RH 10-Q

ITEM 1. FINANCIAL STATEMENTS RH CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ ​ ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ (in thousands) ASSETS ​ ​ ​ ​ Cash and cash equivalents ​ $ 125,492 ​ $ 41,191 Accounts receivable—net ​ 79,130 ​ 63,447 Merchandise inventories ​ 772,716 ​ 818,550 Prepaid expense and other current assets ​ 181,824 ​ 184,474 Total current assets ​ 1,159,162 ​ 1,107,662 Property and equipment—net ​ 2,594,220 ​ 2,158,718 Operating lease right-of-use assets ​ ​ 864,669 ​ ​ 795,352 Goodwill and intangible assets—net ​ 224,366 ​ 224,016 Deferred tax assets ​ 128,326 ​ 128,375 Equity method investments ​ ​ 69,143 ​ ​ 119,754 Other non-current assets ​ 91,214 ​ 301,833 Total assets ​ $ 5,131,100 ​ $ 4,835,710 LIABILITIES AND STOCKHOLDERS’ EQUITY ​ ​ ​ ​ Accounts payable and accrued expenses ​ $ 423,454 ​ $ 386,736 Deferred revenue and customer deposits ​ ​ 402,033 ​ 338,504 Operating lease liabilities ​ ​ 113,332 ​ ​ 110,280 Other current liabilities ​ 94,255 ​ 95,086 Total current liabilities ​ 1,033,074 ​ 930,606 Asset based credit facility ​ — ​ 20,000 Term loan B—net ​ 1,877,971 ​ 1,886,370 Term loan B-2—net ​ 466,922 ​ 467,299 Real estate loan—net ​ ​ 15,027 ​ ​ 15,199 Non-current operating lease liabilities ​ 749,376 ​ 705,084 Non-current finance lease liabilities ​ ​ 837,192 ​ ​ 718,837 Deferred tax liabilities ​ ​ 17,352 ​ ​ 17,731 Other non-current liabilities ​ 13,839 ​ 13,984 Total liabilities ​ ​ 5,010,753 ​ ​ 4,775,110 Commitments and contingencies (Note 14) ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ ​ Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of August 1, 2026 and January 31, 2026 ​ — ​ ​ — Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,931,251 shares issued and outstanding as of August 1, 2026; 18,818,976 shares issued and outstanding as of January 31, 2026 ​ 2 ​ 2 Additional paid-in capital ​ 438,865 ​ 410,461 Accumulated other comprehensive income ​ 21,075 ​ 36,202 Accumulated deficit ​ ( 339,595 ) ​ ( 386,065 ) Total stockholders’ equity ​ ​ 120,347 ​ ​ 60,600 Total liabilities and stockholders’ equity ​ $ 5,131,100 ​ $ 4,835,710 ​ The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. ​ ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 3 ​ Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ (in thousands, except share and per share amounts) Net revenues ​ $ 922,150 ​ $ 899,151 ​ $ 1,722,478 ​ $ 1,713,103 Cost of goods sold ​ 477,297 ​ ​ 489,892 ​ 946,366 ​ ​ 948,511 Gross profit ​ 444,853 ​ 409,259 ​ 776,112 ​ 764,592 Selling, general and administrative expenses ​ 337,280 ​ ​ 280,383 ​ ​ 634,296 ​ ​ 579,805 Operating income ​ 107,573 ​ 128,876 ​ 141,816 ​ 184,787 Other expenses ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest expense—net ​ ​ 50,993 ​ ​ 57,358 ​ ​ 103,656 ​ ​ 113,961 Other income—net ​ ​ ( 1,856 ) ​ ​ ( 574 ) ​ ​ ( 1,119 ) ​ ​ ( 4,227 ) Total other expenses ​ 49,137 ​ ​ 56,784 ​ 102,537 ​ ​ 109,734 Income before taxes and equity method investments ​ ​ 58,436 ​ ​ 72,092 ​ 39,279 ​ ​ 75,053 Income tax expense ​ ​ 16,249 ​ ​ 19,032 ​ 10,347 ​ ​ 22,159 Income before equity method investments ​ ​ 42,187 ​ ​ 53,060 ​ ​ 28,932 ​ ​ 52,894 Share of equity method investments net (income) loss ​ ​ ( 17,980 ) ​ ​ 1,352 ​ ​ ( 17,538 ) ​ ​ ( 6,853 ) Net income ​ $ 60,167 ​ $ 51,708 ​ $ 46,470 ​ $ 59,747 Weighted-average shares used in computing basic net income per share ​ ​ 18,913,130 ​ ​ 18,737,234 ​ 18,879,222 ​ 18,733,119 Basic net income per share ​ $ 3.18 ​ $ 2.76 ​ $ 2.46 ​ $ 3.19 Weighted-average shares used in computing diluted net income per share ​ ​ 19,669,307 ​ ​ 19,737,331 ​ 19,654,650 ​ 19,825,282 Diluted net income per share ​ $ 3.06 ​ $ 2.62 ​ $ 2.36 ​ $ 3.01 ​ The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. ​ ​ ​ 4 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ (in thousands) Net income ​ $ 60,167 ​ $ 51,708 ​ $ 46,470 ​ $ 59,747 Net gain (loss) from foreign currency translation ​ ​ ( 10,510 ) ​ ​ 6,099 ​ ( 15,127 ) ​ 37,708 Comprehensive income ​ $ 49,657 ​ $ 57,807 ​ $ 31,343 ​ $ 97,455 ​ The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. ​ ​ ​ ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 5 ​ Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ ​ COMMON STOCK ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACCUMULATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ADDITIONAL OTHER ​ ​ TOTAL ​ ​ ​ PAID-IN COMPREHENSIVE ACCUMULATED STOCKHOLDERS’ ​ ​ SHARES ​ AMOUNT ​ CAPITAL ​ INCOME (LOSS) ​ DEFICIT ​ EQUITY (DEFICIT) ​ ​ (in thousands, except share amounts) Balances—May 2, 2026 ​ 18,900,769 $ 2 $ 425,102 $ 31,585 $ ( 399,762 ) $ 56,927 Stock-based compensation ​ — ​ ​ — ​ ​ 12,493 ​ ​ — ​ ​ — ​ ​ 12,493 Issuance of restricted stock ​ 5,901 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Exercise of stock options ​ 24,581 ​ ​ — ​ ​ 1,270 ​ ​ — ​ ​ — ​ ​ 1,270 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 60,167 ​ ​ 60,167 Net loss from foreign currency translation ​ — ​ ​ — ​ ​ — ​ ​ ( 10,510 ) ​ ​ — ​ ​ ( 10,510 ) Balances—August 1, 2026 ​ 18,931,251 $ 2 $ 438,865 $ 21,075 $ ( 339,595 ) $ 120,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances—May 3, 2025 ​ 18,732,265 $ 2 $ 375,521 $ 16,522 $ ( 502,813 ) $ ( 110,768 ) Stock-based compensation ​ — ​ ​ — ​ ​ 11,633 ​ ​ — ​ ​ — ​ ​ 11,633 Issuance of restricted stock ​ 4,690 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Exercise of stock options ​ 7,165 ​ ​ — ​ ​ 428 ​ ​ — ​ ​ — ​ ​ 428 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 51,708 ​ ​ 51,708 Net gain from foreign currency translation ​ — ​ ​ — ​ ​ — ​ ​ 6,099 ​ ​ — ​ ​ 6,099 Balances—August 2, 2025 ​ 18,744,120 $ 2 $ 387,582 $ 22,621 $ ( 451,105 ) $ ( 40,900 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SIX MONTHS ENDED ​ ​ COMMON STOCK ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACCUMULATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ADDITIONAL OTHER ​ ​ TOTAL ​ ​ ​ PAID-IN COMPREHENSIVE ACCUMULATED STOCKHOLDERS’ ​ ​ SHARES ​ AMOUNT ​ CAPITAL ​ INCOME (LOSS) ​ DEFICIT ​ EQUITY (DEFICIT) ​ ​ (in thousands, except share amounts) Balances—January 31, 2026 ​ 18,818,976 ​ $ 2 ​ $ 410,461 ​ $ 36,202 ​ $ ( 386,065 ) ​ $ 60,600 Stock-based compensation ​ — ​ ​ — ​ ​ 24,412 ​ ​ — ​ ​ — ​ ​ 24,412 Issuance of restricted stock ​ 18,901 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Vested and delivered restricted stock units ​ 1,389 ​ ​ — ​ ​ ( 18 ) ​ ​ — ​ ​ — ​ ​ ( 18 ) Exercise of stock options ​ 91,985 ​ ​ — ​ ​ 4,010 ​ ​ — ​ ​ — ​ ​ 4,010 Net income ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 46,470 ​ ​ 46,470 Net loss from foreign currency translation ​ — ​ ​ — ​ ​ — ​ ​ ( 15,127 ) ​ ​ — ​ ​ ( 15,127 ) Balances—August 1, 2026 ​ 18,931,251 $ 2 $ 438,865 $ 21,075 $ ( 339,595 ) $ 120,347 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances—February 1, 2025 ​ 18,726,116 $ 2 $ 362,348 $ ( 15,087 ) $ ( 510,852 ) $ ( 163,589 ) Stock-based compensation ​ — ​ ​ — ​ ​ 24,007 ​ ​ — ​ ​ — ​ ​ 24,007 Issuance of restricted stock ​ 4,690 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Vested and delivered restricted stock units ​ 1,020 ​ ​ — ​ ​ ( 31 ) ​ ​ — ​ ​ — ​ ​ ( 31 ) Exercise of stock options ​ 12,294 ​ ​ — ​ ​ 1,258 ​ ​ — ​ ​ — ​ ​ 1,258 Net income ​ — ​ — ​ — ​ — ​ 59,747 ​ 59,747 Net gain from foreign currency translation ​ — ​ — ​ — ​ 37,708 ​ — ​ 37,708 Balances—August 2, 2025 ​ 18,744,120 $ 2 $ 387,582 $ 22,621 $ ( 451,105 ) $ ( 40,900 ) ​ The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. ​ ​ ​ 6 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ ​ 2026 ​ ​ ​ 2025 ​ ​ (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES ​ ​ ​ ​ ​ ​ Net income ​ $ 46,470 ​ $ 59,747 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Depreciation and amortization ​ 79,678 ​ ​ 69,865 Non-cash operating lease cost ​ ​ 55,627 ​ ​ 51,106 Stock-based compensation ​ 24,412 ​ ​ 24,007 Asset impairments ​ ​ 523 ​ ​ 3,948 Non-cash finance lease interest expense ​ ​ 24,152 ​ ​ 18,193 Product recall ​ ​ — ​ ​ 1,913 Share of equity method investments net income ​ ​ ( 17,538 ) ​ ​ ( 6,853 ) Loss on variable interest entities restructuring ​ ​ 10,699 ​ ​ — Distribution of return on equity method investments ​ ​ 8,050 ​ ​ 4,630 Other non-cash items ​ 4,694 ​ ​ 2,098 Change in assets and liabilities: ​ ​ ​ ​ ​ Accounts receivable ​ ( 15,727 ) ​ ​ 2,407 Merchandise inventories ​ 43,787 ​ ​ 73,595 Prepaid expense and other assets ​ ( 10,973 ) ​ ​ ( 13,118 ) Landlord assets under construction—net of tenant allowances ​ ( 78,365 ) ​ ​ ( 46,486 ) Accounts payable and accrued expenses ​ 39,376 ​ ​ ( 22,239 ) Deferred revenue and customer deposits ​ 64,052 ​ ​ 54,800 Other current liabilities ​ ( 3,354 ) ​ ​ 13,451 Current and non-current operating lease liabilities ​ ( 54,577 ) ​ ​ ( 50,447 ) Other non-current liabilities ​ ( 23,268 ) ​ ​ ( 