632 | 14,762 |
Total prepaid expense and other current assets | $ 78,254 | $ 68,585 |
Prepaid Expense And Other Ass38
Prepaid Expense And Other Assets - Schedule of Other Non-Current Assets (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
Other Assets Noncurrent [Abstract] | ||
Deferred financing fees | $ 3,915 | $ 4,446 |
Construction related deposits | 2,745 | 7,407 |
Other deposits | 5,139 | 4,997 |
Other non-current assets | 4,639 | 4,482 |
Total other non-current assets | $ 16,438 | $ 21,332 |
Goodwill and Trademarks and D39
Goodwill and Trademarks and Domain Names - Goodwill and Trademarks and Domain Names Activity (Detail) $ in Thousands | 6 Months Ended |
Aug. 04, 2018USD ($) | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | $ 141,893 |
Ending Balance | 141,835 |
Beginning Balance | 100,663 |
Ending Balance | 100,663 |
RH Segment [Member] | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 124,448 |
Foreign Currency Translation | (58) |
Ending Balance | 124,390 |
Beginning Balance | 48,563 |
Ending Balance | 48,563 |
Waterworks [Member] | |
Indefinite Lived Intangible Assets By Major Class [Line Items] | |
Beginning Balance | 17,445 |
Ending Balance | 17,445 |
Beginning Balance | 52,100 |
Ending Balance | $ 52,100 |
Goodwill and Trademarks and D40
Goodwill and Trademarks and Domain Names - Goodwill and Trademarks and Domain Names Activity (Parenthetical) (Detail) $ in Millions | 12 Months Ended |
Feb. 03, 2018USD ($) | |
Waterworks [Member] | |
Finite Lived Intangible Assets [Line Items] | |
Goodwill impairment charge | $ 33.7 |
Accounts Payable, Accrued Exp41
Accounts Payable, Accrued Expenses and Other Current Liabilities - Accounts Payable and Accrued Expenses (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
Payables And Accruals [Abstract] | ||
Accounts payable | $ 164,706 | $ 195,313 |
Accrued compensation | 47,562 | 47,534 |
Accrued freight and duty | 20,412 | 23,757 |
Accrued sales taxes | 17,346 | 19,525 |
Accrued occupancy | 12,460 | 8,612 |
Accrued catalog costs | 10,427 | 9,000 |
Accrued professional fees | 2,971 | 3,555 |
Other accrued expenses | 9,058 | 11,469 |
Total accounts payable and accrued expenses | $ 284,942 | $ 318,765 |
Accounts Payable, Accrued Exp42
Accounts Payable, Accrued Expenses and Other Current Liabilities - Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
Payables And Accruals [Abstract] | ||
Allowance for sales returns | $ 23,069 | $ 10,565 |
Unredeemed gift card and merchandise credit liability | 19,110 | 24,138 |
Product recall reserves | 3,501 | 1,201 |
Current portion of non-current debt | 892 | 6,033 |
Federal and state tax payable | 5,391 | |
Other current liabilities | 4,782 | 3,838 |
Total other current liabilities | $ 51,354 | $ 51,166 |
Other Non-Current Obligations -
Other Non-Current Obligations - Schedule of Other Non-Current Obligations (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 | |
Other Liabilities Noncurrent [Abstract] | |||
Notes payable for share repurchases | $ 18,741 | $ 19,390 | |
Capital lease obligations—non-current | 8,012 | 7,509 | |
Lease loss liabilities | 7,393 | 9,684 | |
Deferred contract incentive | [1] | 4,167 | 5,358 |
Unrecognized tax benefits | 3,955 | 3,728 | |
Rollover units and profit interests | [2] | 2,424 | 2,211 |
Other non-current obligations | 3,155 | 2,996 | |
Equipment security notes | [3] | 13,864 | |
Promissory note | [4] | 11,627 | |
Total other non-current obligations | $ 47,847 | $ 76,367 | |
[1] | Represents the non-current portion of an incentive payment received in relation to a 5-year service agreement. The amount will be amortized over the term of the agreement. | ||
[2] | Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 13—Stock-Based Compensation. | ||
[3] | Represents the non-current portion of equipment security notes secured by certain of the Company’s distribution center property and equipment. The equipment security notes were repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt. | ||
[4] | Represents the non-current portion of a promissory note secured by the Company’s aircraft. The promissory note was repaid in full in June 2018. As a result of the repayment, the Company incurred a $0.2 million loss on extinguishment of debt. |
Other Non-Current Obligations44
Other Non-Current Obligations - Schedule of Other Non-Current Obligations (Parenthetical) (Detail) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Aug. 04, 2018 | May 05, 2018 | Aug. 04, 2018 | |
Other Non Current Obligations [Line Items] | ||||
Incentive payment service agreement period | 5 years | |||
