What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-04-02 compared with 2024-03-28 · 367 added, 383 removed, 1050 unchanged (42% of the section changed)

8 unchanged sentences

Notes to Consolidated Financial Statements

PART II — FINANCIAL STATEMENTS

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PART II — FINANCIAL STATEMENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

1 unchanged sentence

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of RH and its subsidiaries (the “Company”) as of February 3, 2024 and January 28, 2023, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended February 3, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of RH and its subsidiaries (the “Company”) as of February 1, 2025 and February 3, 2024, and the related consolidated statements of income, of comprehensive income, of stockholders’ equity (deficit) and of cash flows for each of the three years in the period ended February 1, 2025, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 1.

2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1.

2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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We believe that our audits provide a reasonable basis for our opinions .

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PART II — FINANCIAL STATEMENTS

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

A company’s internal control over financial reporting includes those policies

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and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

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Leases that do not meet the definition of a finance lease are considered operating leases.

For the year ended February 3, 2024, lease right-of-use assets obtained in exchange for lease obligations-net of lease terminations totaled $171 million related to operating leases and $2 million related to finance leases, of which a significant portion of the operating leases relate to new real estate leases.

Lease characteristics that management evaluates to determine lease classification include, but are not limited to, the reasonably certain lease term, incremental borrowing rate, and fair value of the leased asset.

The principal considerations for our determination that performing procedures relating to the determination of the classification of new real estate lease contracts is a critical audit matter are (i) a high degree of auditor subjectivity and effort in performing procedures and evaluating audit evidence related to the determination of the classification of new real estate lease contracts and management’s significant assumption related to the incremental borrowing rate of the leased asset;

and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

For the year ended February 1, 2025, lease right-of-use assets obtained in exchange for lease obligations - net of lease terminations totaled $102.4 million related to operating leases and $85.1 million related to finance leases, of which a significant portion of the operating and finance leases relates to new real estate leases.

The principal considerations for our determination that performing procedures relating to the determination of the classification of new real estate lease contracts is a critical audit matter are (i) the significant judgment by management when determining the classification of new real estate lease contracts based on its evaluation of the lease characteristics;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to the determination of the classification of new real estate lease contracts and management’s significant assumptions related to the reasonably certain lease term, incremental borrowing rate of the leased asset, and fair value of the leased asset;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to lease accounting, including controls over management’s determination of the classification of new real estate lease contracts based on the lease characteristics.

These procedures also included, among others (i) reading certain of the lease agreements;

These procedures also included, among others (i) reading certain new real estate lease contracts;

(ii) testing management’s process for determining the classification of new real estate lease contracts based on the lease characteristics;

(iii) testing the completeness and accuracy of the underlying data used by management;

and (iv) evaluating the reasonableness of the significant assumption used by management related to the incremental borrowing rate of the leased asset.

Evaluating management’s significant assumption related to the incremental borrowing rate of the leased asset involved evaluating whether the significant assumption used by management was reasonable considering (i) consistency with external market and industry data;

and (ii) whether the significant assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the significant assumption related to the incremental borrowing rate of the leased asset .

and (iv) evaluating the reasonableness of the significant assumptions used by management related to the reasonably certain lease term, incremental borrowing rate of the leased asset, and fair value of the leased asset.

Evaluating management’s assumptions related to the reasonably certain lease term, incremental borrowing rate of the leased asset, and fair value of the leased asset involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance of the Company;

(ii) consistency with external market and industry data;

and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating the reasonableness of the assumptions related to the incremental borrowing rate of the leased asset and fair value of the leased asset .

/s/ PricewaterhouseCoopers LLP

San Francisco, California

March 28, 2024

April 2, 2025

We have served as the Company’s auditor since 2008.

PART II — FINANCIAL STATEMENTS

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PART II — FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

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Cash and cash equivalents

Restricted cash

Accounts receivable—net

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Other non-current assets

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Accounts payable and accrued expenses

Deferred revenue and customer deposits

Convertible senior notes due 2023

Convertible senior notes due 2024—net

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Real estate loans—net

Convertible senior notes due 2024—net

Non-current operating lease liabilities

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Commitments and contingencies (Note 19)

Stockholders’ equity (deficit):

Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of February 3, 2024 and January 28, 2023

Stockholders’ deficit:

Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of February 1, 2025 and February 3, 2024

Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,726,116 shares issued and outstanding as of February 1, 2025;

22,045,385 shares issued and outstanding as of January 28, 2023

18,315,613 shares issued and outstanding as of February 3, 2024

Additional paid-in capital

Accumulated other comprehensive loss

Retained earnings (accumulated deficit)

Total stockholders’ equity (deficit)

Total liabilities and stockholders’ equity (deficit)

Accumulated deficit

Total stockholders’ deficit

Total liabilities and stockholders’ deficit

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Income before equity method investments

Share of equity method investments loss

Share of equity method investments loss—net

Weighted-average shares used in computing basic net income per share

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The accompanying notes are an integral part of these Consolidated Financial Statements.

PART II — FINANCIAL STATEMENTS

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PART II — FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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The accompanying notes are an integral part of these Consolidated Financial Statements.

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PART II — FINANCIAL STATEMENTS

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)

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Exercise of stock options

Settlement of convertible senior notes

( 1,377,479 )

Exercise of call option under bond hedge upon settlement of convertible senior notes

( 1,377,479 )

Net loss from foreign currency translation

Balances—January 29, 2022

Stock-based compensation

Issuance of restricted stock

Vested and delivered restricted stock units

Exercise of stock options

Repurchase of common stock—including excise tax

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Balances—February 3, 2024

Stock-based compensation

Issuance of restricted stock

Vested and delivered restricted stock units

Exercise of stock options

Settlement of convertible senior notes

Net loss from foreign currency translation

Balances—February 1, 2025

The accompanying notes are an integral part of these Consolidated Financial Statements.

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Non-cash operating lease cost

Asset impairments

Amortization of debt discount

Stock-based compensation expense

Asset impairments

Non-cash compensation related to consolidated variable interest entities

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Loss on extinguishment of debt

Share of equity method investments loss

Share of equity method investments loss—net

Other non-cash items

Cash paid attributable to accretion of debt discount upon settlement of debt

Change in assets and liabilities:

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CASH FLOWS FROM FINANCING ACTIVITIES

Borrowings under asset based credit facility

Repayments under asset based credit facility

Borrowings under term loans

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Repayment under convertible senior notes repurchase obligation

Debt extinguishment costs

Debt issuance costs

Debt extinguishment costs

Principal payments under finance lease agreements—net of tenant allowances

8 unchanged sentences

( 1,283,031 )

Effects of foreign currency exchange rate translation

Net increase (decrease) in cash and cash equivalents, restricted cash and restricted cash equivalents

Effects of foreign currency exchange rate translation on cash

Net decrease in cash and cash equivalents, restricted cash and restricted cash equivalents

( 1,388,075 )

6 unchanged sentences

End of period—restricted cash

End of period—restricted cash equivalents (acquisition related escrow deposits)

End of period—cash and cash equivalents, restricted cash and restricted cash equivalents

End of period—cash and cash equivalents and restricted cash

Cash paid for interest

Cash paid for taxes

PART II — FINANCIAL STATEMENTS

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PART II — FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

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Property and equipment additions acquired under real estate loans

Reclassification of assets from landlord assets under construction to finance lease right-of-use assets

Extinguishment of convertible senior notes related to repurchase obligation

Financing liability and embedded derivative arising from convertible senior notes repurchase

Shares issued on settlement of convertible senior notes

Shares received on exercise of call option under bond hedge upon settlement of convertible senior notes

Extinguishment of convertible senior notes related to repurchase obligation

Financing liability and embedded derivative arising from convertible senior notes repurchase

Conversion of loan receivables into equity of consolidated variable interest entities

The accompanying notes are an integral part of these Consolidated Financial Statements.

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PART II — FINANCIAL STATEMENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and baby, child and teen furnishings.

As of February 3, 2024, we operated a total of 70 RH Galleries and 42 RH outlet stores, one RH Guesthouse and 14 Waterworks Showrooms throughout the United States, Canada, the United Kingdom and Germany.

As of February 1, 2025, we operated a total of 68 RH Galleries and 40 RH Outlet stores, one RH Guesthouse, one RH Interior Design Office and 14 Waterworks Showrooms throughout the United States, Canada, the United Kingdom, Germany, Belgium and Spain.

We also have sourcing operations in Shanghai and Hong Kong.

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As a result, our fiscal year may include 53 weeks.

Our fiscal years ended February 1, 2025 (“fiscal 2024”) and January 28, 2023 (“fiscal 2022”) consisted of 52 weeks.

Our fiscal year ended February 3, 2024 (“fiscal 2023”) consisted of 53 weeks.

The fiscal years ended January 28, 2023 (“fiscal 2022”) and January 29, 2022 (“fiscal 2021”) each consisted of 52 weeks.

Use of Accounting Estimates

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We consider all highly liquid investments with original maturities of 90 days or less to be cash equivalents.

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PART II — FINANCIAL STATEMENTS

Concentration of Credit Risk

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We perform ongoing evaluations of these institutions to limit our concentration of credit risk.

Restricted Cash

Our restricted cash deposits as of January 28, 2023 represent an escrow balance for one real estate development limited liability company that is a consolidated variable interest entity.

Refer to Note 7— Variable Interest Entities .

Accounts Receivable

Accounts receivable consist primarily of receivables from our credit card processors for sales transactions, receivables related to our Contract business and other miscellaneous receivables.

Accounts receivable is presented net of allowance for expected credit losses of $ 3.2 million and $ 3.4 million as of February 3, 2024 and January 28, 2023, respectively.

Accounts receivable consists primarily of receivables from our credit card processors for sales transactions, receivables related to our Contract business and other miscellaneous receivables.