16,298 ) Net cash provided by operating activities ​ 197,718 ​ 224,319 CASH FLOWS FROM INVESTING ACTIVITIES ​ ​ ​ ​ Capital expenditures ​ ( 84,859 ) ​ ​ ( 109,565 ) Acquisition of business ​ ​ — ​ ​ ( 32,119 ) Equity method investments ​ — ​ ​ ( 374 ) Acquisition of intangible asset ​ ​ — ​ ​ ( 3,031 ) Receipt of promissory note repayment from equity method investee ​ ​ — ​ ​ 1,750 Distribution of return of equity method investments ​ ​ 41,950 ​ ​ 7,916 Proceeds from insurance recoveries ​ ​ — ​ ​ 1,275 Net cash used in investing activities ​ ( 42,909 ) ​ ( 134,148 ) ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 7 ​ Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ ​ 2026 ​ ​ ​ 2025 ​ ​ (in thousands) CASH FLOWS FROM FINANCING ACTIVITIES ​ ​ ​ ​ Borrowings under asset based credit facility ​ ​ 165,000 ​ ​ 260,000 Repayments under asset based credit facility ​ ​ ( 185,000 ) ​ ​ ( 325,000 ) Repayments under term loans ​ ​ ( 12,500 ) ​ ​ ( 12,500 ) Repayments under real estate loans ​ ​ ( 31,540 ) ​ ​ ( 169 ) Debt issuance costs ​ — ​ ​ ( 2,766 ) Principal payments under finance lease agreements—net of tenant allowances ​ ​ ( 10,099 ) ​ ​ ( 8,031 ) Proceeds from exercise of stock options ​ 4,010 ​ ​ 1,258 Tax withholdings related to issuance of stock-based awards ​ ​ ( 18 ) ​ ​ ( 31 ) Net cash used in financing activities ​ ( 70,147 ) ​ ( 87,239 ) Effects of foreign currency exchange rate translation on cash ​ ( 361 ) ​ ​ 1,215 Net increase in cash and cash equivalents ​ 84,301 ​ 4,147 Cash and cash equivalents ​ ​ ​ ​ Beginning of period ​ 41,191 ​ 30,413 End of period ​ $ 125,492 ​ $ 34,560 Non-cash transactions ​ ​ ​ ​ Property and equipment additions in accounts payable and accrued expenses at period-end ​ $ 23,187 ​ $ 32,089 Landlord asset additions in accounts payable and accrued expenses at period-end ​ ​ 15,218 ​ ​ 11,439 Property and equipment additions acquired in VIE restructuring (Note 6) ​ ​ 60,500 ​ ​ — Real estate loan acquired in VIE restructuring (Note 6) ​ ​ ( 31,372 ) ​ ​ — ​ The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. ​ ​ ​ ​ 8 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents RH NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1—THE COMPANY Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, “we,” “us,” “our” or the “Company”), is a leading retailer and luxury lifestyle brand operating primarily in the home furnishings market. Our curated and fully integrated assortments are presented consistently across our sales channels, including our retail locations, websites and Sourcebooks. We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and baby, child and teen furnishings. As of August 1, 2026, we operated a total of 77 RH Galleries and 44 RH Outlet stores, one RH Guesthouse, one RH Interior Design Studio and 15 Waterworks Showrooms throughout the United States, Canada and Europe. We also have sourcing operations in Shanghai. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of August 1, 2026, and the results of operations for the three and six months ended August 1, 2026 and August 2, 2025. Our current fiscal year, which consists of 52 weeks, ends on January 30, 2027 (“fiscal 2026”). The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, as well as the financial information of variable interest entities (“VIEs”) where we represent the primary beneficiary and have the power to direct the activities that most significantly impact the entity’s performance (refer to Note 6— Variable Interest Entities ). Accordingly, all intercompany balances and transactions have been eliminated through the consolidation process. Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. The preparation of the condensed consolidated financial statements, in conformity with GAAP, requires our senior leadership team to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the condensed consolidated financial statements. We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, using information that is reasonably available to us at this time. The accounting estimates and other matters we have assessed include, but were not limited to, sales return reserve, inventory reserve, allowance for doubtful accounts, goodwill, and intangible and other long-lived assets. Our current assessment of these estimates is included in the condensed consolidated financial statements as of and for the three and six months ended August 1, 2026. As additional information becomes available to us, our future assessment of these estimates, as well as other factors, could change and the results of any such change could materially and adversely impact the condensed consolidated financial statements in future reporting periods. These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the “2025 Form 10-K”). The results of operations for the three and six months ended August 1, 2026, presented herein, are not necessarily indicative of the results to be expected for the full fiscal year. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 9 ​ Table of Contents NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS New Accounting Standards or Updates Adopted Financial Instruments: Measurement of Credit Losses for Accounts Receivable and Contract Assets In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU 2025-05”). This new guidance provides all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets. We adopted the ASU as of February 1, 2026 on a prospective basis and utilized the practical expedient, which did not have a material impact on our condensed consolidated financial statements. ​ New Accounting Standards or Updates Not Yet Adopted Income Statement: Disaggregation of Income Statement Expenses In November 2024, the FASB issued ASU 2024-03—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) . This new guidance is designed to improve financial reporting by requiring public business entities to disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods, including amounts and qualitative descriptions of inventory purchases, employee compensation, depreciation and intangible asset amortization, among other requirements. In January 2025, the FASB issued ASU 2025-01—Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40) : Clarifying the Effective Date , which clarifies that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The guidance is required to be adopted on either a prospective or retrospective basis and early adoption is permitted. We are currently assessing the impact that adopting this ASU will have on our condensed consolidated financial statements. ​ Intangibles—Goodwill and Other—Internal-Use Software: Improvements to Accounting for Internal-Use Software In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). This new guidance amends guidance related to accounting for internal-use software development costs and clarifies the criteria for capitalization. ASU 2025-06 is effective for fiscal years beginning after December 15, 2027. We are currently assessing the impact that adopting this ASU will have on our condensed consolidated financial statements. ​ Interim Reporting: Narrow-Scope Reporting In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Reporting (“ASU 2025-11”). This new guidance clarifies and improves interim reporting guidance. ASU 2025-11 is effective for fiscal years beginning after December 15, 2027. We expect to comply with the amendments in this ASU beginning on the effective date. ​ ​ 10 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents NOTE 3—BUSINESS COMBINATION On July 8, 2025, we acquired a home furnishings business operating under the brand names of Formations and Dennis & Leen for total consideration of $ 32 million, funded through available cash. The transaction was accounted for as a business combination under Accounting Standards Codification (“ASC”) 805— Business Combinations . We believe that this addition to the RH platform further positions us as a leader in the luxury design market as we continue to enhance the RH product assortment. During the three and six months ended August 2, 2025, we incurred $ 1.5 million and $ 2.2 million, respectively, of acquisition-related costs associated with the transaction. These costs include fees associated with financial, legal and accounting advisors, and are included in selling, general and administrative expenses on the condensed consolidated statements of income. The following table summarizes the purchase price allocation based on the fair value of the assets acquired and liabilities assumed as of July 8, 2025: ​ ​ ​ ​ ​ ​ PURCHASE ​ ​ PRICE ​ ​ ALLOCATION ​ ​ (in thousands) Merchandise inventories ​ $ 5,451 Property and equipment ​ ​ 27,461 Operating lease right-of-use assets ​ ​ 4,443 Goodwill (1) ​ ​ 3,220 Other assets ​ ​ 923 Deferred revenue and customer deposits ​ ​ ( 3,471 ) Operating lease liabilities ​ ​ ( 4,273 ) Other liabilities ​ ​ ( 1,635 ) Total ​ $ 32,119 (1) Goodwill of $ 3.2 million, included in the RH Segment, represents the expected synergies from integrating the acquired business into our operations and is expected to be deductible for tax purposes. Results of operations of the acquired company have been included in our condensed consolidated statements of income since July 8, 2025, the acquisition date. Pro forma results of the acquired business have not been presented as the results were not considered material to our condensed consolidated financial statements for all periods presented and would not have been material had the acquisition occurred at the beginning of fiscal 2025. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 11 ​ Table of Contents NOTE 4—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ ​ ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ (in thousands) Current portion of value added tax (VAT) receivable ​ $ 50,637 ​ $ 39,169 Prepaid expenses ​ ​ 24,125 ​ ​ 30,355 Capitalized catalog costs ​ ​ 22,550 ​ ​ 23,274 Vendor deposits ​ ​ 18,417 ​ ​ 26,230 Current portion of capitalized cloud computing costs ​ ​ 13,995 ​ ​ 11,344 Tenant allowance receivable ​ ​ 9,323 ​ ​ 5,633 Right of return asset for merchandise ​ 6,145 ​ 6,423 Federal and state tax receivable ​ ​ 3,459 ​ ​ 11,528 Promissory note receivable, including interest (1) ​ 1,183 ​ 1,164 Other current assets ​ ​ 31,990 ​ ​ 29,354 Total prepaid expense and other current assets ​ $ 181,824 ​ $ 184,474 (1) Represents promissory note, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs. Refer to Note 6— Variable Interest Entities . Other non-current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ ​ ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ (in thousands) Capitalized cloud computing costs—net (1) ​ $ 32,416 ​ $ 31,224 Landlord assets under construction—net of tenant allowances ​ ​ 12,903 ​ ​ 156,252 Value added tax (VAT) receivable ​ ​ 10,651 ​ ​ — Other deposits ​ ​ 8,587 ​ ​ 12,234 Initial direct costs prior to lease commencement ​ ​ 4,624 ​ ​ 81,066 Vendor deposits—non-current ​ 3,773 ​ 3,336 Deferred financing fees ​ 2,702 ​ 3,377 Other non-current assets ​ 15,558 ​ 14,344 Total other non-current assets ​ $ 91,214 ​ $ 301,833 (1) Presented net of accumulated amortization of $ 51 million and $ 43 million as of August 1, 2026 and January 31, 2026, respectively. ​ 12 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents NOTE 5—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS Goodwill, tradenames, trademarks and other intangible assets for the RH Segment and Waterworks consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RH SEGMENT ​ ​ ​ WATERWORKS ​ ​ ​ ​ TRADENAMES, ​ ​ ​ TRADENAMES, ​ ​ ​ ​ ​ TRADEMARKS AND ​ ​ ​ ​ TRADEMARKS AND ​ ​ ​ ​ ​ OTHER INTANGIBLE ​ ​ ​ ​ OTHER INTANGIBLE ​ ​ GOODWILL ​ ASSETS ​ GOODWILL (1) ​ ASSETS (2) ​ ​ (in thousands) January 31, 2026 ​ $ 144,239 ​ $ 62,777 ​ $ — ​ $ 17,000 Additions ​ — ​ ​ 515 ​ ​ — ​ ​ — Other (3) ​ ​ — ​ ​ ( 131 ) ​ ​ — ​ ​ — Foreign currency translation ​ ​ ( 34 ) ​ ​ — ​ ​ — ​ ​ — August 1, 2026 ​ $ 144,205 ​ $ 63,161 ​ $ — ​ $ 17,000 (1) Waterworks reporting unit goodwill of $ 51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) Presented net of an impairment charge of $ 35 million recognized in prior fiscal years. (3) Represents amortization of patents and disposals. There are no goodwill, tradenames, trademarks and other intangible assets for the Real Estate segment. NOTE 6—VARIABLE INTEREST ENTITIES Restructuring As part of a May 2026 restructuring of the Aspen LLCs (defined below) (the “May 2026 Aspen LLC Restructuring”), we received a $ 50 million cash distribution related to our membership interests in the Aspen LLCs in connection with a series of transactions whereby ownership of certain real estate property companies held by the Aspen LLCs were transferred to entities wholly-owned by the managing member of the Aspen LLCs and ownership of one property company, which also owns the property we plan to operate as an RH Guesthouse, was transferred to an entity wholly-owned by us. Following this distribution, we repaid $ 31 million of outstanding debt secured by the RH Guesthouse property transferred to us. Additionally, as part of the May 2026 Aspen LLC Restructuring, we received $ 10 million of deemed non-cash capital contributions in one of the Aspen LLCs. Concurrently with these transactions, the membership interests in the seven Member LLCs (defined below) that were previously held by a third-party real estate developer affiliated with the managing member of the Aspen LLCs were fully assigned to us, and, as a result, each of such seven Member LLCs became a wholly-owned subsidiary entity. The impacts to our condensed consolidated financial statements from these transactions are discussed below. Equity Method Investments Equity method investments primarily represent our membership interests in three privately-held limited liability companies in Aspen, Colorado (each, an “Aspen LLC” and collectively, the “Aspen LLCs” or the “equity method investments”) that were formed for the purpose of acquiring, developing, operating and selling certain real estate projects in Aspen, Colorado. We use the hypothetical liquidation at book value (“HLBV”) method to determine our proportionate share of the earnings or losses for each equity method investment. In March 2025 one of the three Aspen LLCs sold its sole real estate property. Subsequent to the property sale, we received $ 15 million from such Aspen LLC, which consisted of $ 2.9 million for the repayment of its outstanding promissory note to us, including accrued interest, and a capital distribution of $ 13 million. The capital distribution of $ 13 million represented a return of our contributed capital of $ 7.9 million and a return on investment of $ 4.6 million. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 13 ​ Table of Contents In connection with the May 2026 Aspen LLC Restructuring, we recognized income of $ 20 million under the HLBV method for the three and six months ended August 1, 2026, which is included in share of equity method investments net (income) loss on the condensed consolidated statements of income. Additionally, upon obtaining control of the company that owns the property planned for the RH Guesthouse Aspen, we acquired its net assets and settled our preexisting lease under which we had been the lessee before the May 2026 Aspen LLC Restructuring. These transactions resulted in a non-cash loss of $ 11 million, which is comprised of (i) the assumption of outstanding debt on the real estate property transferred to us of $ 31 million, (ii) a decrease in other non-current assets of $ 22 million to eliminate previously capitalized lease-related initial direct costs and prepaid rent prior to commencement, (iii) a reduction of our equity method investment of $ 17 million related to the property company distribution, (iv) a decrease in property and equipment of approximately $ 2 million to eliminate previously capitalized leasehold improvements and (v) an increase to property and equipment of $ 61 million to recognize the acquisition of land and building assets at fair value. The non-cash loss of $ 11 million recognized during the three and six months ended August 1, 2026 is included in selling, general and administrative expenses on the condensed consolidated statements of income and reflected within cash flows from operating activities on the condensed consolidated statements of cash flows for the six months ended August 1, 2026. The cash distribution of $ 50 million in connection with the May 2026 Aspen LLC Restructuring represented a return of our contributed capital of $ 42 million and a return on investment of $ 8.1 million. The $ 31 million repayment of the acquired real estate loan is included in repayments under real estate loans within cash flows from financing activities on the condensed consolidated statements of cash flows for the six months ended August 1, 2026. We continue to account for the Aspen LLCs as equity method investments since we are not the primary beneficiary of these VIEs. Additionally, Waterworks has membership interests in two European entities that are equity method investments. Our maximum exposure to loss as of August 1, 2026 is the carrying value of our equity method investments. Additionally, we are the lessee for one lease arrangement within an Aspen LLC, which commenced as of January 31, 2026. Refer to Note 8 — Leases . Consolidated Variable Interest Entities and Noncontrolling Interests In fiscal 2022, we formed eight privately-held limited liability companies (each, a “Member LLC” and collectively, the “Member LLCs”) with a third-party real estate development partner (the “development partner”) affiliated with the managing member of the Aspen LLCs (as defined below under “Equity Method Investments”) for real estate development