Loss on extinguishment of debt | $ 917 | $ 917 | ||
Equipment Security Notes [Member] | ||||
Other Non Current Obligations [Line Items] | ||||
Loss on extinguishment of debt | $ 200 | |||
Promissory Note [Member] | ||||
Other Non Current Obligations [Line Items] | ||||
Loss on extinguishment of debt | $ 200 |
Convertible Senior Notes - Addi
Convertible Senior Notes - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
Jun. 30, 2018USD ($)dDerivative$ / shares$ / Derivativeshares | Jun. 30, 2015USD ($)dDerivative$ / shares$ / Derivativeshares | Jun. 30, 2014USD ($)dDerivative$ / shares$ / Derivativeshares | Aug. 04, 2018USD ($)$ / shares | Jul. 29, 2017USD ($) | Aug. 04, 2018USD ($)$ / shares | Jul. 29, 2017USD ($) | Feb. 03, 2018USD ($) | Jul. 31, 2015USD ($) | |
Debt Instrument [Line Items] | |||||||||
Amortization of debt discount | $ 17,645,000 | $ 15,018,000 | |||||||
Total cost of convertible note hedge transactions | 91,857,000 | ||||||||
Cash proceeds from sale of warrants | 51,021,000 | ||||||||
Convertible Senior Notes Due 2023 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 335,000,000 | 335,000,000 | |||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | ||||||||
Debt instrument, effective interest rate | 6.35% | ||||||||
Discounts and commissions payable | $ 1,700,000 | 89,217,000 | 89,217,000 | ||||||
Third party offering costs | $ 4,600,000 | ||||||||
Amortization of debt issuance costs | 100,000 | 100,000 | |||||||
Amortization of debt discount | 1,800,000 | $ 1,800,000 | |||||||
Warrants sold to purchase common stock | shares | 1,700,000 | ||||||||
Cash proceeds from sale of warrants | $ 51,000,000 | ||||||||
Warrants price per share | $ / shares | $ 309.84 | ||||||||
Convertible Senior Notes Due 2023 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share | $ / shares | $ 309.84 | ||||||||
Convertible note hedge, number of shares | Derivative | 1,700,000 | ||||||||
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 1.7 million shares of its common stock at a price of approximately $193.65 per share. | ||||||||
Convertible note hedge, inception Date | Jun. 30, 2018 | ||||||||
Total cost of convertible note hedge transactions | $ 91,900,000 | ||||||||
Deferred tax liability | 22,300,000 | $ 22,300,000 | |||||||
Deferred tax asset | $ 22,500,000 | $ 22,500,000 | |||||||
Convertible Senior Notes Due 2023 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | Warrants Subject to Certain Adjustment Mechanisms [Member] | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrants sold to purchase common stock | shares | 3,500,000 | ||||||||
Convertible Senior Notes Due 2023 [Member] | Convertible Debt Instrument Conversion Period One [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | d | 20 | ||||||||
Debt instrument, convertible consecutive trading days | d | 30 | ||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||
Convertible Senior Notes Due 2023 [Member] | Convertible Debt Instrument Conversion Period Two [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | d | 5 | ||||||||
Debt instrument, convertible consecutive trading days | d | 10 | ||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||
Convertible Senior Notes Due 2023 [Member] | Convertible Debt Instrument Conversion Period Three [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible earliest date | Mar. 15, 2023 | ||||||||
Convertible Senior Notes Due 2023 [Member] | Common Stock [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, initial conversion rate | 5.1640 | ||||||||
Debt instrument, conversion principal amount | $ 1,000 | ||||||||
Conversion price per share | $ / shares | $ 193.65 | $ 193.65 | $ 193.65 | ||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2023 Notes is 5.1640 shares of common stock per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $193.65 per share. | ||||||||
Convertible Senior Notes Due 2020 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 300,000,000 | $ 300,000,000 | $ 300,000,000 | ||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | ||||||||
Debt instrument, effective interest rate | 6.47% | ||||||||
Discounts and commissions payable | $ 3,800,000 | 35,745,000 | 35,745,000 | 44,135,000 | |||||
Third party offering costs | $ 2,300,000 | ||||||||
Amortization of debt issuance costs | 300,000 | $ 300,000 | 500,000 | 500,000 | |||||
Amortization of debt discount | 4,200,000 | 4,000,000 | $ 8,400,000 | 7,900,000 | |||||
Warrants sold to purchase common stock | shares | 2,500,000 | ||||||||
Cash proceeds from sale of warrants | $ 30,400,000 | ||||||||