Accounts receivable is presented net of allowance for expected credit losses of $ 4.4 million and $ 3.2 million as of February 1, 2025 and February 3, 2024, respectively.

The allowance for expected credit losses is determined by considering a number of factors, including the length of time amounts are past due and the party’s financial condition and ability to pay the obligations.

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Actual inventory shrinkage and obsolescence can vary from estimates due to various factors, including the volume of inventory movement and execution against loss prevention initiatives in our distribution centers, home delivery center locations, off-site storage locations and with our third-party transportation providers.

Our inventory reserves were $ 46 million and $ 40 million as of February 3, 2024 and January 28, 2023.

Our inventory reserves were $ 35 million and $ 46 million as of February 1, 2025 and February 3, 2024, respectively.

During fiscal 2022, we reserved for certain inventory of $ 11 million that was not considered saleable.

During fiscal 2024, we disposed of such inventory.

Supplier Finance Program

We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank.

We are not a party to the supplier agreements with the Bank, and the terms of our payment obligations to suppliers are not impacted by a supplier’s participation in the Financing Program.

Our responsibility is limited to making payments to the Bank on the terms originally negotiated with our suppliers, which are typically between 30 days and 60 days .

There are no assets pledged as security or other forms of guarantees provided under the Financing Program.

The Financing Program is not indicative of a borrowing arrangement and the liabilities under the Financing Program are included in accounts payable and accrued expenses on the consolidated balance sheets and associated payments are included within cash provided by operating activities on the consolidated statements of cash flows.

Our obligations and activity under the Financing Program consisted of the following:

(in thousands)

Confirmed obligations outstanding at beginning of fiscal year

Invoices confirmed

Invoices paid

Confirmed obligations outstanding at end of fiscal year

PART II — FINANCIAL STATEMENTS

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Product Recalls

When necessary, we initiate product recalls for certain of our products, as well as adjust accruals related to certain product recalls previously initiated due to changes in estimates based on customer response and vendors and insurance recoveries.

The product recall accrual was $ 3.8 million and $ 6.9 million as of February 3, 2024 and January 28, 2023, respectively, and is included in other current liabilities on the consolidated balance sheets.

The product recall accrual was $ 0.7 million and $ 3.8 million as of February 1, 2025 and February 3, 2024, respectively, and is included in other current liabilities on the consolidated balance sheets.

Advertising Expenses

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Capitalized Catalog Costs

Capitalized catalog costs consist primarily of third-party incremental direct costs to prepare, print and distribute our Sourcebooks, which are capitalized and recognized as expense upon the delivery of the Sourcebooks to the carrier.

In the case of multiple printings of a Sourcebook, the creative costs will be expensed in full upon the initial delivery of Sourcebooks to the carrier.

We had $ 28 million and $ 27 million of capitalized catalog costs as of February 3, 2024 and January 28, 2023, respectively, which are included in prepaid expense and other current assets on the consolidated balance sheets.

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PART II — FINANCIAL STATEMENTS

In the case of multiple printings of a Sourcebook, the creative costs are expensed in full upon the initial delivery of Sourcebooks to customers.

We had $ 30 million and $ 28 million of capitalized catalog costs as of February 1, 2025 and February 3, 2024, respectively, which are included in prepaid expense and other current assets on the consolidated balance sheets.

Website and Print Advertising

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The cost of leasehold improvements is amortized over the lesser of the useful life of the asset or the reasonably certain lease term .

The cost of built-to-suit assets are depreciated over the term of the useful life of the asset.

We expense all internal-use software and website development costs incurred in the preliminary project stage and capitalize certain direct costs associated with the development and purchase of internal-use software or website development costs, including external costs of materials and services and internal payroll costs related to the software project, as “computer software” within property and equipment.

1 unchanged sentence

We capitalized interest of $ 8.7 million, $ 5.6 million and $ 4.9 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

During fiscal 2021, $ 10 million of the $ 12 million capitalized interest relates to the capitalization of non-cash interest associated with the amortization of the convertible senior notes debt discount.

No amortization of the debt discounts was recognized during fiscal 2023 or fiscal 2022, as we recombined the previously outstanding equity component of the 2023 Notes and 2024 Notes upon the adoption of Accounting Standards Update (“ASU”) 2020-06—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”) in fiscal 2022.

Land purchases are recorded at cost and are non-depreciable assets.

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PART II — FINANCIAL STATEMENTS

Cloud Computing Costs

We incur costs to implement cloud computing arrangements that are hosted by third parties.

Such costs are capitalized during the application development phase and are included in other non-current assets on the consolidated balance sheets.

Cloud computing costs are presented net of accumulated amortization of $ 30 million and $ 19 million as of February 1, 2025 and February 3, 2024, respectively.

Such costs are capitalized during the application development phase and are included in prepaid expense and other current assets or other non-current assets on the consolidated balance sheets.

Once a project is substantially complete and ready for its intended use, we amortize the costs on a straight-line basis over the contractual term of the cloud computing arrangement, which is typically one to seven years .

7 unchanged sentences

We sublease certain real estate locations to third parties under operating leases and recognize rental income received on a straight-line basis over the lease term, which is recorded as an offset to selling, general and administrative expenses on the consolidated statements of income.

PART II — FINANCIAL STATEMENTS

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Lease arrangements may require the landlord to provide tenant allowances directly to us.

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After the leased asset is constructed and the lease commences, we reclassify the tenant allowance from other non-current assets or other current liabilities to lease right-of-use assets on the consolidated balance sheets, and such allowances are amortized over the reasonably certain lease term.

Lease Classification

Determination of the Classification of New Real Estate Lease Contracts

Certain of our real estate and equipment leases are classified as finance leases.

Lease characteristics that we evaluate to determine lease classification include, but are not limited to, the reasonably certain lease term, incremental borrowing rate and fair value of the leased asset.

Lease characteristics that we evaluate to determine lease classification include, but are not limited to, the reasonably certain lease term, incremental borrowing rate of the leased asset and fair value of the leased asset.

Additionally, the economic life of the leased asset impacts the lease classification, particularly related to historical buildings that tend to have longer lives.

5 unchanged sentences

At lease commencement, we evaluate whether we are reasonably certain to exercise available options based on consideration of a variety of economic factors and the circumstances related to the leased asset.

Factors considered include, but are not limited to, (i) the contractual terms compared to estimated market rates, (ii) the uniqueness or importance of the asset or its location, (iii) the potential costs of obtaining an alternative asset, (iv) the potential costs of relocating or ceasing use of the asset, including the consideration of leasehold improvements and other invested capital, and (v) any potential tax consequences.

Factors considered include, but are not limited to, (i) the contractual terms, including renewal periods compared to estimated market rates, (ii) the uniqueness or importance of the asset or its location, (iii) the potential costs of obtaining an alternative asset, (iv) the potential costs of relocating or ceasing use of the asset, including the consideration of leasehold improvements and other invested capital, and (v) any potential tax consequences.

PART II — FINANCIAL STATEMENTS

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The determination of the reasonably certain lease term affects the inclusion of rental payments utilized in the incremental borrowing rate calculations, the results of the lease classification test, and consideration of certain assets held for sale or planned for sale-leaseback.

6 unchanged sentences

These stated fixed payments, through the reasonably certain lease term, are included in our measurement of the lease right-of-use assets and lease liabilities upon lease commencement.

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PART II — FINANCIAL STATEMENTS

Certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels.

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The fair value assessments may materially impact our financial position related to certain Design Galleries or distribution center facilities.

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PART II — FINANCIAL STATEMENTS

The determination of fair value requires subjectivity and estimates, including the use of multiple valuation techniques and uncertain inputs, such as market price per square foot and assumed capitalization rates or the replacement cost of the assets, where applicable.

4 unchanged sentences

If we are the “deemed owner” for accounting purposes during the construction period, upon construction commencement we are required to capitalize (i) costs incurred by us and (ii) the cash and non-cash assets contributed by the landlord for construction as property and equipment on our consolidated balance sheets as “build-to-suit property”, with an offsetting financing obligation under build-to-suit lease transactions.

The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord for construction, are included as property and equipment additions due to build-to-suit lease transactions within the non-cash section of the consolidated statements of cash flows.

The contributions by the landlord toward construction, including the building, existing site improvements at construction commencement and any amounts paid by the landlord for construction, are included within the non-cash section of the consolidated statements of cash flows.

Over the lease term, these non-cash additions to property and equipment do not impact our cash outflows, nor do they impact net income on the consolidated statements of income.

PART II — FINANCIAL STATEMENTS

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Upon completion of the construction project where we are the deemed owner, we perform a sale-leaseback analysis to determine if we can derecognize the build-to-suit asset and corresponding financing obligation.

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Intangible Assets

Intangible assets reflect the value assigned to tradenames, trademarks, domain names and other intangible assets.

Intangible assets reflect the value assigned to tradenames, trademarks, domain names and other intangible assets, including patents.

The cost of purchasing transferable liquor licenses in jurisdictions with a limited number of authorized liquor licenses is capitalized as an intangible asset.

We do not amortize our intangible assets as we define the life of these assets as indefinite.

We do not amortize our intangible assets, other than patents, as we define the life of these assets as indefinite.

Patents are amortized on a straight-line basis over the estimated useful life of the patent, which generally is fifteen years .

As of February 1, 2025, intangible assets are reported net of $ 0.1 million of patent amortization.

PART II — FINANCIAL STATEMENTS

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Goodwill is initially recorded as of the acquisition date, is measured as any excess of the purchase price over the estimated fair value of the identifiable net assets acquired and is assigned to the applicable reporting unit.

A reporting unit is an operating segment, or a business unit one level below that operating segment, for which discrete financial information is prepared and regularly reviewed.

As of February 3, 2024 and January 28, 2023, goodwill relates to the RH Segment only.