activities related to our Gallery transformation and global expansion strategies. In fiscal 2024, one Member LLC became a wholly-owned subsidiary and accordingly is no longer considered a Member LLC. Concurrently with the May 2026 Aspen LLC Restructuring, the seven remaining Member LLCs became wholly-owned subsidiaries as the membership interests in the Member LLCs that were previously held by a third-party real estate developer were withdrawn, which had an immaterial effect on the condensed consolidated financial statements for the three and six months ended August 1, 2026. Accordingly, there are no noncontrolling interest holders in any of the Member LLCs as of August 1, 2026 and we continue to consolidate these subsidiaries following the transactions described under “Restructuring .” ​ 14 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents NOTE 7—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES Accounts payable and accrued expenses consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ ​ ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ (in thousands) Accounts payable ​ $ 211,433 ​ $ 197,740 Accrued compensation ​ 65,207 ​ 54,933 Accrued sales, use and other indirect tax ​ 40,871 ​ 35,254 Accrued occupancy ​ 31,295 ​ 27,264 Accrued freight and duty ​ 23,478 ​ 22,877 Accrued professional fees ​ 6,705 ​ 7,811 Accrued legal contingencies (1) ​ ​ 2,091 ​ ​ 2,914 Other accrued expenses ​ 42,374 ​ 37,943 Total accounts payable and accrued expenses ​ $ 423,454 ​ $ 386,736 (1) Refer to Note 14 ¾ Commitments and Contingencies . Other current liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ ​ ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ (in thousands) Allowance for sales returns ​ $ 25,703 ​ $ 24,821 Current portion of term loans ​ ​ 25,000 ​ ​ 25,000 Finance lease liabilities ​ ​ 23,726 ​ ​ 21,249 Unredeemed gift card and merchandise credit liability ​ ​ 16,611 ​ ​ 18,138 Other current liabilities ​ 3,215 ​ 5,878 Total other current liabilities ​ $ 94,255 ​ $ 95,086 ​ Supplier Finance Program We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank. As of August 1, 2026 and January 31, 2026, we had $ 42 million and $ 31 million, respectively, of payment obligations outstanding under the Financing Program included in accounts payable and accrued expenses on the condensed consolidated balance sheets. Contract Liabilities We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue and customer deposits as of August 1, 2026 will be recognized within the next six months as the performance obligations are satisfied. In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards. During the three months ended August 1, 2026 and August 2, 2025, we recognized $ 4.6 million and $ 5.2 million, respectively, of revenue related to previous deferrals related to our gift cards . During the six months ended August 1, 2026 and August 2, 2025, we recognized $ 10 million and $ 12 million, respectively, of revenue related to previous deferrals related to our gift cards . We expect that approximately 70 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 15 ​ Table of Contents Reorganization We implemented and completed a restructuring in the second quarter of fiscal 2025 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth. The workforce reduction associated with this initiative included the elimination of numerous leadership and other positions throughout the organization. During the three and six months ended August 2, 2025, we incurred total charges relating to the reorganization of $ 1.2 million, consisting primarily of severance costs and related taxes, all of which was paid during fiscal 2025. NOTE 8—LEASES Lease costs—net consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ ​ AUGUST 1, ​ ​ ​ AUGUST 2, ​ AUGUST 1, ​ ​ ​ AUGUST 2, ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 ​ ​ ​ (in thousands) Operating lease costs (1) ​ ​ $ 42,130 ​ $ 36,447 $ 82,304 ​ $ 71,893 Finance lease costs ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortization of leased assets (1) ​ ​ ​ 18,723 ​ ​ 14,875 ​ ​ 35,929 ​ ​ 29,548 Interest on lease liabilities (2) ​ ​ ​ 12,874 ​ ​ 9,248 ​ ​ 24,152 ​ ​ 18,193 Variable lease costs (3) ​ ​ ​ 6,958 ​ ​ 6,442 ​ ​ 14,032 ​ ​ 13,629 Sublease income (4) ​ ​ ​ ( 1,133 ) ​ ​ ( 1,189 ) ​ ​ ( 2,309 ) ​ ​ ( 2,371 ) Total lease costs—net ​ ​ $ 79,552 ​ $ 65,823 ​ $ 154,108 ​ $ 130,892 (1) Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on our accounting policy. (2) Included in interest expense—net on the condensed consolidated statements of income. Amounts include lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset for finance leases, which were not material in either period presented. (3) Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $ 3.8 million and $ 4.0 million for the three months ended August 1, 2026 and August 2, 2025, respectively, and $ 7.5 million and $ 8.1 million for the six months ended August 1, 2026 and August 2, 2025, respectively, as well as charges associated with common area maintenance of $ 3.2 million and $ 2.4 million for the three months ended August 1, 2026 and August 2, 2025, respectively, and $ 6.6 million and $ 5.5 million for the six months ended August 1, 2026 and August 2, 2025, respectively. Other variable costs, which include single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset, were not material in any period presented. (4) Included in selling, general and administrative expenses on the condensed consolidated statements of income. ​ 16 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents Lease right-of-use assets and lease liabilities consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ JANUARY 31, ​ ​ BALANCE SHEET CLASSIFICATION ​ ​ 2026 ​ ​ 2026 ​ ​ ​ ​ (in thousands) ASSETS ​ ​ ​ ​ ​ ​ ​ ​ Operating leases (1) ​ Operating lease right-of-use assets ​ $ 864,669 ​ $ 795,352 Finance leases (2)(3)(4) ​ Property and equipment—net ​ ​ 1,527,833 ​ ​ 1,181,339 Total lease right-of-use assets ​ ​ ​ $ 2,392,502 ​ $ 1,976,691 LIABILITIES ​ ​ ​ ​ ​ ​ ​ ​ Current (5) ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ Operating lease liabilities ​ $ 113,332 ​ $ 110,280 Finance leases ​ Other current liabilities ​ ​ 23,726 ​ ​ 21,249 Total lease liabilities—current ​ ​ ​ ​ 137,058 ​ ​ 131,529 Non-current ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ Non-current operating lease liabilities ​ ​ 749,376 ​ ​ 705,084 Finance leases ​ Non-current finance lease liabilities ​ ​ 837,192 ​ ​ 718,837 Total lease liabilities—non-current ​ ​ ​ ​ 1,586,568 ​ ​ 1,423,921 Total lease liabilities ​ ​ ​ $ 1,723,626 ​ $ 1,555,450 (1) Includes $ 41 million as of both August 1, 2026 and January 31, 2026 related to a future RH Design Gallery lease where the landlord is one of the Aspen LLCs. Refer to Note 6— Variable Interest Entities . (2) Includes capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement. (3) Includes accumulated amortization of $ 419 million and $ 384 million as of August 1, 2026 and January 31, 2026, respectively. (4) Includes $ 32 million and $ 33 million as of August 1, 2026 and January 31, 2026, respectively, related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs. Refer to Note 6— Variable Interest Entities . (5) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months. ​ ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 17 ​ Table of Contents The maturities of lease liabilities were as follows as of August 1, 2026: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING ​ FINANCE ​ ​ FISCAL YEAR ​ ​ ​ ​ LEASES ​ ​ LEASES ​ ​ TOTAL ​ ​ ​ ​ (in thousands) Remainder of fiscal 2026 ​ ​ ​ $ 82,094 ​ $ 36,878 ​ $ 118,972 2027 ​ ​ ​ ​ 156,304 ​ ​ 74,378 ​ ​ 230,682 2028 ​ ​ ​ ​ 125,538 ​ ​ 73,479 ​ ​ 199,017 2029 ​ ​ ​ ​ 113,663 ​ ​ 73,140 ​ ​ 186,803 2030 ​ ​ ​ ​ 104,701 ​ ​ 74,178 ​ ​ 178,879 2031 ​ ​ ​ ​ 85,200 ​ ​ 71,220 ​ ​ 156,420 Thereafter ​ ​ ​ ​ 676,785 ​ ​ 1,393,062 ​ ​ 2,069,847 Total lease payments (1)(2) ​ ​ ​ ​ 1,344,285 ​ ​ 1,796,335 ​ ​ 3,140,620 Less—imputed interest (3) ​ ​ ​ ​ ( 481,577 ) ​ ​ ( 935,417 ) ​ ​ ( 1,416,994 ) Present value of lease liabilities ​ ​ ​ $ 862,708 ​ $ 860,918 ​ $ 1,723,626 (1) Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Total lease payments exclude $ 256 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of August 1, 2026, of which $ 4.0 million, $ 11 million, $ 14 million, $ 16 million, $ 17 million and $ 17 million will be paid in the remainder of fiscal 2026, fiscal 2027, fiscal 2028, fiscal 2029, fiscal 2030 and fiscal 2031, respectively, and $ 177 million will be paid subsequent to fiscal 2031. (2) Excludes an immaterial amount of future commitments under short-term lease agreements. (3) Calculated using the discount rate for each lease at lease commencement. Supplemental information related to leases consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SIX MONTHS ENDED ​ ​ ​ ​ ​ AUGUST 1, ​ ​ ​ AUGUST 2, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Weighted-average remaining lease term (years) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ ​ ​ ​ ​ 12.0 ​ ​ ​ 9.2 ​ Finance leases ​ ​ ​ ​ ​ 22.5 ​ ​ ​ 20.0 ​ Weighted-average discount rate ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating leases ​ ​ ​ ​ ​ 6.8 % ​ ​ 6.1 % Finance leases ​ ​ ​ ​ ​ 6.7 % ​ ​ 5.9 % ​ ​ 18 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents Other information related to leases consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SIX MONTHS ENDED ​ ​ ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ 2026 ​ 2025 ​ ​ ​ (in thousands) Cash paid for amounts included in the measurement of lease liabilities ​ ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ ​ $ ( 81,906 ) ​ $ ( 70,984 ) Operating cash flows from finance leases ​ ​ ​ ( 24,152 ) ​ ​ ( 18,193 ) Financing cash flows from finance leases—net (1) ​ ​ ​ ( 10,099 ) ​ ​ ( 8,031 ) Total cash outflows from leases ​ ​ $ ( 116,157 ) ​ $ ( 97,208 ) Non-cash transactions ​ ​ ​ ​ ​ ​ ​ Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations ​ ​ ​ ​ ​ ​ ​ Operating leases (2) ​ ​ $ 106,185 ​ $ 61,737 Finance leases ​ ​ ​ 130,492 ​ ​ 37,947 Reclassification from other non-current assets to finance lease right-of-use assets ​ ​ ​ 260,040 ​ ​ 37,502 Reclassification from other non-current assets to operating lease right-of-use assets ​ ​ ​ 24,552 ​ ​ — ​ (1) Presented net of tenant allowances received subsequent to lease commencement of $ 6.2 million in the six months ended August 2, 2025. No such amounts were received from landlords in the six months ended August 1, 2026. (2) Right-of-use assets obtained in exchange for new operating lease liabilities exclude the impact from acquisitions of $ 4.3 million for the six months ended August 2, 2025. Refer to Note 3— Business Combination . NOTE 9—CREDIT FACILITIES AND REAL ESTATE LOAN The outstanding balances under our credit facilities were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ ​ ​ ​ ​ UNAMORTIZED ​ ​ ​ ​ ​ UNAMORTIZED ​ ​ ​ ​ ​ ​ ​ ​ ​ DEBT ​ NET ​ ​ ​ ​ DEBT ​ NET ​ ​ INTEREST ​ OUTSTANDING ​ ISSUANCE ​ CARRYING ​ OUTSTANDING ​ ISSUANCE ​ CARRYING ​ ​ RATE ​ ​ ​ AMOUNT ​ ​ ​ COSTS ​ ​ ​ AMOUNT ​ ​ ​ AMOUNT ​ ​ ​ COSTS ​ ​ ​ AMOUNT ​ ​ (dollars in thousands) Asset based credit facility (1) ​ 5.33 % ​ $ — ​ $ — ​ $ — ​ $ 20,000 ​ $ — ​ $ 20,000 Term loan B (2) ​ 6.35 % ​ ​ 1,905,000 ​ ​ ( 7,029 ) ​ ​ 1,897,971 ​ ​ 1,915,000 ​ ​ ( 8,630 ) ​ ​ 1,906,370 Term loan B-2 (3) ​ 7.01 % ​ ​ 481,250 ​ ​ ( 9,328 ) ​ ​ 471,922 ​ ​ 483,750 ​ ​ ( 11,451 ) ​ ​ 472,299 Total credit facilities ​ ​ ​ $ 2,386,250 ​ $ ( 16,357 ) ​ $ 2,369,893 ​ $ 2,418,750 ​ $ ( 20,081 ) ​ $ 2,398,669 (1) Deferred financing fees associated with the asset based credit facility as of August 1, 2026 and January 31, 2026 were $ 2.7 million and $ 3.4 million, respectively, and are included in other non-current assets on the condensed consolidated balance sheets. The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit. In July 2025, Restoration Hardware, Inc. entered into an amendment to the ABL Credit Agreement (defined below), which extended the maturity date of the revolving line of credit from July 29, 2026 to the earlier of (a) July 31, 2030 and (b) the date which is 91 days prior to the final stated maturity of the Term Loan Credit Agreement and any refinancing thereof. (2) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,885 million and $ 1,895 million were included in term loan B—net on the condensed consolidated balance sheets as of August 1, 2026 and January 31, 2026, respectively, and $ 20 million of current maturities of long-term debt was included in other current liabilities on the condensed consolidated balance sheets as of both August 1, 2026 and January 31, 2026. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 19 ​ Table of Contents (3) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $ 476 million and $ 479 million were included in term loan B-2—net on the condensed consolidated balance sheets as of August 1, 2026 and January 31, 2026, respectively, and $ 5.0 million of current maturities of long-term debt was included in other current liabilities on the condensed consolidated balance sheets as of both August 1, 2026 and January 31, 2026. Asset Based Credit Facility On August 3, 2011, Restoration Hardware, Inc. (“RHI”), a wholly-owned subsidiary of RH, along with its Canadian subsidiary, Restoration Hardware Canada, Inc., entered into the Ninth Amended and Restated Credit Agreement (as amended prior to June 28, 2017, the “Original Credit Agreement”) by and among RHI, Restoration Hardware Canada, Inc., certain other subsidiaries of RH named therein as borrowers or guarantors, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent (the “ABL Agent”). On July 31, 2025, RHI entered into an Amendment (the “Amendment”) to the Original Credit Agreement, as it had been subsequently amended (as amended by the Amendment, the “ABL Credit Agreement”). The Amendment, among other things, amends the Original Credit Agreement to extend the maturity date of the ABL Credit Agreement to be the earlier of (a) July 31, 2030 and (b) the date which is 91 days prior to the final stated maturity of the Term Loan Credit Agreement and any refinancing thereof. Under the ABL Credit Agreement, RHI has a revolving line of credit with initial availability of up to $ 600 million, of which (i) $ 10 million is available to the RH subsidiary, Restoration Hardware Canada, Inc., and (ii) $ 100 million is available to the RH subsidiary, RH Geneva Sàrl. The ABL Credit Agreement includes a $ 300 million accordion feature under which the revolving line of credit may be expanded by agreement of the parties from $ 600 million to up to $ 900 million if and to the extent the lenders revise their credit commitments to encompass a larger facility. The ABL Credit Agreement provides that the $ 300 million accordion, or a portion thereof, may be added as a first-in, last-out term loan facility if and to the extent the lenders revise their credit commitments for such facility. The ABL Credit Agreement further provides that the borrowers may request a European sub-credit facility under the revolving line of credit or under the accordion feature for borrowing by certain European subsidiaries of RH Global Holdings, Inc. if certain conditions set out in the ABL Credit Agreement are met. The availability of credit at any given time under the ABL Credit Agreement will be constrained by its terms and conditions, including the amount of collateral available, a borrowing base formula based upon numerous factors, including the value of eligible inventory and eligible accounts receivable, and other restrictions contained in the ABL Credit Agreement. All obligations under the ABL Credit Agreement are secured by substantial assets of the loan parties, including inventory, receivables and certain types of intellectual property. As a result, actual borrowing availability under the revolving line of credit could be less than the stated amount of the revolving line of credit (as reduced by the actual borrowings and outstanding letters of credit under the revolving line of credit). Borrowings under the revolving line of credit (other than swing line loans, which are subject to interest at the base rate) bear interest, at the borrower’s option, at either the base rate or the Secured Overnight Financing Rate (“SOFR”), subject to a 0.00 % SOFR floor (or, in the case of the Canadian borrowings, the “BA Rate” or the “Canadian Prime Rate”, as such terms are defined in the ABL Credit Agreement, for the Canadian borrowings denominated in Canadian dollars, or the “U.S. Index Rate”, as such term is defined in the ABL Credit Agreement, or SOFR for Canadian borrowings denominated in U.S. dollars) plus an applicable interest rate margin, in each case. The ABL Credit Agreement contains various restrictive and affirmative covenants, including required financial reporting, limitations on granting certain liens, limitations on making certain loans or investments, limitations on incurring additional debt, restricted payment limitations limiting the payment of dividends and certain other transactions and distributions, limitations on transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of a similar type and size. The ABL Credit Agreement does not contain any significant financial ratio covenants or coverage ratio covenants other than a consolidated fixed charge coverage ratio (“FCCR”) covenant based on the ratio of (i) consolidated EBITDA to the amount of (ii) debt service costs plus certain other amounts, including dividends and distributions and prepayments of debt as defined in the ABL Credit Agreement (the “FCCR Covenant”). The FCCR Covenant only applies in certain limited circumstances, including when