Warrants price per share | $ / shares | $ 189 | ||||||||
Convertible Senior Notes Due 2020 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Conversion price per share | $ / shares | $ 189 | ||||||||
Convertible note hedge, number of shares | Derivative | 2,500,000 | ||||||||
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 2.5 million shares of its common stock at a price of approximately $118.13 per share | ||||||||
Convertible note hedge, inception Date | Jun. 30, 2015 | ||||||||
Total cost of convertible note hedge transactions | $ 68,300,000 | ||||||||
Deferred tax liability | 32,800,000 | $ 32,800,000 | |||||||
Deferred tax asset | $ 26,600,000 | $ 26,600,000 | |||||||
Convertible Senior Notes Due 2020 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | Warrants Subject to Certain Adjustment Mechanisms [Member] | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrants sold to purchase common stock | shares | 5,100,000 | ||||||||
Convertible Senior Notes Due 2020 [Member] | Convertible Debt Instrument Conversion Period One [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | d | 20 | ||||||||
Debt instrument, convertible consecutive trading days | d | 30 | ||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||
Convertible Senior Notes Due 2020 [Member] | Convertible Debt Instrument Conversion Period Two [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | d | 5 | ||||||||
Debt instrument, convertible consecutive trading days | d | 10 | ||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||
Convertible Senior Notes Due 2020 [Member] | Convertible Debt Instrument Conversion Period Three [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible earliest date | Mar. 15, 2020 | ||||||||
Convertible Senior Notes Due 2020 [Member] | Common Stock [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, initial conversion rate | 8.4656 | ||||||||
Debt instrument, conversion principal amount | $ 1,000 | ||||||||
Conversion price per share | $ / shares | $ 118.13 | $ 118.13 | $ 118.13 | ||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2020 Notes is 8.4656 shares of common stock per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $118.13 per share. | ||||||||
Convertible Senior Notes Due 2019 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 350,000,000 | $ 350,000,000 | 350,000,000 | ||||||
Debt instrument, convertible earliest date | Mar. 15, 2019 | ||||||||
Deemed elected combination settlement amount per note to be received upon conversion | $ 1,000 | ||||||||
Debt instrument, effective interest rate | 4.51% | ||||||||
Discounts and commissions payable | $ 4,400,000 | 13,506,000 | $ 13,506,000 | $ 20,988,000 | |||||
Third party offering costs | $ 1,000,000 | ||||||||
Amortization of debt issuance costs | 300,000 | 200,000 | 500,000 | 400,000 | |||||
Amortization of debt discount | 3,800,000 | $ 3,600,000 | $ 7,500,000 | $ 7,200,000 | |||||
Warrants sold to purchase common stock | shares | 3,000,000 | ||||||||
Cash proceeds from sale of warrants | $ 40,400,000 | ||||||||
Warrants price per share | $ / shares | $ 171.98 | ||||||||
Convertible Senior Notes Due 2019 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Convertible note hedge, number of shares | Derivative | 3,000,000 | ||||||||
Convertible note hedge, price per share | $ / Derivative | 116.09 | ||||||||
Convertible note hedge, description | the Company entered into convertible note hedge transactions whereby the Company has the option to purchase a total of approximately 3.0 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 | ||||||||
Deferred tax liability | 27,500,000 | $ 27,500,000 | |||||||
Deferred tax asset | $ 28,600,000 | $ 28,600,000 | |||||||
Conversion price per share, two | $ / shares | $ 171.98 | ||||||||
Convertible Senior Notes Due 2019 [Member] | Convertible Bond Hedge and Warrant Transactions [Member] | Warrants Subject to Certain Adjustment Mechanisms [Member] | Maximum [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Warrants sold to purchase common stock | shares | 6,000,000 | ||||||||
Convertible Senior Notes Due 2019 [Member] | Convertible Debt Instrument Conversion Period One [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | d | 20 | ||||||||
Debt instrument, convertible consecutive trading days | d | 30 | ||||||||
Debt instrument, convertible percentage of stock price | 130.00% | ||||||||
Convertible Senior Notes Due 2019 [Member] | Convertible Debt Instrument Conversion Period Two [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible trading days | d | 5 | ||||||||