As of February 1, 2025 and February 3, 2024, goodwill relates to the RH Segment only.

Goodwill is not amortized, but rather is subject to impairment testing at least annually or more frequently if events or changes in circumstances indicate that the asset may be impaired.

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We will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value, limited to the total amount of goodwill of the reporting unit.

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PART II — FINANCIAL STATEMENTS

During fiscal 2024, fiscal 2023 and fiscal 2022, we reviewed the RH Segment reporting unit goodwill for impairment by assessing qualitative factors to determine whether it was more likely than not that the fair value of the reporting unit was less than its carrying amount.

Based on the qualitative tests performed in each fiscal year, we determined that it was not more likely than not that the fair value of the reporting unit was less than its carrying amount in any fiscal year, and therefore we did not recognize goodwill impairment.

Tradenames, Trademarks and Other Intangible Assets

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Based on the qualitative tests performed in each fiscal year, we did not perform quantitative impairment tests in any year and did not recognize any impairment with respect to the assets.

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PART II — FINANCIAL STATEMENTS

Long-Lived Assets

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The estimate of fair value requires judgments that may significantly affect the ending asset valuation.

Future cash flows are estimated based on Gallery-level historical results, current trends, and operating and cash flow projections.

Our estimates are subject to uncertainty and may be affected by a number of factors outside of our control, including general economic conditions and the competitive environment.

Future cash flows are estimated considering the highest and best use of the assets, which may be based on a number of factors, including gallery-level historical results, current trends, operating cash flow projections or market-based rental rates.

Our estimates are subject to uncertainty and may be affected by a number of factors outside our control, including general economic conditions and the competitive environment.

While we believe our estimates and judgments about future cash flows are reasonable, future impairment charges may be required if the expected cash flow estimates, as projected, do not occur or if events change requiring us to revise our estimates.

During the third quarter of fiscal 2024, we assessed two Design Galleries in Germany for impairment.

We first assessed the recoverability of the assets based on an undiscounted cash flow model.

Since the assets were not recoverable on an undiscounted cash flow basis, we determined the long-lived asset impairment as the amount by which the carrying value of the assets exceeded the related fair value over the respective remaining lease terms, both of which end in 2027.

As a result of this analysis, we recognized long-lived asset impairment charges of $ 19 million, comprising lease right-of-use asset impairment of $ 13 million and property and equipment impairment of $ 5.6 million, which is included in selling, general and administrative expenses on the consolidated statements of income.

Except as noted above, we did not record impairments for long-lived assets at the individual retail location level in fiscal 2024, fiscal 2023 or fiscal 2022.

We also review our capital expenditures for Galleries under construction and recognize impairment charges when there is a change in the intended use of an asset, including asset disposals.

We recognized long-lived asset impairment charges related to such construction expenditures of $ 18 million, $ 4.7 million and $ 13 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

PART II — FINANCIAL STATEMENTS

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From time to time, we record impairment for certain corporate assets and other long-lived assets resulting from changes to the expected use of the assets and an update to both the timing and the amount of future estimated lease related cash flows based on present market conditions.

Such impairment charges are included in s elling, general and administrative expenses on the consolidated statements of income.

We did not record impairment charges of corporate assets or other long-lived assets in fiscal 2024, fiscal 2023 or fiscal 2022.

Variable Interest Entities (VIE)

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The determination of the power to direct the activities that most significantly impact economic performance requires judgement and is impacted by numerous factors, including the purpose of the VIE, rights and obligations of the variable interest holders, mechanisms for the resolution of disputes among the variable interest holders and other agreements with the legal entity and its variable interest holders.

PART II — FINANCIAL STATEMENTS

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We account for investments in VIEs that are limited liability companies where we are not the primary beneficiary using the equity method of accounting.

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We determined these assumptions based on entity specific considerations of (i) the primary expected future cash flows of property rents and expected debt and debt service payments, (ii) discount rates appropriate for the economic environment and anticipated future interest rates and (iii) expected volatility based on historical observed stock prices of publicly traded peer companies, including those involved in real estate development.

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PART II — FINANCIAL STATEMENTS

Equity Method Investments

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If specialized expertise is required we obtain independent third-party appraisals to determine the fair value of the underlying assets and liabilities.

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PART II — FINANCIAL STATEMENTS

The operating agreements for each equity method investment specify distributions from operations and upon liquidation that may be disproportionate to the members’ relative ownership percentages.

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Sales tax or value added tax (VAT) 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.

PART II — FINANCIAL STATEMENTS

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Our customers may return purchased items for a refund in accordance with our policies.

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Merchandise exchanges of the same product and price are not considered merchandise returns and, therefore, are excluded when calculating the sales returns reserve.

PART II — FINANCIAL STATEMENTS

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A summary of the allowance for sales returns is as follows:

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We defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards.

During fiscal 2023, fiscal 2022 and fiscal 2021, we recognized $ 24 million, $ 21 million and $ 20 million, respectively, of revenue related to previous deferrals related to our gift cards.

Customer liabilities related to gift cards was $ 25 million and $ 27 million as of February 3, 2024 and January 28, 2023, respectively.

During fiscal 2024, fiscal 2023 and fiscal 2022, we recognized $ 20 million, $ 24 million and $ 21 million, respectively, of revenue related to previous deferrals of gift cards.

Customer liabilities related to gift cards were $ 20 million and $ 25 million as of February 1, 2025 and February 3, 2024, respectively.

We recognize breakage income associated with gift cards proportional to actual gift card redemptions in net revenues on the consolidated statements of income.

We expect that approximately 75 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers.

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PART II — FINANCIAL STATEMENTS

Self-Insurance

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The projections involved in this process are subject to uncertainty related to the timing and amount of claims filed, levels of IBNR, fluctuations in health care costs and changes to regulatory requirements.

We had liabilities of $ 3.2 million and $ 3.6 million related to health care coverage as of February 3, 2024 and January 28, 2023, respectively.

We carry workers’ compensation insurance subject to a deductible amount for which we are responsible on each claim.

We had liabilities of $ 5.6 million related to workers’ compensation claims, primarily for claims that do not meet the per-incident deductible, as of both February 3, 2024 and January 28, 2023.

We had liabilities of $ 4.7 million and $ 3.2 million related to health care coverage as of February 1, 2025 and February 3, 2024, respectively.

We carry workers’ compensation insurance subject to a deductible amount for which we are responsible for each claim.

We had liabilities of $ 6.1 million and $ 5.6 million related to workers’ compensation claims, primarily for claims that do not meet the per-incident deductible, as of February 1, 2025 and February 3, 2024, respectively.

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PART II — FINANCIAL STATEMENTS

Stock-Based Compensation

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We determined these assumptions based on consideration of (i) future exercise behavior based on the historical observed exercise pattern of the award recipient, (ii) expected volatility based on our historical observed common stock prices measured over the full trading history of our common stock and implied volatility based on 180-day average trading prices of our common stock and (iii) a discount for illiquidity estimated using the Finnerty method.

Refer to Note 3— Consolidated Variable Interest Entities and Noncontrolling Interests for discussion of compensation expense related to noncontrolling interests.

Refer to Note 3— Consolidated Variable Interest Entities and Noncontrolling Interests for discussion of compensation expense related to noncontrolling interests recognized in fiscal 2022.

Cost of Goods Sold

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All retail pre-opening costs are included in selling, general and administrative expenses and are expensed as incurred.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 83

Interest Expense—Net

Interest expense primarily relates to interest incurred on our term loans and finance lease arrangements.

Interest Expense

Interest expense primarily relates to interest incurred on our term loans, asset based credit facility and finance lease arrangements.

Refer to Note 12— Credit Facilities and Note 10— Leases.

Amounts in fiscal 2021 also include amortization of convertible senior notes debt discount, prior to the adoption of ASU 2020-06 in fiscal 2022.

Interest income primarily represents interest received related to our cash and cash equivalent balances.

Interest expense—net consists of the following:

Interest expense—net consisted of the following:

(in thousands)

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Interest income

Total interest expense—net

Interest expense—net

PART II — FINANCIAL STATEMENTS

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Net Income Per Share

Basic net income per share is computed as net income divided by the weighted-average number of common shares outstanding for the period.

Diluted net income per share is computed as net income divided by the weighted-average number of common shares outstanding for the period, including additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for convertible senior notes and the treasury stock method for all other instruments.

Diluted net income per share is computed as net income divided by the weighted-average number of common shares outstanding for the period, including additional common shares that would have been outstanding if potential common shares with a dilutive effect had been issued using the if-converted method for convertible senior notes prior to extinguishment and the treasury stock method for all other instruments.

Potential dilutive securities are excluded from the computation of diluted net income per share if their effect is anti-dilutive.

The if-converted method is applicable for the convertible senior notes beginning in fiscal 2022 due to the adoption of ASU 2020-06.

The treasury stock method was applied in fiscal 2021 prior to the adoption of ASU 2020-06.

The if-converted method is applicable for the convertible senior notes beginning in fiscal 2022 due to the adoption of ASU 2020-06 —Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity .

Treasury Stock

We record our purchases of treasury stock at cost as a separate component of stockholders’ equity in the consolidated financial statements.

We record our purchases of treasury stock at cost as a separate component of stockholders’ equity (deficit) in the consolidated financial statements.

Upon retirement of treasury stock, we allocate the excess of the purchase price over par value to additional paid-in capital subject to certain limitations with any remaining purchase price allocated to retained earnings (accumulated deficit) .

The cost basis of treasury stock includes excise tax on share repurchases initiated on and after January 1, 2023 and the outstanding balance of excise tax is included in accounts payable and accrued expenses on the consolidated balance sheets.

The cost basis of treasury stock includes excise tax on share repurchases initiated on and after January 1, 2023 and any outstanding balance of excise tax is included in accounts payable and accrued expenses on the consolidated balance sheets.