the unused availability under the ABL Credit Agreement drops below the greater of (A) $ 40 million and (B) an amount based on 10 % of the total borrowing availability at the time. The FCCR Covenant ratio is set at 1.0 and measured on a trailing twelve-month basis. As of August 1, 2026, RHI was in compliance with the FCCR Covenant. ​ 20 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents The ABL Credit Agreement requires a daily sweep of all cash receipts and collections to prepay the loans under the agreement while (i) an event of default exists or (ii) when the unused availability under the ABL Credit Agreement drops below the greater of (A) $ 40 million and (B) an amount based on 10 % of the total borrowing availability at the time. The ABL Credit Agreement contains customary representations and warranties, events of default and other customary terms and conditions for an asset based credit facility. As of August 1, 2026, RHI had no outstanding borrowings and $ 334 million of availability under the revolving line of credit, net of $ 44 million in outstanding letters of credit. As a result of the FCCR Covenant that limits the last 10 % of borrowing availability, actual incremental borrowing available to RHI and the other affiliated parties under the revolving line of credit would be $ 274 million as of August 1, 2026. Term Loan Credit Agreement On October 20, 2021, RHI entered into a Term Loan Credit Agreement (the “Term Loan Credit Agreement”) by and among RHI as the borrower, the lenders party thereto and Bank of America, N.A. as administrative agent and collateral agent (in such capacities, the “Term Agent”) with respect to an initial term loan (the “Term Loan B”) in an aggregate principal amount equal to $ 2,000 million with a maturity date of October 20, 2028. Through July 31, 2023, the Term Loan B bore interest at an annual rate based on LIBOR subject to a 0.50 % LIBOR floor plus an interest rate margin of 2.50 % (with a stepdown of the interest rate margin if RHI achieves a specified public corporate family rating). LIBOR is a floating interest rate that reset periodically during the life of the Term Loan B. At the date of borrowing, the interest rate was set at the LIBOR floor of 0.50 % plus 2.50 % and the Term Loan B was issued at a discount of 0.50 % to face value. Effective August 1, 2023, the Term Loan B bears interest at an annual rate based on SOFR subject to a 0.50 % SOFR floor plus an interest rate margin of 2.50 % plus a credit spread adjustment. On May 13, 2022, RHI entered into a 2022 Incremental Amendment (the “2022 Incremental Amendment”) with Bank of America, N.A., as administrative agent, amending the Term Loan Credit Agreement (the Term Loan Credit Agreement as amended by the 2022 Incremental Amendment, the “Amended Term Loan Credit Agreement”). Pursuant to the terms of the 2022 Incremental Amendment, RHI incurred incremental term loans (the “Term Loan B-2”) in an aggregate principal amount equal to $ 500 million with a maturity date of October 20, 2028. The Term Loan B-2 constitutes a separate class from the Term Loan B under the Term Loan Credit Agreement. The Term Loan B-2 bears interest at an annual rate based on SOFR subject to a 0.50 % SOFR floor plus an interest rate margin of 3.25 % plus a credit spread adjustment of 0.10 %. Other than the terms relating to the Term Loan B-2, the terms of the Amended Term Loan Credit Agreement remain substantially the same as the terms of the existing Term Loan Credit Agreement, including representations and warranties, covenants and events of default. All obligations under the Term Loan B are guaranteed by certain domestic subsidiaries of RHI. Further, RHI and such subsidiaries have granted a security interest in substantially all of their assets (subject to customary and other exceptions) to secure the Term Loan B. Substantially all of the collateral securing the Term Loan B also secures the loans and other credit extensions under the ABL Credit Agreement. On October 20, 2021, in connection with the Term Loan Credit Agreement, RHI and certain other subsidiaries of RH party to the Term Loan Credit Agreement and the ABL Credit Agreement, as the case may be, entered into an Intercreditor Agreement (the “Intercreditor Agreement”) with the Term Agent and the ABL Agent. The Intercreditor Agreement establishes various customary inter-lender terms, including, without limitation, with respect to priority of liens, permitted actions by each party, application of proceeds, exercise of remedies in case of default, releases of liens and certain limitations on the amendment of the ABL Credit Agreement and the Term Loan Credit Agreement without the consent of the other parties. The borrowings under the Term Loan Credit Agreement may be prepaid in whole or in part at any time, subject to a prepayment premium of 1.0 % in connection with any repricing transaction within the six months following the closing date of the Term Loan Credit Agreement. The Term Loan Credit Agreement contains various restrictive and affirmative covenants, including required financial reporting, limitations on granting certain liens, limitations on making certain loans or investments, limitations on incurring additional debt, restricted payment limitations limiting the payment of dividends and certain other transactions and distributions, limitations on transactions with affiliates, along with other restrictions and limitations similar to those frequently found in credit agreements of a similar type and size, but provides for unlimited exceptions in the case of incurring indebtedness, granting of liens and making investments, dividend payments, and payments of material junior indebtedness, subject to satisfying specified leverage ratio tests. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 21 ​ Table of Contents The Term Loan Credit Agreement does not contain a financial maintenance covenant. The Term Loan Credit Agreement contains customary representations and warranties, events of default and other customary terms and conditions for a term loan credit agreement. Real Estate Loan On September 9, 2022, the property company owned by a Member LLC, as defined in Note 6— Variable Interest Entities , as the borrower executed a Promissory Note (the “Promissory Note”) with a third-party bank in an aggregate principal amount equal to $ 16 million with a maturity date of September 9, 2032. The Promissory Note bears interest at a fixed rate per annum equal to 5.37 % until September 15, 2027, on which date the interest rate will reset based on the five-year treasury rate plus 2.00 %, subject to a total interest rate floor of 3.00 %. As of January 31, 2026 and August 1, 2026, the Promissory Note was secured by the assets of the property company owned by such Member LLC, which became wholly owned by us in the second quarter of fiscal 2026, and the creditor does not have recourse against RH’s general assets. NOTE 10—FAIR VALUE MEASUREMENTS Fair Value Measurements—Recurring Amounts reported as cash and equivalents, receivables, and accounts payable and accrued expenses approximate fair value due to the short-term nature of activity within these accounts. The estimated fair value of the asset based credit facility approximates cost as the interest rate associated with the facility is variable and resets frequently (Level 2). The estimated fair value and carrying value of the Term Loan Credit Agreement and the real estate loan were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AUGUST 1, ​ JANUARY 31, ​ ​ 2026 ​ 2026 ​ ​ ​ ​ ​ ​ ​ ​ PRINCIPAL ​ ​ ​ ​ ​ ​ ​ PRINCIPAL ​ ​ FAIR ​ CARRYING ​ FAIR ​ CARRYING ​ ​ VALUE ​ VALUE (1) ​ VALUE ​ VALUE (1) ​ ​ (in thousands) Term loan B ​ $ 1,857,375 ​ $ 1,905,000 ​ $ 1,881,488 ​ $ 1,915,000 Term loan B-2 ​ 475,234 ​ ​ 481,250 ​ 480,122 ​ 483,750 Real estate loan ​ ​ 14,805 ​ ​ 15,417 ​ ​ 15,343 ​ ​ 15,585 (1) The principal carrying values of the Term Loan B and Term Loan B-2 represent the outstanding amount under each class and exclude discounts upon original issuance and third-party offering costs. The principal carrying value of the real estate loan represents the outstanding principal balance and excludes debt issuance costs. The fair values of the Term Loan B and Term Loan B-2 were derived from observable bid prices (Level 1). The fair values of the real estate loan were derived from discounted cash flows using risk-adjusted rates (Level 2). NOTE 11—INCOME TAXES Our income tax expense and effective tax rates were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ ​ ​ AUGUST 2, ​ AUGUST 1, ​ ​ ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ 2026 ​ ​ ​ 2025 ​ ​ (dollars in thousands) Income tax expense ​ $ 16,249 ​ ​ $ 19,032 ​ $ 10,347 ​ ​ $ 22,159 ​ Effective tax rate ​ ​ 27.8 % ​ ​ 26.9 % ​ ​ 26.3 % ​ ​ 27.1 % ​ ​ 22 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents The increase in