Debt instrument, convertible consecutive trading days | d | 10 | ||||||||
Debt instrument, convertible percentage of stock price | 98.00% | ||||||||
Convertible Senior Notes Due 2019 [Member] | Convertible Debt Instrument Conversion Period Three [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, convertible earliest date | Mar. 15, 2019 | ||||||||
Convertible Senior Notes Due 2019 [Member] | Common Stock [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, initial conversion rate | 8.6143 | ||||||||
Debt instrument, conversion principal amount | $ 1,000 | ||||||||
Conversion price per share | $ / shares | $ 116.09 | $ 116.09 | $ 116.09 | ||||||
Debt instrument, conversion description | The initial conversion rate applicable to the 2019 Notes is 8.6143 shares of common stock per $1,000 principal amount of 2019 Notes, which is equivalent to an initial conversion price of approximately $116.09 per share | ||||||||
Private Placement [Member] | Convertible Senior Notes Due 2023 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 300,000,000 | ||||||||
Debt instrument, interest rate | 0.00% | ||||||||
Debt instrument, maturity date | Jun. 15, 2023 | ||||||||
Private Placement [Member] | Convertible Senior Notes Due 2020 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 250,000,000 | ||||||||
Debt instrument, interest rate | 0.00% | ||||||||
Debt instrument, maturity date | Jul. 15, 2020 | ||||||||
Private Placement [Member] | Convertible Senior Notes Due 2019 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 350,000,000 | ||||||||
Debt instrument, interest rate | 0.00% | ||||||||
Debt instrument, maturity date | Jun. 15, 2019 | ||||||||
Over Allotment Option in Private Placement [Member] | Convertible Senior Notes Due 2023 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
Debt instrument, principal amount | $ 35,000,000 | ||||||||
Exercise of Over Allotment Option in Private Placement [Member] | Convertible Senior Notes Due 2020 [Member] | |||||||||
Debt Instrument [Line Items] | |||||||||
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 | Aug. 04, 2018 | Jun. 30, 2018 | Feb. 03, 2018 | Jun. 30, 2015 |
Convertible Senior Notes Due 2023 [Member] | ||||
Liability component | ||||
Principal | $ 335,000 | |||
Less: Debt discount | (89,217) | $ (1,700) | ||
Net carrying amount | 245,783 | |||
Equity component | 90,990 | |||
Convertible Senior Notes Due 2020 [Member] | ||||
Liability component | ||||
Principal | 300,000 | $ 300,000 | ||
Less: Debt discount | (35,745) | (44,135) | $ (3,800) | |
Net carrying amount | 264,255 | 255,865 | ||
Equity component | $ 84,003 | $ 84,003 |
Convertible Senior Notes - Ca47
Convertible Senior Notes - Carrying Value of Notes Excluding the Discounts and Commissions Payable to the Initial Purchasers and Third Party Offering Costs (Detail) - Convertible Senior Notes Due 2019 [Member] - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 | Jun. 30, 2014 |
Liability component | |||
Principal | $ 350,000 | $ 350,000 | |
Less: Debt discount | (13,506) | (20,988) | $ (4,400) |
Net carrying amount | 336,494 | 329,012 | |
Equity component | $ 70,482 | $ 70,482 |
Credit Facilities - Additional
Credit Facilities - Additional Information (Detail) - USD ($) | Jun. 28, 2017 | Jun. 30, 2018 | Aug. 04, 2018 | Aug. 04, 2018 | Feb. 03, 2018 |
Line Of Credit Facility [Line Items] | |||||
Outstanding revolving line of credit | $ 0 | $ 0 | $ 279,469,000 | ||
Loss on extinguishment of debt | 917,000 | $ 917,000 | |||
Revolving line of credit, interest rate description | Borrowings under the revolving line of credit are subject to interest, at the borrowers’ option, at either the bank’s reference rate or 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. | ||||
Fixed charge coverage ratio covenant, percentage of borrowing base | 10.00% | ||||
Incremental borrowing available after maintaining fixed charge coverage ratio | 392,800,000 | $ 392,800,000 | |||
Credit Agreement [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Agreement, date | Jun. 28, 2017 | ||||
Revolving Credit Facility [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Outstanding revolving line of credit | 0 | $ 0 | |||
Availability under the revolving line of credit | 437,800,000 | 437,800,000 | |||
Outstanding letters of credit | $ 12,800,000 | $ 12,800,000 | |||