We account for income taxes under an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in our consolidated financial statements or tax returns.

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This allowance does not alter our ability to utilize the underlying tax net operating loss and credit carryforwards in the future, the utilization of which is limited to achieving future taxable income.

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PART II — FINANCIAL STATEMENTS

The accounting standard for uncertainty in income taxes prescribes a recognition threshold that a tax position is required to meet before being recognized in the financial statements and provides guidance on derecognition, measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues.

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dollars by our international subsidiaries other than those of a long-term investment nature, where repayment is not planned or anticipated in the foreseeable future.

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PART II — FINANCIAL STATEMENTS

Recently Issued Accounting Standards

New Accounting Standards or Updates Adopted

Disclosure of Supplier Finance Program Obligations

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04—Disclosure of Supplier Finance Program Obligations (“ASU 2022-04”).

ASU 2022-04 requires entities to disclose a program’s nature, activity during the period, changes from period to period and potential magnitude.

Under ASU 2022-04, the buyer in a supplier finance program is required to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

With the exception of the disclosure of rollforward information, the guidance is effective for fiscal years beginning after December 15, 2022, and is required to be applied retrospectively to all periods for which a balance sheet is presented.

The rollforward requirement is effective for fiscal years beginning after December 15, 2023, and is required to be applied prospectively.

We adopted ASU 2022-04 in the first quarter of fiscal 2023.

Supplier Finance Program

We are not a party to the supplier agreements with the Bank, and the terms of our payment obligations to suppliers are not impacted by a supplier’s participation in the Financing Program.

Our responsibility is limited to making payments to the Bank on the terms originally negotiated with our suppliers, which are typically between 30 days and 60 days.

There are no assets pledged as security or other forms of guarantees provided under the Financing Program.

The Financing Program is not indicative of a borrowing arrangement and the liabilities under the Financing Program are included in accounts payable and accrued expenses on the consolidated balance sheets and associated payments are included within operating activities on the consolidated statements of cash flows.

As of February 3, 2024 and January 28, 2023, supplier invoices that have been confirmed as valid under the Financing Program included in accounts payable and accrued expenses were $ 28 million and $ 26 million, respectively.

PART II — FINANCIAL STATEMENTS

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Segment Reporting:

Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07—Improvements to Reportable Segment Disclosures .

This new guidance is designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis.

We have adopted this ASU in the fourth quarter of fiscal 2024 on a retrospective basis.

Refer to Note 20— Segment Reporting .

New Accounting Standards or Updates Not Yet Adopted

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While ASU 2023-05 is not currently applicable to us because our existing arrangements in variable interest entities do not meet the definition of joint ventures as described in the updated standard, we will apply this guidance in future reporting periods after the guidance is effective to any future arrangements we enter into that meet the definition of a joint venture.

Segment Reporting:

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07—Improvements to Reportable Segment Disclosures .

This new guidance is designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024 on a retrospective basis.

Early adoption is permitted.

We are currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements.

Income Taxes:

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Early adoption is permitted.

We are currently assessing the impact that adopting this new accounting standard will have on our consolidated financial statements.

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We are currently assessing the impact that adopting this ASU will have on our consolidated financial statements.

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 a prospective basis and early adoption is permitted.

We are currently assessing the impact that adopting this ASU will have on our consolidated financial statements.

PART II — FINANCIAL STATEMENTS

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NOTE 4—PREPAID EXPENSE AND OTHER ASSETS

Prepaid expense and other current assets consist of the following:

Prepaid expense and other current assets consisted of the following:

(in thousands)

Prepaid expenses

Capitalized catalog costs

Vendor deposits

Prepaid expenses

Federal and state tax receivable (1)

Vendor deposits

Tenant allowance receivable

2 unchanged sentences

Promissory notes receivable, including interest (2)

Interest income receivable

Other current assets

Total prepaid expense and other current assets

(1) Refer to Note 14— Income Taxes .

(1) Includes $ 19 million as of both periods related to a federal tax receivable from a carryback claim.

(2) Represents promissory notes, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs.

Refer to Note 7— Variable Interest Entities .

Other non-current assets consist of the following:

Other non-current assets consisted of the following:

(in thousands)

2 unchanged sentences

Capitalized cloud computing costs—net

Vendor deposits—non-current

Other deposits

Vendor deposits—non-current

Deferred financing fees

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Total other non-current assets

(1) Presented net of accumulated amortization of $ 19 million and $ 11 million as of February 3, 2024 and January 28, 2023.

PART II — FINANCIAL STATEMENTS

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PART II — FINANCIAL STATEMENTS

NOTE 5—PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

Property and equipment consisted of the following:

(in thousands)

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(1) Refer to “Lease Accounting” within Note 3— Significant Accounting Policies and Note 10— Leases .

(2) Includes construction in progress of $ 39 million and $ 8.0 million as of February 3, 2024 and January 28, 2023 , respectively.

(3) Includes $ 126 million and $ 92 million of owned buildings under construction related to future Design Galleries as of February 3, 2024 and January 28, 2023, respectively.

Additionally, includes the purchase of the RH Guesthouse New York building in fiscal 2023.

Refer to Note 10— Leases .

(4) During fiscal 2021, we opened the Dallas Design Gallery.

During the construction period of this Design Gallery, we were the “deemed owner” for accounting purposes and classified the construction costs as a build-to-suit asset.

Upon construction completion and lease commencement, we performed a sale-leaseback analysis and determined that we cannot derecognize the build-to-suit asset.

Therefore, the asset remains classified as a build-to-suit asset and is depreciated over the term of the useful life of the asset.

(5) Includes accumulated amortization related to finance lease right-of-use assets of $ 268 million and $ 224 million as of February 3, 2024 and January 28, 2023, respectively.

(2) Includes construction in progress of $ 13 million and $ 39 million as of February 1, 2025 and February 3, 2024, respectively.

(3) Includes $ 109 million and $ 126 million of owned buildings under construction related to future Design Galleries as of February 1, 2025 and February 3, 2024, respectively.

(4) Includes accumulated amortization related to finance lease right-of-use assets of $ 320 million and $ 268 million as of February 1, 2025 and February 3, 2024, respectively.

Refer to Note 10— Leases.

We recorded depreciation of property and equipment, excluding amortization for finance lease right-of-use assets, of $ 76 million, $ 64 million and $ 56 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively.

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PART II — FINANCIAL STATEMENTS

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NOTE 6—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS

Goodwill, tradenames, trademarks and other intangible assets activity for the RH Segment and Waterworks consists of the following:

Goodwill, tradenames, trademarks and other intangible assets for the RH Segment and Waterworks consisted of the following:

TRADEMARKS AND

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Foreign currency translation

January 28, 2023

February 3, 2024

Foreign currency translation

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(2) Presented net of an impairment charge of $ 35 million recognized in prior fiscal years.

(3) Represents disposals and amortization.

There are no goodwill, tradenames, trademarks and other intangible assets for the Real Estate segment.

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Consolidated Variable Interest Entities and Noncontrolling Interests

We hold a 50 percent membership interest in seven of the Member LLCs, and the remaining noncontrolling interest of 50 percent in each Member LLC is held by a third-party real estate development partner affiliated with the managing member of the Aspen LLCs (as defined in “Equity Method Investments” below).

In one Member LLC we hold approximately 75 percent membership interest with the remaining noncontrolling interest of approximately 25 percent held in the same way by the same development partner.

In fiscal 2022, we formed eight privately-held limited liability companies (each, a “Member LLC” and collectively, the “Member LLCs” or the “consolidated variable interest entities”) with a third-party real estate development partner affiliated with the managing member of the Aspen LLCs (as defined in “Equity Method Investments” below) for real estate development activities related to our Gallery transformation and global expansion strategies.

In December 2024, we acquired 50 percent of the membership interests of one of the Member LLCs from the same development partner for no consideration.

As a result, we own 100 percent of the membership interests and this Member LLC is no longer a variable interest entity as of February 1, 2025.

No distribution to the former member of this entity was required as a result of the transaction.

As of February 1, 2025, of the remaining seven Member LLCs, we hold a 50 percent membership interest in six of the Member LLCs, and the remaining noncontrolling interest of 50 percent in each Member LLC is held by the same development partner.

In one Member LLC, we hold approximately 75 percent membership interest with the remaining noncontrolling interest of approximately 25 percent held by the same development partner as of February 1, 2025.

The Member LLCs are qualitatively determined to be VIEs due to their having insufficient equity investment at risk to finance their activities without additional subordinated financial support.

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Accordingly, we are the primary beneficiary of the Member LLCs and we consolidate the results of operations, financial condition and cash flows of the Member LLCs in our consolidated financial statements.

Six locations represent current and future RH locations and are included in the RH Segment, two of which are operational as of February 3, 2024.

Two locations represent properties for the purpose of use by RH or others related to developing, operating and selling such real estate, and are part of the Real Estate segment.

Six locations represent current or future RH locations and are included in the RH Segment, three of which are operational as of February 1, 2025.

One location represents property, the purpose of which is use by RH or others related to developing, operating and selling such property, and is part of the Real Estate segment.

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PART II — FINANCIAL STATEMENTS

In fiscal 2022, we recognized compensation expense of $ 4.5 million related to the equity interests given to the noncontrolling interest holders of the consolidated VIEs, of which $ 3.6 million was recorded to additional paid-in capital and $ 0.9 million was recorded to other non-current obligations on the consolidated balance sheets.

The additional paid-in capital portion relates to equity-classified compensation arrangements and represents the fair-value-based measure of the equity interests upon the noncontrolling interest holders being admitted as a member of the VIEs.

The other non-current obligations portion relates to liability-classified compensation arrangements and represents the fair-value-based measure of the equity interests at the end of the reporting period, which was $ 0.9 million as of both February 3, 2024 and January 28, 2023.