our effective tax rate for the three months ended August 1, 2026 compared to the three months ended August 2, 2025 is primarily attributable to reporting lower net income, as well as the impact of higher net excess tax benefits from stock-based compensation in the current period as compared to the prior period. The decrease in our effective tax rate for the six months ended August 1, 2026 compared to the six months ended August 2, 2025 is attributable to reporting lower net income in the current period as compared to the prior period. On July 4, 2025, the United States enacted tax legislation through the H.R.1 Reconciliation Act, commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”), which implemented several corporate tax law changes taking effect in fiscal 2025 and others through fiscal 2027. The impacts of the OBBBA are reflected in our results for the quarter ended August 1, 2026. We will continue to monitor any future changes in our business or interpretations of the new tax law that could affect our tax position in subsequent periods. NOTE 12—NET INCOME PER SHARE The weighted-average shares used for net income per share were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 Weighted-average shares—basic ​ ​ 18,913,130 ​ ​ 18,737,234 ​ ​ 18,879,222 ​ ​ 18,733,119 Effect of dilutive stock-based awards ​ 756,177 ​ ​ 1,000,097 ​ 775,428 ​ ​ 1,092,163 Weighted-average shares—diluted ​ 19,669,307 ​ 19,737,331 ​ 19,654,650 ​ 19,825,282 ​ The following number of options and restricted stock units were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 Options ​ ​ 3,043,582 ​ ​ 2,224,003 ​ ​ 2,809,898 ​ ​ 2,085,890 Restricted stock units ​ 5,075 ​ ​ 9,470 ​ 12,428 ​ ​ 9,051 ​ NOTE 13—STOCK-BASED COMPENSATION We maintain two stock incentive plans, the 2012 Stock Incentive Plan and the 2023 Stock Incentive Plan (collectively, the “Plans”), that provide for the grant of incentive stock options to our employees and the grant of non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, dividend equivalent rights and any combination thereof to our employees, directors and consultants and our parent and subsidiary corporations’ employees, directors and consultants. As of August 1, 2026, there were a total of 1,340,682 shares issuable under the 2023 Stock Incentive Plan. Equity Awards Under the Plans Options outstanding, vested or expected to vest, and exercisable as of August 1, 2026 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ WEIGHTED- ​ AGGREGATE ​ ​ ​ ​ AVERAGE ​ AVERAGE ​ INTRINSIC ​ ​ ​ ​ EXERCISE ​ REMAINING TERM ​ VALUE ​ ​ ​ SHARES ​ ​ ​ PRICE ​ ​ ​ (in years) ​ ​ ​ (in thousands) Options outstanding ​ ​ 4,333,533 ​ $ 200.79 ​ ​ 5.1 ​ $ 155,546 Options vested or expected to vest ​ ​ 3,920,408 ​ ​ 201.90 ​ ​ 4.8 ​ ​ 148,146 Options exercisable ​ ​ 2,563,136 ​ ​ 196.24 ​ ​ 3.0 ​ ​ 131,713 ​ ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 23 ​ Table of Contents Stock-based compensation, which is included in selling, general and administrative expenses on the condensed consolidated statements of income, was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ 2025 ​ ​ (in thousands) Stock-based compensation ​ $ 12,493 ​ $ 11,633 ​ $ 24,412 ​ $ 24,007 ​ No stock-based compensation has been capitalized in the accompanying condensed consolidated financial statements. As of August 1, 2026, the total unrecognized stock-based compensation and weighted-average remaining term of unvested awards were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ UNRECOGNIZED ​ ​ WEIGHTED- ​ ​ STOCK BASED ​ ​ AVERAGE ​ ​ COMPENSATION ​ ​ REMAINING TERM ​ ​ (in thousands) ​ ​ (in years) Unvested options ​ $ 153,779 ​ ​ 5.2 Unvested restricted stock and restricted stock units ​ ​ 6,036 ​ ​ 1.5 Total ​ $ 159,815 ​ ​ ​ ​ NOTE 14—COMMITMENTS AND CONTINGENCIES Commitments We had no material off-balance sheet commitments as of August 1, 2026. Contingencies We are subject to contingencies, including in connection with lawsuits, claims, investigations and other legal proceedings incident to the ordinary course of our business. These disputes are increasing in number as we expand our business and provide new product and service offerings, such as restaurants and hospitality, and as we enter new markets and legal jurisdictions and face increased complexity related to compliance and regulatory requirements. In addition, we are subject to governmental and regulatory examinations, information requests, and investigations from time to time at the state and federal levels. We currently face certain legal proceedings that involve complex litigation, including class action cases, matters related to our employment practices, the application of state wage-and-hour laws, product liability and other causes of action. We have faced similar litigation in the past. Due to the inherent difficulty of predicting the course of complex legal actions, including class-action allegations, such as the eventual scope, duration or outcome, we may be unable to estimate the amount or range of any potential loss that could result from an unfavorable outcome arising from such matters. Our assessment of these legal proceedings, as well as other lawsuits, could change based upon the discovery of facts that are not presently known or developments during the course of the litigation. We have settled certain class action and other cases but continue to defend a variety of legal actions and our estimates of our exposure in such cases may evolve over time. Accordingly, the ultimate costs to resolve litigation, including class action cases, may be substantially higher or lower than our estimates. ​ 24 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents With respect to such contingencies, we review the need for any loss contingency reserves and establish reserves when, in the opinion of our senior leadership team, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. Loss contingencies determined to be probable and estimable are included in accounts payable and accrued expenses on the condensed consolidated balance sheets (refer to Note 7— Accounts Payable, Accrued Expenses and Other Current Liabilities ). These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to each matter. In view of the inherent difficulty of predicting the outcome of certain matters, particularly in cases in which claimants seek substantial or indeterminate damages, it may not be possible to determine whether a liability has been incurred or to reasonably estimate the ultimate or minimum amount of that liability until the case is close to resolution, in which case no reserve is established until that time. When and to the extent that we do establish a reserve, there can be no assurance that any such recorded liability for estimated losses will be for the appropriate amount, and actual losses could be higher or lower than what we accrue from time to time. Although we believe that the ultimate resolution of our current legal proceedings will not have a material adverse effect on the condensed consolidated financial statements, the outcome of legal matters is subject to inherent uncertainty. Although we are self-insured or maintain deductibles in the United States for workers’ compensation, general liability and product liability up to predetermined amounts, above which third-party insurance applies, depending on the facts and circumstances of the underlying claims, coverage under these or other of our insurance policies may not be available. We may elect not to renew certain insurance coverage or renewal of coverage may not be available or may be prohibitively expensive. Even if we believe coverage does apply under our insurance programs, our insurance carriers may dispute coverage based on the underlying facts and circumstances. The outcome of any contingencies, including lawsuits, claims, investigations and other legal proceedings, could result in unexpected expenses and liability that could adversely affect our operations. In addition, any legal proceedings in which we are involved or claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of our senior leadership team’s time, result in the diversion of significant operational resources, and require changes to our business operations, policies and practices. Legal costs related to such matters are expensed as incurred. Gain Contingencies Settlement In February 2026, we entered into a settlement agreement to resolve litigation pertaining to credit card interchange fees in which we received $ 32 million, net of legal costs, in March 2026. We recognized this settlement as a gain within selling, general and administrative expenses on the condensed consolidated statements of income for the six months ended August 1, 2026. Tariffs In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Subsequently, new tariffs were imposed pursuant to alternative statutory authority and are scheduled to