Revolving Credit Facility [Member] | Credit Agreement [Member] | Scenario, Plan Subject to Satisfaction of Conditions [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Increase in revolving line of credit | $ 200,000,000 | ||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | Maximum [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Availability under the revolving line of credit | 600,000,000 | ||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | Maximum [Member] | Scenario, Plan Subject to Satisfaction of Conditions [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Line of credit | 800,000,000 | ||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | Minimum [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Line of credit | 600,000,000 | ||||
Revolving Credit Facility [Member] | Credit Agreement [Member] | Restoration Hardware Canada, Inc. [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Availability under the revolving line of credit | 10,000,000 | ||||
LILO Term Loan Facility [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Outstanding revolving line of credit | $ 79,499,000 | ||||
Loss on extinguishment of debt | $ 500,000 | ||||
Prepayment penalties upon early extinguishment of debt | $ 0 | ||||
LILO Term Loan Facility [Member] | Credit Agreement [Member] | |||||
Line Of Credit Facility [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 80,000,000 | ||||
Line of credit facility, maturity date | Jun. 28, 2022 |
Credit Facilities - Schedule of
Credit Facilities - Schedule of Credit Facilities (Detail) - USD ($) | Aug. 04, 2018 | Feb. 03, 2018 |
Line Of Credit Facility [Line Items] | ||
Credit facilities, Outstanding Amount | $ 279,970,000 | |
Credit facilities, Unamortized Debt Issuance Costs | (501,000) | |
Credit facilities, Net Carrying Amount | $ 0 | 279,469,000 |
Asset Based Credit Facility [Member] | ||
Line Of Credit Facility [Line Items] | ||
Credit facilities, Outstanding Amount | 199,970,000 | |
Credit facilities, Net Carrying Amount | 199,970,000 | |
LILO Term Loan [Member] | ||
Line Of Credit Facility [Line Items] | ||
Credit facilities, Outstanding Amount | 80,000,000 | |
Credit facilities, Unamortized Debt Issuance Costs | (501,000) | |
Credit facilities, Net Carrying Amount | $ 79,499,000 |
Fair Value of Financial Instr50
Fair Value of Financial Instruments - Estimated Fair Value and Carrying Value of 2019, 2020 and 2023 Notes (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
Convertible Senior Notes Due 2019 [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Convertible senior notes, Fair Value | $ 332,232 | $ 324,866 |
Convertible senior notes, Carrying Value | 336,494 | 329,012 |
Convertible Senior Notes Due 2020 [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Convertible senior notes, Fair Value | 265,796 | 261,047 |
Convertible senior notes, Carrying Value | 264,255 | $ 255,865 |
Convertible Senior Notes Due 2023 [Member] | ||
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items] | ||
Convertible senior notes, Fair Value | 245,275 | |
Convertible senior notes, Carrying Value | $ 245,783 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | Feb. 03, 2018 | |
Income Tax [Line Items] | |||||
Income tax expense | $ 2,936 | $ 5,583 | $ 11,443 | $ 3,670 | |
Effective income tax rate | 4.40% | (245.00%) | 11.10% | (48.50%) | |
U.S. corporate income tax rate | 21.00% | 35.00% | |||
Unrecognized tax benefits | $ 8,400 | $ 8,400 | $ 8,200 | ||
Tax expense and the effective tax rate, if recognized | 6,800 | 6,800 | $ 6,500 | ||
Exposures related to unrecognized tax benefits | $ 400 | $ 400 | |||
Period of unrecognized tax benefits change | 12 months |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Weighted-Average Shares Used for Net Income (Loss) per Share (Detail) - shares | 3 Months Ended | 6 Months Ended | |||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | ||
Earnings Per Share [Abstract] | |||||
Weighted-average shares—basic | 21,925,702 | 28,398,307 | 21,735,364 | 35,667,217 | |
Effect of dilutive stock-based awards | 5,158,591 | 4,421,897 | |||
Effect of dilutive convertible senior notes | [1] | 412,268 | 206,134 | ||
Weighted-average shares—diluted | 27,496,561 | 28,398,307 | 26,363,395 | 35,667,217 | |
[1] | The 2019 Notes, 2020 Notes and 2023 Notes have an impact on the Company’s dilutive share count beginning at stock prices of $116.09 per share, $118.13 per share and $193.65 per share, respectively |
Net Income (Loss) Per Share -53
Net Income (Loss) Per Share - Schedule of Weighted-Average Shares Used for Net Income (Loss) per Share (Parenthetical) (Detail) - Common Stock [Member] - $ / shares | Aug. 04, 2018 | Jun. 30, 2018 | Jun. 30, 2015 | Jun. 30, 2014 |
Convertible Senior Notes Due 2019 [Member] | ||||
Earnings Per Share Diluted [Line Items] | ||||