There are no explicit or implicit vesting conditions associated with these compensation arrangements.

PART II — FINANCIAL STATEMENTS

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We measure the noncontrolling interests in the consolidated variable interest entities using the distribution provisions set out in the operating agreements of each Member LLC.

As of February 3, 2024 and January 28, 2023, the noncontrolling interest holders had no claim to the net assets of each Member LLC based upon such distribution provisions.

Accordingly, we did not recognize any noncontrolling interests in fiscal 2023 and fiscal 2022 .

As of February 1, 2025 and February 3, 2024, the noncontrolling interest holders had no claim to the net assets of each Member LLC based upon such distribution provisions.

Accordingly, we did not recognize any noncontrolling interests in fiscal 2024, fiscal 2023 and fiscal 2022.

The carrying amounts and classification of the VIEs’ assets and liabilities included in the consolidated balance sheets were as follows:

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Cash and cash equivalents

Restricted cash (1)

Prepaid expense and other current assets

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Total liabilities

(1) Restricted cash deposits as of January 28, 2023 represented amounts held in escrow for one Member LLC representing a portion of the proceeds from the issuance of the Promissory Note (defined below) that were required to be used for tenant allowances specified in a lease agreement between us and the Member LLC.

All amounts have been utilized during fiscal 2023 and, accordingly, there is no restricted cash remaining as of February 3, 2024.

(2) Includes $ 77 million and $ 125 million of construction in progress as of February 3, 2024 and January 28, 2023, respectively, which is included in “building and building improvements” within property and equipment —net .

(1) Includes $ 54 million and $ 77 million of construction in progress as of February 1, 2025 and February 3, 2024, respectively, which is included in “building and building improvements” within property and equipment —net .

(2) Real estate loans are secured by the assets of each respective Member LLC and the associated creditors do not have recourse against RH’s general assets.

On August 3, 2022, a Member LLC as the borrower executed a Secured Promissory Note (the “Secured Promissory Note”) with a third-party in an aggregate principal amount equal to $ 2.0 million with a maturity date of August 1, 2032.

On December 1, 2024, the maturity date of the Secured Promissory Note was amended to December 1, 2025.

The Secured Promissory Note bears interest at a fixed rate per annum equal to 6.00 % .

In December 2024, we acquired the remaining 50 % membership interest of this Member LLC from our development partner, with the result of this entity becoming a wholly-owned subsidiary and not a VIE as of February 1, 2025.

Therefore, as of February 1, 2025, the real estate loan is no longer presented as a VIE liability in the table above.

The outstanding balance under this debt agreement is included in other current liabilities on the consolidated balance sheets as of February 1, 2025.

On September 9, 2022, a Member LLC as the borrower executed a Promissory Note (the “Promissory Note”) with a third-party bank in an aggregate principal amount equal to $ 16 million with a maturity date of September 9, 2032.

The Promissory Note bears interest at a fixed rate per annum equal to 5.37 % until September 15, 2027, on which date the interest rate will reset based on the five-year treasury rate plus 2.00 % , subject to a total interest rate 3.00 % floor.

Real estate loans—net exclude $ 0.1 million of current obligations related to such loans that are included in other current liabilities on the consolidated balance sheets as of February 3, 2024.

There was no current obligation under these loans as of January 28, 2023.

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PART II — FINANCIAL STATEMENTS

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The current obligations of the real estate loans—net of $ 0.3 million and $ 0.1 million as of February 1, 2025 and February 3, 2024, respectively, are included in other current liabilities on the consolidated balance sheets.

Equity Method Investments

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Accordingly, we account for these investments using the equity method of accounting.

As of February 3, 2024 and January 28, 2023 the aggregate balance of the investment in the Aspen LLCs was $ 125 million and $ 101 million, respectively.

As of February 3, 2024 and January 28, 2023, $ 3.3 million and $ 3.0 million, respectively, of a promissory notes receivable, inclusive of accrued interest, was outstanding with the managing member or entities affiliated with the managing member for the Aspen LLCs, which promissory notes were included in prepaid expense and other current assets on the consolidated balance sheets.

As of February 1, 2025 and February 3, 2024, the aggregate balance of the investment in the Aspen LLCs was $ 124 million and $ 125 million, respectively.

As of February 1, 2025 and February 3, 2024, $ 3.7 million and $ 3.3 million, respectively, of a promissory notes receivable, inclusive of accrued interest, was outstanding with the managing member or entities affiliated with the managing member for the Aspen LLCs, which promissory notes were included in prepaid expense and other current assets on the consolidated balance sheets.

The promissory note related specifically to the Aspen LLCs is expected to be settled in cash and not converted into additional equity investment in the Aspen LLCs.

During fiscal 2023, fiscal 2022 and fiscal 2021, we recorded our proportionate share of equity method investments loss of $ 11 million, $ 2.1 million and $ 8.2 million, respectively, which is included on the consolidated statements of income with a corresponding decrease to the carrying value of equity method investments on the consolidated balance sheets as of February 3, 2024 and January 28, 2023.

During fiscal 2024, fiscal 2023 and fiscal 2022, we recorded our proportionate share of equity method investments loss of $ 11 million, $ 11 million and $ 2.1 million, respectively, which is included on the consolidated statements of income with a corresponding decrease to the carrying value of equity method investments on the consolidated balance sheets as of February 1, 2025 and February 3, 2024.

We did not receive any distributions or have any undistributed earnings of equity method investments in any fiscal year.

We have previously made contractually required contributions to the Aspen LLCs in an aggregate amount of $ 135 million in prior periods.

In February 2023, we elected to make equity contributions to two of the Aspen LLCs totaling $ 31 million whereby such funding was used to repay a portion of third-party debt secured by certain real estate assets held by the Aspen LLCs.

In April 2023, we made an additional equity contribution to one Aspen LLC of $ 1.8 million whereby such funding was used in connection with the acquisition of additional real estate assets.

Inclusive of the equity contributions made during fiscal 2023, we have made in excess of $ 135 million in capital contributions to the Aspen LLCs.

As of February 1, 2025, we have made capital contributions of approximately $ 146 million to the Aspen LLCs.

Additionally, Waterworks has membership interests in two European entities that are equity method investments.

Our maximum exposure to loss with respect to these equity method investments is the carrying value of the equity method investments as of February 1, 2025.

PART II — FINANCIAL STATEMENTS

In March 2025, the Aspen LLC in which we hold a 70 percent interest sold its sole real estate property.

Subsequent to the property sale, we received $ 15 million from the Aspen LLC, which consisted of $ 2.9 million for the repayment of its outstanding promissory note to us, including accrued interest (refer to Note 4— Prepaid expenses and other assets ), 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.

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PART II — FINANCIAL STATEMENTS

NOTE 8—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consist of the following:

Accounts payable and accrued expenses consisted of the following:

(in thousands)

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Accrued compensation

Accrued occupancy

Accrued sales and use tax

Accrued legal settlements (1)(2)

Accrued occupancy

Accrued freight and duty

Excise tax payable on share repurchases (1)

Accrued professional fees

Accrued legal contingencies (1)

Accrued interest

Accrued legal settlements (1)

Excise tax payable on share repurchases

Other accrued expenses

Total accounts payable and accrued expenses

(1) Prior year amounts have been adjusted to conform to the current period presentation.

(1) Refer to Note 19 ¾ Commitments and Contingencies .

Reorganization

We implemented a restructuring on March 24, 2023 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth.

The workforce reduction associated with the initiative included the elimination of numerous leadership and other positions throughout the organization, which affected approximately 440 roles.

The reorganization was completed during the first quarter of fiscal 2023.

During the year ended February 3, 2024, we incurred total charges relating to the reorganization of $ 7.6 million consisting primarily of severance costs and related taxes.

As of February 3, 2024, we had accruals of $ 0.3 million included in accounts payable and accrued expenses on the consolidated balance sheets related to the reorganization.

Other current liabilities consist of the following:

Reorganizations

We implemented and completed restructurings in the fourth quarter of fiscal 2024 and in the first quarter of fiscal 2023 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth.

The workforce reduction associated with the initiative included the elimination of numerous leadership and other positions throughout the organization.

During fiscal 2024 and fiscal 2023, we incurred total charges relating to the reorganizations of $ 4.4 million and $ 7.6 million, respectively, consisting primarily of severance costs and related taxes.

As of February 1, 2025, we had accruals of $ 3.4 million included within accounts payable and accrued expenses on the consolidated balance sheets related to the fiscal 2024 reorganization.

As of February 3, 2024, we had an immaterial amount accrued within accounts payable and accrued expenses on the consolidated balance sheets related to the fiscal 2023 reorganization, all of which was paid during fiscal 2024.

Other current liabilities consisted of the following:

(in thousands)

Current portion of term loans

Unredeemed gift card and merchandise credit liability

Allowance for sales returns

Finance lease liabilities

Unredeemed gift card and merchandise credit liability

Federal tax payable

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Total other current liabilities

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PART II — FINANCIAL STATEMENTS

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NOTE 9—OTHER NON-CURRENT OBLIGATIONS

Other non-current obligations consist of the following:

Other non-current obligations consisted of the following:

(in thousands)

3 unchanged sentences

NOTE 10—LEASES

Lease costs—net consist of the following:

Lease costs—net consisted of the following:

(in thousands)

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(4) Included in selling, general and administrative expenses on the consolidated statements of income.

PART II — FINANCIAL STATEMENTS

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Lease right-of-use assets and lease liabilities consist of the following:

PART II — FINANCIAL STATEMENTS

Lease right-of-use assets and lease liabilities consisted of the following:

(in thousands)

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(1) Includes capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement.

(2) Recorded net of accumulated amortization of $ 268 million and $ 224 million as of February 3, 2024 and January 28, 2023, respectively.