expire after 150 days absent Congressional authorization. In April 2026, the IEEPA refund process was launched at which time we filed for refunds for tariffs previously paid in an aggregate amount of $ 69 million. During the second quarter of fiscal 2026, we received IEEPA tariff refunds of $ 67 million, as well as related interest of $ 2.4 million. Additionally, as of August 1, 2026 we recognized a receivable of $ 2.1 million for future refund claims that are realizable. As a result, we recognized a $ 55 million reduction to cost of goods sold on the condensed consolidated statements of income for the three and six months ended August 1, 2026 and a $ 14 million reduction of merchandise inventories on the condensed consolidated balance sheets as of August 1, 2026. NOTE 15—SEGMENT REPORTING We define reportable and operating segments on the same basis that we use to evaluate our performance internally by the chief operating decision maker (“CODM”), which we have determined is our Chief Executive Officer. We have three operating segments: RH Segment, Waterworks and Real Estate. The RH Segment and Waterworks operating segments (the “retail operating segments”) include all sales channels accessed by our customers, including sales through retail locations and outlets, including hospitality, websites, Sourcebooks, and the Trade and Contract channels. The Real Estate segment represents operations associated with certain of our equity method investments and consolidated VIEs that have operations not directly related to the activities of the retail operating segments. ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 25 ​ Table of Contents The retail operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared senior leadership team and customer base, we have determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors. Segment Information The CODM uses segment adjusted operating income to evaluate segment profitability for the retail operating segments and to allocate resources and analyze variances of actual performance to our forecasts when making decisions. Operating income is defined as net income before interest expense—net, other income—net, income tax expense and our share of equity method investments net (income) loss. Segment adjusted operating income excludes (i) legal settlements—net, (ii) variable interest entities restructuring (refer to Note 6— Variable Interest Entities ), including professional fees associated with the restructuring, (iii) certain asset impairments, (iv) product recall, (v) severance costs associated with a reorganization and (vi) non-cash compensation amortization related to an option grant made to Mr. Friedman in October 2020. These items are excluded from segment adjusted operating income in order to provide better transparency of segment operating results. Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that the CODM and our senior leadership team review. ​ ​ ​ ​ 26 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents Segment net revenues, which represent our disaggregated net revenues in accordance with ASC 606, significant segment expenses and segment adjusted operating income, by reportable segment, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ 2025 ​ ​ ​ 2026 ​ 2025 ​ ​ RH SEGMENT ​ WATERWORKS ​ TOTAL (1) ​ RH SEGMENT ​ WATERWORKS ​ TOTAL (1) ​ RH SEGMENT ​ WATERWORKS ​ TOTAL (1) ​ RH SEGMENT ​ WATERWORKS ​ TOTAL (1) ​ ​ (in thousands) Net revenues ​ $ 867,280 ​ $ 54,870 ​ $ 922,150 ​ $ 846,717 ​ $ 52,434 ​ $ 899,151 ​ $ 1,619,482 ​ $ 102,996 ​ $ 1,722,478 ​ $ 1,611,715 ​ $ 101,388 ​ $ 1,713,103 Cost of goods sold (2) ​ ​ 456,061 ​ ​ 21,236 ​ ​ 477,297 ​ ​ 465,811 ​ ​ 24,081 ​ ​ 489,892 ​ ​ 902,241 ​ ​ 44,125 ​ ​ 946,366 ​ ​ 901,015 ​ ​ 47,496 ​ ​ 948,511 Advertising expense ​ ​ 34,546 ​ ​ 1,215 ​ ​ 35,761 ​ ​ 14,365 ​ ​ 1,003 ​ ​ 15,368 ​ ​ 85,727 ​ ​ 2,153 ​ ​ 87,880 ​ ​ 63,088 ​ ​ 1,658 ​ ​ 64,746 Other segment expenses (3) ​ ​ 265,793 ​ ​ 22,086 ​ ​ 287,879 ​ ​ 237,791 ​ ​ 20,481 ​ ​ 258,272 ​ ​ 521,675 ​ ​ 42,769 ​ ​ 564,444 ​ ​ 467,407 ​ ​ 40,058 ​ ​ 507,465 Segment adjusted operating income ​ $ 110,880 ​ $ 10,333 ​ $ 121,213 ​ $ 128,750 ​ $ 6,869 ​ $ 135,619 ​ $ 109,839 ​ $ 13,949 ​ $ 123,788 ​ $ 180,205 ​ $ 12,176 ​ $ 192,381 Legal settlement—net ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ ( 31,668 ) ​ ​ ​ ​ ​ ​ ​ — Variable interest entities restructuring ​ ​ ​ ​ ​ ​ 13,640 ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 13,640 ​ ​ ​ ​ ​ ​ ​ — Asset impairments ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 3,597 ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 3,597 Product recall ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 1,913 ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 1,913 Reorganization related costs ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 1,233 ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 1,233 Non-cash compensation ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ ​ — ​ ​ ​ ​ ​ ​ ​ 851 Operating income ​ ​ ​ ​ ​ 107,573 ​ ​ ​ ​ ​ ​ ​ 128,876 ​ ​ ​ ​ ​ ​ 141,816 ​ ​ ​ ​ ​ ​ ​ 184,787 Interest expense—net ​ ​ ​ ​ ​ 50,993 ​ ​ ​ ​ ​ ​ ​ 57,358 ​ ​ ​ ​ ​ ​ 103,656 ​ ​ ​ ​ ​ ​ ​ 113,961 Other income—net ​ ​ ​ ​ ​ ​ ​ ( 1,856 ) ​ ​ ​ ​ ​ ​ ​ ( 574 ) ​ ​ ​ ​ ​ ​ ​ ​ ( 1,119 ) ​ ​ ​ ​ ​ ​ ​ ( 4,227 ) Income before taxes and equity method investments ​ ​ ​ ​ ​ ​ ​ $ 58,436 ​ ​ ​ ​ ​ ​ ​ $ 72,092 ​ ​ ​ ​ ​ ​ ​ $ 39,279 ​ ​ ​ ​ ​ ​ ​ $ 75,053 (1) All intercompany transactions are not material and have been eliminated. (2) Includes $ 51 million and $ 3.7 million of IEEPA tariff refunds in both the three and six months ended August 1, 2026 for RH Segment and Waterworks, respectively. (3) Other segment expenses primarily include compensation and occupancy costs classified as selling, general and administrative expenses, and other general and administrative expenses. ​ ​ ​ ​ PART I. FINANCIAL INFORMATION 2026 SECOND QUARTER FORM 10-Q | 27 ​ Table of Contents In the three months ended August 1, 2026 and August 2, 2025, the Real Estate segment share of equity method investments operations, which is the measure of segment profitability reviewed by the CODM to evaluate performance internally for the Real Estate segment, was income of $ 18 million and a loss of $ 1.7 million, respectively. In the six months ended August 1, 2026 and August 2, 2025, the Real Estate segment share of equity method investments operations was income of $ 17 million and $ 6.5 million, respectively. The share of income from equity method investments for the Waterworks segment was immaterial in all fiscal periods presented. Depreciation and amortization for our segments was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED ​ SIX MONTHS ENDED ​ ​ AUGUST 1, ​ AUGUST 2, ​ AUGUST 1, ​ AUGUST 2, ​ ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ ​ 2026 ​ ​ ​ 2025 ​ ​ (in thousands) RH Segment ​ $ 39,187 ​ $ 32,879 ​ $ 76,314 ​ $ 66,740 Waterworks ​ ​ 1,744 ​ ​ 1,750 ​ ​ 3,364 ​ ​ 3,125 Real Estate (1) ​ ​ — ​ ​ — ​ ​ — ​ ​ — Total depreciation and amortization $ 40,931 $ 34,629 $ 79,678 $ 69,865 (1) There is no depreciation and amortization for the Real Estate segment since all assets represent construction in progress. Balance sheet information for our segments consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TRADENAMES, ​ ​ ​ ​ ​ ​ ​ ​ ​ TRADEMARKS AND ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER INTANGIBLE ​ EQUITY METHOD ​ TOTAL ​ ​ GOODWILL (1) ​ ASSETS (2) ​ INVESTMENTS ​ ASSETS ​ ​ (in thousands) January 31, 2026 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RH Segment ​ $ 144,239 ​ $ 62,777 ​ $ — ​ $ 4,499,349 Waterworks ​ ​ — ​ ​ 17,000 ​ ​ 4,363 ​ ​ 184,203 Real Estate ​ — ​ ​ — ​ ​ 115,391 ​ ​ 152,158 Total ​ $ 144,239 ​ $ 79,777 ​ $ 119,754 ​ $ 4,835,710 August 1, 2026 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RH Segment ​ $ 144,205 ​ $ 63,161 ​ $ — ​ $ 4,829,247 Waterworks ​ ​ — ​ ​ 17,000 ​ ​ 4,912 ​ ​ 200,884 Real Estate ​ ​ — ​ ​ — ​ ​ 64,231 ​ ​ 100,969 Total ​ $ 144,205 ​ $ 80,161 ​ $ 69,143 ​ $ 5,131,100 (1) The Waterworks reporting unit goodwill of $ 51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) The Waterworks reporting unit tradename is presented net of an impairment charge of $ 35 million recognized in prior fiscal years. ​ 28 | 2026 SECOND QUARTER FORM 10-Q PART I. FINANCIAL INFORMATION ​ Table of Contents We are domiciled in the United States and primarily operate our retail locations and outlets in the United States. As of August 1, 2026, we operated the following number of retail locations and outlets outside the United States: ​ ​ ​ ​ ​ ​ COUNT Canada ​ 6 United Kingdom ​ 4 France ​ 3 Germany ​ 2 Belgium ​ 1 Italy ​ 1 Spain ​ 1 Total (1) ​ 18 (1) Geographic revenues generated outside of the United States did not exceed 10% of total consolidated net revenues in any fiscal period presented.