Conversion price per share | $ 116.09 | $ 116.09 | ||
Convertible Senior Notes Due 2020 [Member] | ||||
Earnings Per Share Diluted [Line Items] | ||||
Conversion price per share | 118.13 | $ 118.13 | ||
Convertible Senior Notes Due 2023 [Member] | ||||
Earnings Per Share Diluted [Line Items] | ||||
Conversion price per share | $ 193.65 | $ 193.65 |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Anti-Dilutive Securities Excluded from Diluted Net Income (Loss) per Share (Detail) - shares | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 209,441 | 9,835,587 | 353,228 | 9,835,587 |
Options [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 209,441 | 8,997,210 | 347,978 | 8,997,210 |
Restricted Stock Units [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Options and restricted stock units were excluded from calculation of diluted net earnings share | 838,377 | 5,250 | 838,377 |
Share Repurchases - Additional
Share Repurchases - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Millions | 3 Months Ended | 6 Months Ended | ||||||
Aug. 04, 2018 | Jul. 29, 2017 | Apr. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | Feb. 03, 2018 | May 02, 2017 | Feb. 21, 2017 | |
Equity Class Of Treasury Stock [Line Items] | ||||||||
Unpaid principal amount of notes payable for share repurchases | $ 18,741,000 | $ 18,741,000 | $ 19,390,000 | |||||
$700 Million Repurchase Program [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Shares of common stock purchased under repurchase program, shares | 12.4 | |||||||
Shares of common stock purchased at an average price per share under repurchase program | $ 56.60 | |||||||
Shares of common stock purchased under repurchase program | $ 700,000,000 | |||||||
$300 Million Repurchase Program [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Shares of common stock purchased under repurchase program, shares | 7.8 | |||||||
Shares of common stock purchased at an average price per share under repurchase program | $ 38.24 | |||||||
Shares of common stock purchased under repurchase program | $ 300,000,000 | |||||||
Share Repurchases Under Equity Plans [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Unpaid principal amount of notes payable for share repurchases | 19,600,000 | 19,600,000 | 19,400,000 | |||||
Interest expense related to notes payable for share repurchases | 300,000 | $ 300,000 | 500,000 | $ 500,000 | ||||
Share Repurchases Under Equity Plans [Member] | Other Current Liabilities [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Unpaid principal amount of notes payable for share repurchases | 900,000 | 900,000 | ||||||
Share Repurchases Under Equity Plans [Member] | Other Non-current Obligations [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Unpaid principal amount of notes payable for share repurchases | 18,700,000 | 18,700,000 | 19,400,000 | |||||
Board of Directors [Member] | Maximum [Member] | $700 Million Repurchase Program [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Stock repurchase program authorized amount | $ 700,000,000 | |||||||
Board of Directors [Member] | Maximum [Member] | $300 Million Repurchase Program [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Stock repurchase program authorized amount | $ 300,000,000 | |||||||
Director [Member] | Share Repurchases Under Equity Plans [Member] | ||||||||
Equity Class Of Treasury Stock [Line Items] | ||||||||
Unpaid principal amount of notes payable for share repurchases | $ 15,500,000 | $ 15,500,000 | $ 15,500,000 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) - USD ($) | May 02, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | Feb. 03, 2018 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Stock-based compensation expense | $ 6,100,000 | $ 30,900,000 | $ 14,092,000 | $ 36,166,000 | |||
Stock-based compensation cost capitalized | 0 | 0 | |||||
Rollover units and profit interests | [1] | 2,424,000 | 2,424,000 | $ 2,211,000 | |||
Selling, general and administrative expenses | 186,225,000 | 193,690,000 | $ 344,659,000 | 357,050,000 | |||
Design Investors WW Acquisition Company, LLC [Member] | Profit Interests [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Profit interest expected life | 5 years | ||||||
Selling, general and administrative expenses | 100,000 | 100,000 | $ 200,000 | 200,000 | |||
Design Investors WW Acquisition Company, LLC [Member] | Profit Interests [Member] | Other Non-Current Obligations [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Liability associated with the profit interests | 900,000 | $ 900,000 | 700,000 | ||||