(3) Includes $ 37 million and $ 39 million as of February 3, 2024 and January 28, 2023, respectively, related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs.

(2) Recorded net of accumulated amortization of $ 320 million and $ 268 million as of February 1, 2025 and February 3, 2024, respectively.

(3) Includes $ 35 million and $ 37 million as of February 1, 2025 and February 3, 2024, respectively, related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs.

Refer to Note 7— Variable Interest Entities .

(4) During fiscal 2023, we purchased the building and land of our RH Guesthouse New York location and terminated the lease associated with the property.

As a result, the right-of-use asset and lease liability was reclassified to property and equipment—net on the consolidated balance sheets as of the purchase date.

Refer to Note 5— Property and Equipment .

(4) Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months.

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PART II — FINANCIAL STATEMENTS

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The maturities of lease liabilities were as follows as of February 1, 2025:

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(3) Calculated using the discount rate for each lease at lease commencement.

Supplemental information related to leases consists of the following:

Supplemental information related to leases consisted of the following:

Weighted-average remaining lease term (years)

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Finance leases

PART II — FINANCIAL STATEMENTS

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Other information related to leases consists of the following:

PART II — FINANCIAL STATEMENTS

Other information related to leases consisted of the following:

(in thousands)

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Finance leases

Reclassification from other non-current assets to finance lease right-of-use assets

Reclassification of finance lease right-of-use asset to property and equipment (2)

Reclassification of finance lease liability to property and equipment (2)

(1) Represents the principal portion of finance lease payments offset by tenant allowances received under finance leases subsequent to lease commencement of $ 2.4 million and $ 4.7 million in fiscal 2023 and fiscal 2022, respectively.

No such tenant allowances were received in fiscal 2021.

(2) Represents the reclassification of the right-of-use asset and lease liability upon the purchase of the building and land of our RH Guesthouse New York location and termination of the associated lease agreement.

Refer to Note 5— Property and Equipment .

(1) Represents the principal portion of lease payments, partially offset by tenant allowances received subsequent to lease commencement of $ 4.8 million, $ 2.4 million and $ 4.7 million in fiscal 2024, fiscal 2023 and fiscal 2022 respectively.

(2) During fiscal 2023, we purchased the building and land of our RH Guesthouse New York location and terminated the lease associated with the property.

As a result, we reclassified the right-of-use asset and lease liability to property and equipment—net on the consolidated balance sheets as of the purchase date.

NOTE 11—CONVERTIBLE SENIOR NOTES

1 unchanged sentence

In September 2019, we issued in a private offering $ 350 million principal amount of 0.00 % convertible senior notes due 2024 (the “2024 Notes” and, together with the 2023 Notes, the “Convertible Senior Notes” or the “Notes”).

In connection with our adoption of ASU 2020-06 in the first quarter of fiscal 2022, we recombined the previously outstanding equity component, which resulted in an increase in the balance of convertible debt outstanding.

The outstanding balances under the 2023 Notes and 2024 Notes were as follows:

(in thousands)

Convertible senior notes due 2023 (1)

Convertible senior notes due 2024 (2)

Total convertible senior notes

(1) The 2023 Notes outstanding were classified as convertible senior notes due 2023 within current liabilities as of January 28, 2023.

The 2023 Notes matured and were repaid in June 2023 and, as of February 3, 2024, the 2023 Notes are no longer outstanding.

(2) The 2024 Notes outstanding were classified as convertible seniors notes due 2024—net within current liabilities as of February 3, 2024 and within non-current liabilities as of January 28, 2023.

96 | FORM 10-K

PART II — FINANCIAL STATEMENTS

As of February 1, 2025, there are no remaining obligations under the Convertible Senior Notes.

2023 Notes and 2024 Notes—Bond Hedge and Warrant Terminations and Note Repurchase

3 unchanged sentences

Upon settlement of these agreements in April 2022, we paid an aggregate of $ 391 million in cash to terminate the warrants.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 97

During fiscal 2022, we entered into agreements with the Counterparties to terminate all of the convertible note bond hedges issued in connection with the 2023 Notes and 2024 Notes to receive an aggregate closing price of $ 56 million and $ 180 million, respectively, subject to adjustment for a settlement feature based on pricing formulations linked to the trading price of our common stock over a three day volume weighted-average price measurement period.

18 unchanged sentences

Accordingly, we recognized a loss on the fair value adjustment of the bifurcated embedded equity derivative of $ 1.5 million, which is classified within other expense—net on the consolidated statements of income.

PART II — FINANCIAL STATEMENTS

98 | FORM 10-K

$ 350 million 0.00 % Convertible Senior Notes due 2024

Prior to June 15, 2024 , the 2024 Notes are convertible only under the following circumstances:

(1) during any calendar quarter commencing after December 31, 2019, if, for at least 20 trading days (whether or not consecutive) during the 30 consecutive trading day period ending on the last trading day of the immediately preceding calendar quarter, the last reported sale price of our common stock on such trading day is greater than or equal to 130 % of the applicable conversion price on such trading day;

(2) during the five consecutive business day period after any ten consecutive trading day period in which, for each day of that period, the trading price per $ 1,000 principal amount of 2024 Notes for such trading day was less than 98 % of the product of the last reported sale price of our common stock and the applicable conversion rate on such trading day;

or (3) upon the occurrence of specified corporate transactions.

The first condition was satisfied from the calendar quarter ended September 30, 2020 through the calendar quarter ended March 31, 2022.

However, this condition was not met for the calendar quarter ended June 30, 2022 through the calendar quarter ended June 30, 2023, but was met for the calendar quarter ended September 30, 2023, and as a result, the 2024 Notes were convertible as of September 30, 2023.

This condition was not met for the calendar quarter ended December 31, 2023.

On and after June 15, 2024 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or a portion of their 2024 Notes at any time, regardless of the foregoing circumstances.

Upon conversion, the 2024 Notes will be settled, at our election, in cash, shares of our common stock, or a combination of cash and shares of our common stock.

If the Company has not delivered a notice of its election of settlement method prior to the final conversion period, it will be deemed to have elected combination settlement with a dollar amount per note to be received upon conversion of $ 1,000 .

During fiscal 2022, holders of $ 3.6 million in aggregate principal amount of the 2024 Notes elected to exercise the early conversion option and we elected to settle such conversions using combination settlement comprised of cash equal to the principal amount of the 2024 Notes converted and shares of our common stock for the remaining conversion value.

During fiscal 2022, we paid $ 3.6 million in cash and delivered 9,760 shares of common stock to settle the early conversion of these 2024 Notes.

We also received 9,760 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2024 Notes.

During fiscal 2021, holders of $ 130 million in aggregate principal amount of the 2024 Notes elected to exercise the early conversion option and we elected to settle such conversions using combination settlement comprised of cash equal to the principal amount of the 2024 Notes converted and shares of our common stock for the remaining conversion value.

During fiscal 2021, we paid $ 130 million in cash and delivered 419,182 shares of common stock to settle the early conversion of these 2024 Notes.

As a result, we recognized a loss on extinguishment of the liability component of $ 10 million in fiscal 2021.

We also received 419,172 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2024 Notes as described below, and therefore, on a net basis issued 10 shares of our common stock in respect to such settlement of the converted 2024 Notes.

The remaining liability for the 2024 Notes is classified as a current obligation on the consolidated balance sheets as of February 3, 2024 since the settlement date of the outstanding 2024 Notes is in September 2024.

The settlement of the outstanding 2024 Notes will be made, at our election, in cash, shares of our common stock, or a combination of cash and shares of our common stock upon settlement.

PART II — FINANCIAL STATEMENTS

$ 335 million 0.00 % Convertible Senior Notes due 2023

5 unchanged sentences

On and after March 15, 2023, until the close of business on the second scheduled trading day immediately preceding the maturity date, holders were able to convert all or a portion of their 2023 Notes at any time, regardless of the foregoing circumstances.

98 | FORM 10-K

PART II — FINANCIAL STATEMENTS

During fiscal 2022, holders of $ 9.4 million in aggregate principal amount of the 2023 Notes elected to exercise the early conversion option and we elected to settle such conversions using combination settlement comprised of cash equal to the principal amount of the 2023 Notes converted and shares of our common stock for the remaining conversion value.

1 unchanged sentence

We also received 27,208 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2023 Notes, and therefore, on a net basis issued 26 shares of our common stock in respect to such settlement of the converted 2023 Notes.

During fiscal 2021, holders of $ 261 million in aggregate principal amount of the 2023 Notes elected to exercise the early conversion option and we elected to settle such conversions using combination settlement comprised of cash equal to the principal amount of the 2023 Notes converted and shares of our common stock for the remaining conversion value.

During fiscal 2021, we paid $ 261 million in cash and delivered 958,330 shares of common stock to settle the early conversion of these 2023 Notes.

As a result, we recognized a loss on extinguishment of the liability component of $ 19 million in fiscal 2021.

We also received 958,307 shares of common stock from the exercise of a portion of the convertible bond hedge we purchased concurrently with the issuance of the 2023 Notes as described below, and therefore, on a net basis issued 23 shares of our common stock in respect to such settlement of the converted 2023 Notes.

In June 2023, upon the maturity of the 2023 Notes, the remaining $ 1.7 million in aggregate principal amount of the 2023 Notes settled for $ 1.7 million in cash.

During fiscal 2023 through the maturity of the 2023 Notes, we issued in aggregate 1,931 shares of common stock upon settlement of the 2023 Notes.

During fiscal 2023 through the maturity of the 2023 Notes, we issued in aggregate 1,931 shares at a par value of $ 0.0001 per share and, as a result, recognized $ 0 in additional paid-in capital on the consolidated statements of stockholders’ equity (deficit) upon settlement of the 2023 Notes.