Chairman and Chief Executive Officer [Member] | Stock Options [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 1,000,000 | ||||||
Exercise price of option granted | $ 50 | ||||||
Time Based Restricted [Member] | Chairman and Chief Executive Officer [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Number of share lapse per year | 250,000 | ||||||
Time Based Restricted [Member] | Chairman and Chief Executive Officer [Member] | Stock Options [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option vesting period | 4 years | ||||||
Performance Based Restricted [Member] | Chairman and Chief Executive Officer [Member] | Stock Options [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
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 [Member] | Design Investors WW Acquisition Company, LLC [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Rollover units and profit interests | 1,500,000 | $ 1,500,000 | $ 1,500,000 | ||||
Appreciation Rights [Member] | Design Investors WW Acquisition Company, LLC [Member] | Rollover Units [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Stock-based compensation expense | $ 0 | 0 | $ 0 | 0 | |||
2012 Stock Incentive Plan and 2012 Stock Option Plan [Member] | Stock Options [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Outstanding shares | 8,031,998 | 8,031,998 | |||||
Options outstanding, weighted-average exercise price per share | $ 52.63 | $ 52.63 | |||||
Numbers of options vested | 6,125,419 | ||||||
Vested weighted-average exercise price per share | $ 52.03 | ||||||
Aggregate intrinsic value of options outstanding | $ 660,200,000 | $ 660,200,000 | |||||
Aggregate intrinsic value of options vested or expected to vest | 605,600,000 | 605,600,000 | |||||
Aggregate intrinsic value of options exercisable | 506,600,000 | $ 506,600,000 | |||||
Weighted-average remaining contractual life of options exercisable | 5 years 7 months 13 days | ||||||
Unrecognized compensation expense related to unvested options | $ 25,600,000 | $ 25,600,000 | |||||
Unrecognized compensation expense with weighted-average period | 2 years 10 months 24 days | ||||||
2012 Stock Incentive Plan and 2012 Stock Option Plan [Member] | Restricted Stock And Restricted Stock Unit [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Unrecognized compensation expense with weighted-average period | 2 years 6 months 25 days | ||||||
Outstanding shares | 594,408 | 594,408 | |||||
Restricted stock awards outstanding with weighted-average grant date fair value per share | $ 52.74 | $ 52.74 | |||||
Vested restricted stock unit | 132,660 | 163,275 | |||||
Vested weighted-average grant date fair value | $ 58.73 | $ 57.54 | |||||
Vested weighted-average vest date fair value | $ 58.73 | $ 57.54 | |||||
Unrecognized compensation expense related to unvested options | $ 16,400,000 | $ 16,400,000 | |||||
Time-Based Restrictions and Performance-Based Restrictions [Member] | Chairman and Chief Executive Officer [Member] | Stock Options [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Stock-based compensation expense | $ 23,900,000 | $ 23,900,000 | |||||
Performance-Based Restrictions [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
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. 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. | ||||||
Performance-Based Restrictions [Member] | Common Stock Achieving Price per Share of $100 [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 83,333 | ||||||
Exercise price of option granted | $ 100 | ||||||
Performance-Based Restrictions [Member] | Common Stock Achieving Price per Share of $125 [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 83,333 | ||||||
Exercise price of option granted | $ 125 | ||||||
Performance-Based Restrictions [Member] | Common Stock Achieving Price per Share of $150 [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 83,334 | ||||||
Exercise price of option granted | $ 150 | ||||||
Performance-Based Restrictions [Member] | First Performance Year [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance-Based Restrictions [Member] | Second Performance Year [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance-Based Restrictions [Member] | Third Performance Year [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 250,000 | ||||||
Performance-Based Restrictions [Member] | Fourth Performance Year [Member] | |||||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||||
Option to purchase of common stock | 250,000 | ||||||
[1] | Represents rollover units and profit interests associated with the acquisition of Waterworks. Refer to Note 13—Stock-Based Compensation. |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | Aug. 04, 2018USD ($) |
Commitments And Contingencies Disclosure [Abstract] | |
Material off balance sheet commitments | $ 0 |
Segment Reporting - Additional
Segment Reporting - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018StoreCustomer | Jul. 29, 2017Customer | Aug. 04, 2018StoreSegmentCustomer | Jul. 29, 2017Customer | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | Segment | 2 | |||
Number of outlet stores | 36 | 36 | ||
Number of customers accounted for more than 10% of Company's revenues | Customer | 0 | 0 | 0 | 0 |
Sales [Member] | Customer Concentration Risk [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Portion of specified customers portion in total revenues | 10.00% | 10.00% | 10.00% | 10.00% |
Canada [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Number of retail stores | 4 | 4 | ||
Number of outlet stores | 2 | 2 | ||
U.K [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Number of retail stores | 1 | 1 |
Segment Reporting - Summary of
Segment Reporting - Summary of Statements of Operations Metrics Reviewed by CODM to Evaluate Performance Internally or As required under ASC 280 - Segment Reporting (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Segment Reporting Information [Line Items] | ||||
Net revenues | $ 640,798 | $ 615,326 | $ 1,198,204 | $ 1,177,406 |
Gross profit | 271,600 | 205,813 | 483,635 | 376,069 |
Depreciation and amortization | 17,756 | 16,526 | 34,803 | 32,546 |
RH Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 607,604 | 583,793 | 1,133,611 | 1,117,321 |
Gross profit | 258,181 | 192,996 | 457,216 | 352,623 |
Depreciation and amortization | 16,638 | 15,386 | 32,573 | 30,287 |
Waterworks [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Net revenues | 33,194 | 31,533 | 64,593 | 60,085 |
Gross profit | 13,419 | 12,817 | 26,419 | 23,446 |
Depreciation and amortization | $ 1,118 | $ 1,140 | $ 2,230 | $ 2,259 |
Segment Reporting - Summary o60
Segment Reporting - Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting (Detail) - USD ($) $ in Thousands | Aug. 04, 2018 | Feb. 03, 2018 |
Segment Reporting Information [Line Items] | ||
Goodwill | $ 141,835 | $ 141,893 |
Trademarks and domain names | 100,663 | 100,663 |
Total assets | 1,814,107 | 1,732,866 |
RH Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 124,390 | 124,448 |
Trademarks and domain names | 48,563 | 48,563 |
Total assets | 1,685,089 | 1,608,290 |
Waterworks [Member] | ||
Segment Reporting Information [Line Items] | ||
Goodwill | 17,445 | 17,445 |
Trademarks and domain names | 52,100 | 52,100 |
Total assets | $ 129,018 | $ 124,576 |
Segment Reporting - Summary o61
Segment Reporting - Summary of Balance Sheet Metrics as Required Under ASC 280 - Segment Reporting (Parenthetical) (Detail) $ in Millions | 12 Months Ended |
Feb. 03, 2018USD ($) | |
Waterworks [Member] | |
Segment Reporting Information [Line Items] | |
Impairment charge to goodwill | $ 33.7 |
Segment Reporting - Schedule of
Segment Reporting - Schedule of Segment Operating Income (Loss) and Income (Loss) Before Tax (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ 85,375 | $ 12,123 | $ 138,976 | $ 19,019 |
Legal settlement | 7,204 | 5,289 | ||
Distribution center closures | 2,072 | |||
Recall accrual | 1,064 | (4,733) | 1,318 | (4,733) |
Reorganization related costs | (1,721) | (1,721) | ||
Impact of inventory step-up | (190) | (480) | (380) | (1,860) |
Non-cash compensation | (23,872) | (23,872) | ||
Gain on sale of building and land | 1,300 | 1,300 | ||
Interest expense—net | 17,480 | 14,402 | 34,515 | 26,581 |
Loss on extinguishment of debt | 917 | 917 | ||
Income (loss) before income taxes | 66,978 | (2,279) | 103,544 | (7,562) |
Operating Segments [Member] | RH Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | 78,777 | 39,550 | 132,673 | 49,608 |
Operating Segments [Member] | Waterworks [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Operating income (loss) | $ 241 | $ 358 | $ (275) | $ (1,424) |
Segment Reporting - Net Revenue
Segment Reporting - Net Revenues (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2018 | Jul. 29, 2017 | Aug. 04, 2018 | Jul. 29, 2017 | |
Segment Reporting Information [Line Items] | ||||
Total net revenues | $ 640,798 | $ 615,326 | $ 1,198,204 | $ 1,177,406 |
Furniture [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | 430,196 | 388,983 | 782,842 | 741,939 |
Non-furniture [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | $ 210,602 | $ 226,343 | $ 415,362 | $ 435,467 |