$ 350 million 0.00 % Convertible Senior Notes due 2024

As of February 3, 2024, we had $ 42 million of 2024 Notes outstanding, which were classified as convertible senior notes due 2024—net within current liabilities.

Prior to June 15, 2024 , the 2024 Notes were convertible only under the following circumstances:

or (3) upon the occurrence of specified corporate transactions.

The first condition was satisfied from the calendar quarter ended September 30, 2020 through the calendar quarter ended March 31, 2022.

However, this condition was not met for the calendar quarter ended June 30, 2022 through the calendar quarter ended June 30, 2023, but was met for the calendar quarter ended September 30, 2023.

This condition was not met for the calendar quarters ended December 31, 2023 or March 31, 2024.

On and after June 15, 2024 , until the close of business on the second scheduled trading day immediately preceding the maturity date, holders were able to convert all or a portion of their 2024 Notes at any time, regardless of the foregoing circumstances.

In September 2024, upon the maturity of the 2024 Notes, the $ 42 million in aggregate principal amount of the 2024 Notes settled for $ 42 million in cash and are no longer outstanding as of February 1, 2025.

During fiscal 2024 through the maturity of the 2024 Notes, we issued in aggregate 39,121 shares of common stock at a par value of $ 0.0001 per share and, as a result, recognized $ 0 in additional paid-in capital on the consolidated statements of stockholders’ equity (deficit) upon settlement of the 2024 Notes.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 99

NOTE 12—CREDIT FACILITIES

4 unchanged sentences

Term loan B-2 (3)

Equipment promissory note (5)

Total credit facilities

(1) Interest rates for the asset based credit facility and term loans represent the weighted-average interest rates as of February 3, 2024.

(2) Deferred financing fees associated with the asset based credit facility as of February 3, 2024 and January 28, 2023 were $ 2.5 million and $ 3.5 million, respectively, and are included in other non-current assets on the consolidated balance sheets.

The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit, which has a maturity date of July 29, 2026.

(3) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,935 million and $ 1,955 million were included in term loan—net on the consolidated balance sheets as of February 3, 2024 and January 28, 2023, respectively, and $ 20 million was included in other current liabilities on the consolidated balance sheets as of both February 3, 2024 and January 28, 2023.

(4) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $ 489 million and $ 494 million were included in term loan B-2—net on the consolidated balance sheets as of February 3, 2024 and January 28, 2023, respectively, and $ 5.0 million was included in other current liabilities on the consolidated balance sheets as of both February 3, 2024 and January 28, 2023.

(5) Represents equipment security note secured by certain of our property and equipment, which was included in other current liabilities on the consolidated balance sheets as of January 28, 2023.

The equipment security note was repaid in full in April 2023 and, as of February 3, 2024, is no longer outstanding.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 99

Asset Based Credit Facility & Term Loan Facilities

(1) Deferred financing fees associated with the asset based credit facility as of February 1, 2025 and February 3, 2024 were $ 1.5 million and $ 2.5 million, respectively, and are included in other non-current assets on the consolidated balance sheets.

The deferred financing fees are amortized on a straight-line basis over the life of the revolving line of credit.

(2) Represents the Term Loan Credit Agreement (defined below), of which outstanding amounts of $ 1,915 million and $ 1,935 million were included in term loan—net on the consolidated balance sheets as of February 1, 2025 and February 3, 2024, respectively, and $ 20 million was included in other current liabilities on the consolidated balance sheets as of both February 1, 2025 and February 3, 2024.

(3) Represents the outstanding balance of the Term Loan B-2 (defined below) under the Term Loan Credit Agreement, of which outstanding amounts of $ 484 million and $ 489 million were included in term loan B-2—net on the consolidated balance sheets as of February 1, 2025 and February 3, 2024, respectively, and $ 5.0 million was included in other current liabilities on the consolidated balance sheets as of both February 1, 2025 and February 3, 2024.

Asset Based Credit Facility

On August 3, 2011, Restoration Hardware, Inc.

9 unchanged sentences

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).

100 | FORM 10-K

PART II — FINANCIAL STATEMENTS

Borrowings under the revolving line of credit (other than swing line loans, which are subject to interest at the base rate) bear interest, at the borrower’s option, at either the base rate or LIBOR subject to a 0.00 % LIBOR floor (or, in the case of the Canadian borrowings, the “BA Rate” or the “Canadian Prime Rate”, as such terms are defined in the ABL Credit Agreement, for the Canadian borrowings denominated in Canadian dollars, or the “U.S.

7 unchanged sentences

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.

100 | FORM 10-K

PART II — FINANCIAL STATEMENTS

The ABL Credit Agreement contains customary representations and warranties, events of default and other customary terms and conditions for an asset based credit facility.

As of February 3, 2024, the amount available for borrowing under the revolving line of credit under the ABL Credit Agreement was $ 448 million, net of $ 45 million in outstanding letters of credit.

As of February 1, 2025, RHI had $ 200 million in outstanding borrowings and $ 355 million of availability under the revolving line of credit, net of $ 45 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 $ 295 million as of February 1, 2025.

Term Loan Credit Agreement

2 unchanged sentences

Through July 31, 2023, the Term Loan B bore interest at an annual rate based on LIBOR subject to a 0.50 % LIBOR floor plus an interest rate margin of 2.50 % (with a stepdown of the interest rate margin if RHI achieves a specified public corporate family rating).

LIBOR was a floating interest rate that reset periodically during the life of the Term Loan B.

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.

5 unchanged sentences

Other than the terms relating to the Term Loan B-2, the terms of the Amended Term Loan Credit Agreement remain substantially the same as the terms of the existing Term Loan Credit Agreement, including representations and warranties, covenants and events of default.

We incurred debt issuance costs of $ 28 million and $ 26 million in fiscal 2022 and fiscal 2021, respectively, in connection with the issuance of the Term Loan Credit Agreement.

No debt issuance costs were incurred in fiscal 2023.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 101

We incurred debt issuance costs of $ 28 million in fiscal 2022, in connection with the issuance of the Term Loan Credit Agreement.

No debt issuance costs were incurred in fiscal 2024 or fiscal 2023.

All obligations under the Term Loan B are guaranteed by certain domestic subsidiaries of RHI.

7 unchanged sentences

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.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 101

NOTE 13—FAIR VALUE MEASUREMENTS

7 unchanged sentences

The inputs used in the determination of fair value require significant judgment or estimation.

102 | FORM 10-K

PART II — FINANCIAL STATEMENTS

Fair Value Measurements—Recurring

Amounts reported as cash and equivalents, restricted cash, receivables, and accounts payable and accrued expenses approximate fair value due to the short-term nature of activity within these accounts.

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 2023 Notes, the 2024 Notes, the Term Loan Credit Agreement and the real estate loans were as follows:

The estimated fair value and carrying value of the 2024 Notes, the Term Loan Credit Agreement and the real estate loans were as follows:

(in thousands)

Convertible senior notes due 2024

Term loan B-2

Real estate loans

(1) The principal carrying value of the 2023 Notes and 2024 Notes excludes the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third-party offering costs, as applicable.

(1) The principal carrying value of the 2024 Notes excludes the discounts upon original issuance, discounts and commissions payable to the initial purchasers and third-party offering costs, as applicable.

The principal carrying values of the Term Loan B and Term Loan B-2 represent the outstanding amount under each class and exclude discounts upon original issuance and third-party offering costs.

The real estate loans represent the outstanding principal balance and exclude debt issuance costs.

The fair value of each of the 2023 Notes and 2024 Notes was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of our convertible notes, when available, our stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).

The fair values of the Term Loan B, Term Loan B-2 and real estate loans were derived from discounted cash flows using risk-adjusted rates (Level 2).

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PART II — FINANCIAL STATEMENTS

The fair value of the 2024 Notes was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of our convertible notes, when available, our stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).

As of February 1, 2025, the fair values of the Term Loan B and Term Loan B-2 were derived from observable bid prices (Level 1).

As of February 3, 2024, the fair values of the Term Loan B and Term Loan B-2 were derived from discounted cash flows using risk-adjusted rates (Level 2).

The fair values of the real estate loans were derived from discounted cash flows using risk-adjusted rates (Level 2).

Fair Value Measurements—Non-Recurring

The fair value of the non-cash compensation related to noncontrolling interests in the Member LLCs in fiscal 2022, as discussed in “Consolidated Variable Interest Entities and Noncontrolling Interests” within Note 3— Significant Accounting Policies and Note 7— Variable Interest Entities , were determined based on unobservable (Level 3) inputs and valuation techniques.

Upon settlement of our convertible senior notes, including the settlements in which holders of the 2023 Notes and 2024 Notes elected to exercise the early conversion option, we recognized a gain or loss on extinguishment of debt in the consolidated statements of income, which represents the difference between the carrying value and fair value of the convertible senior notes immediately prior to the settlement date.

The fair value of each of the 2023 Notes and 2024 Notes related to the settlement of the early conversions was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of our convertible notes, when available, our common stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).

In fiscal 2022, upon settlement of our convertible senior notes, including the settlements in which holders of the 2023 Notes and 2024 Notes elected to exercise the early conversion option, we recognized a gain or loss on extinguishment of debt in the consolidated statements of income, which represents the difference between the carrying value and fair value of the convertible senior notes immediately prior to the settlement date.

The fair value of the 2024 Notes related to the settlement of the early conversions was determined based on inputs that are observable in the market or that could be derived from, or corroborated with, observable market data, including the trading price of our convertible notes, when available, our common stock price and interest rates based on similar debt issued by parties with credit ratings similar to ours (Level 2).

The fair values of long-lived assets, such as property and equipment and lease right-of-use assets, as discussed in “Impairment—Long-Lived Assets” within Note 3— Significant Accounting Policies , were determined based on unobservable (Level 3) inputs and valuation techniques.

Fair values are based on the expected future cash flows of the asset or asset group, using a discount rate commensurate with the related risk.

Expected future cash flows are estimated based on the highest and best use of the asset and take into consideration multiple factors, including but not limited to, location-level historical results, current trends, operating cash flow projections and market-based rental rates.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 103

NOTE 14—INCOME TAXES

The following table presents our income before income taxes, inclusive of our share of equity method investments loss:

Our income before income taxes, inclusive of our share of equity method investments loss—net, was as follows:

(in thousands)

The following table presents a summary of our income tax expense (benefit):

Our income tax expense (benefit) consisted of the following:

(in thousands)

2 unchanged sentences

Total income tax expense (benefit)

PART II — FINANCIAL STATEMENTS

104 | FORM 10-K

PART II — FINANCIAL STATEMENTS

A reconciliation of the federal statutory tax rate to our effective tax rate was as follows:

1 unchanged sentence

State income taxes—net of federal tax impact

Federal rehabilitation tax credit (1)

Stock compensation—excess benefits

2 unchanged sentences

Valuation allowance

Federal rehabilitation tax credit

Tax impact of convertible senior notes repurchase

2 unchanged sentences

Effective tax rate

(1) Prior year rates have been adjusted to conform to the current period presentation.

We have recorded deferred tax assets and liabilities based upon estimates of their realizable value, and such estimates are based upon likely future tax consequences.

1 unchanged sentence

If, based on the weight of available evidence, it is more likely than not that the deferred tax assets will not be realized, we record a valuation allowance.

104 | FORM 10-K

PART II — FINANCIAL STATEMENTS

FORM 10-K | 105

Significant components of our deferred tax assets and liabilities were as follows:

13 unchanged sentences

Lease right-of-use assets

Prepaid expense and other

Tradename, trademarks and intangibles

Prepaid expense and other current assets

Tradename, trademarks and other intangible assets

State benefit

11 unchanged sentences

Internal Revenue Code Section 382 and similar state rules place a limitation on the amount of taxable income which can be offset by net operating loss carryforwards after a change in ownership (generally greater than 50 % change in ownership).

We cannot give any assurances that it will not undergo an ownership change in the future resulting in further limitations on utilization of net operating losses.

PART II — FINANCIAL STATEMENTS

We cannot give any assurances that we will not undergo an ownership change in the future resulting in further limitations on utilization of net operating losses.

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PART II — FINANCIAL STATEMENTS

A reconciliation of the exposures related to unrecognized tax benefits was as follows:

7 unchanged sentences

The remaining unrecognized tax benefits would offset other deferred tax assets, if recognized.

In October 2017, we filed an amended federal tax return claiming a $ 5.4 million refund, however, no income tax benefit has been recorded in any fiscal year given the technical nature and amount of the refund claim.

An income tax benefit related to this refund claim could be recorded in a future period upon settlement with the respective taxing authority.

As of February 1, 2025, we have $ 0.4 million of exposures related to unrecognized tax benefits that are expected to decrease in the next 12 months .

As of the first quarter of fiscal 2024, we are no longer appealing this refund claim and have reversed the receivable and related reserve.

We are subject to taxation in the United States and various states and foreign jurisdictions.

6 unchanged sentences

tax liability is expected to be immaterial, due to the participation exemption put in place in the Tax Cuts and Jobs Act of 2017.

Inflation Reduction Act

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA includes implementation of a new alternative minimum tax, an excise tax on stock buybacks, and significant tax incentives for energy and climate initiatives, among other provisions.

We have evaluated the provisions included under the IRA and do not expect the provisions to have a material impact on our consolidated financial statements.

106 | FORM 10-K

The Organization for Economic Cooperation and Development (“OECD”) proposed model rules to ensure a minimal level of taxation (commonly referred to as Pillar II) and the European Union member states have agreed to implement Pillar II’s proposed global corporate minimum tax rate of 15 %.

Many countries are actively considering, have proposed or have enacted changes to their tax laws based upon the Pillar II proposals, which could increase our tax obligations in countries where we do business or cause us to change the way we operate our business.

To mitigate the administrative burden for multinational enterprises in complying with the OECD Global Anti-Base Erosion rules during the initial years of implementation, the OECD developed the temporary “Transitional Country-by-Country Safe Harbor.” We considered the applicable tax law changes from Pillar II implementation in the relevant countries in which we operate, and there is no material impact to our tax provision for fiscal 2024.

We will continue to evaluate the impact of these tax law changes in future reporting periods.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 107

NOTE 15—NET INCOME PER SHARE

The weighted-average shares used for net income per share are presented in the table below.

The weighted-average shares used for net income per share were as follows:

Weighted-average shares—basic

2 unchanged sentences

Weighted-average shares—diluted

(1) The dilutive effect of the 2023 Notes and 2024 Notes is calculated under the if-converted method, which assumes share settlement of the entire convertible debt instrument.

The 2023 Notes terminated in June 2023 and did not have an impact on our diluted share count post-termination.

The warrants associated with the 2023 Notes and 2024 Notes had an impact on our dilutive share count beginning at stock prices of $ 309.84 per share and $ 338.24 per share, respectively.

The warrants associated with the 2023 Notes and 2024 Notes were repurchased in April 2022 and, as a result, no warrant instruments were outstanding as of and after April 30, 2022.

Accordingly, the warrants have no impact on our dilutive shares post-repurchase.

(1) The dilutive effect of the 2023 Notes and 2024 Notes is calculated under the if-conv erted method, which assumes share settlement of the entire convertible debt instrument.

The 2023 Notes and 2024 Notes matured in June 2023 and September 2024, respectively, and did not have an impact on our diluted share count post-maturity.

Refer to Note 11— Convertible Senior Notes.

We adopted ASU 2020-06 in the first quarter of fiscal 2022, and the adoption requires the dilutive impact of the convertible senior notes for diluted net income per share purposes to be determined under the if-converted method which assumes share settlement of the entire convertible debt instrument.

Prior to adoption of ASU 2020-06 for fiscal 2021, we applied the treasury stock method to determine the dilutive impact of the 2023 Notes and 2024 Notes for diluted net income per share purposes, and the 2020 Notes, 2023 Notes and the 2024 Notes impact our dilutive share count beginning at stock prices of $ 118.13 per share, $ 193.65 per share and $ 211.40 per share, respectively.

The following number of options and restricted stock units, as well as shares issuable under convertible senior notes prior to extinguishment in fiscal 2022, were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive:

The following number of options and restricted stock units, as well as shares issuable under convertible senior notes, were excluded from the calculation of diluted net income per share because their inclusion would have been anti-dilutive:

Restricted stock units

3 unchanged sentences

In 2018, our Board of Directors authorized a share repurchase program.

On June 2, 2022, the Board of Directors authorized an additional $ 2.0 billion for the purchase of shares of our outstanding common stock, increasing the total authorized size of the share repurchase program to $ 2,450 million (the “Share Repurchase Program”).

On June 2, 2022, the Board of Directors authorized an additional $ 2,000 million for the purchase of shares of our outstanding common stock, increasing the total authorized size of the share repurchase program to $ 2,450 million (the “Share Repurchase Program”).

We did not repurchase any shares of our common stock under the Share Repurchase Program during fiscal 2024.

As of February 1, 2025, $ 201 million remains available for future share repurchases under this program.

In fiscal 2022, we repurchased 3,719,550 shares of our common stock under the Share Repurchase Program at an average price of $ 268.83 per share, for an aggregate repurchase amount of approximately $ 1,004 million, inclusive of $ 3.7 million of excise taxes.

In fiscal 2023, we repurchased 3,887,965 shares of our common stock under the Share Repurchase Program at an average price of $ 321.28 per share, for an aggregate repurchase amount of approximately $ 1,261 million, inclusive of $ 12 million of excise taxes.

The excise tax liability is recorded in accounts payable and accrued expenses on the consolidated balance sheets and was $ 12 million and $ 3.7 million as of February 3, 2024 and January 28, 2023, respectively.

As of February 3, 2024, $ 201 million remains available for future share repurchases under this program.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 107

The excise tax liability of $ 12 million, which was included in accounts payable and accrued expenses on the consolidated balance sheets as of February 3, 2024, was paid in October 2024 and is no longer outstanding as of February 1, 2025.

Share Retirements

1 unchanged sentence

As a result of this retirement, we reclassified a total of $ 444 million and $ 560 million from treasury stock to additional paid-in capital and retained earnings (accumulated deficit) , respectively, on the consolidated balance sheets and consolidated statements of stockholders’ equity (deficit).

108 | FORM 10-K

PART II — FINANCIAL STATEMENTS

In fiscal 2023, we retired 3,887,965 shares of common stock related to shares we repurchased under the Share Repurchase Program.

As a result of this retirement, we reclassified a total of $ 10 million and $ 1,251 million from treasury stock to additional paid-in capital and retained earnings (accumulated deficit) , respectively, on the consolidated balance sheets and consolidated statements of stockholders’ equity (deficit).

There was no impact on the consolidated statements of income or cash flows related to the share retirement activity.

NOTE 17—STOCK-BASED COMPENSATION

10 unchanged sentences

Awards under the 2023 Stock Incentive Plan reduce the number of shares available for future issuance.

Cancellations and forfeitures of awards previously granted under the 2023 Stock Incentive Plan increase the number of shares available for future issuance.

Cancellations and forfeitures of awards previously granted under the Plans increase the number of shares available for future issuance.

Shares issued as a result of award exercises under the 2023 Stock Incentive Plan will be funded with the issuance of new shares.

As of February 1, 2025, a total of 2,235,091 shares were available for future issuance under the 2023 Stock Incentive Plan.

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PART II — FINANCIAL STATEMENTS

Stock Options Under the Plans

A summary of stock option activity was as follows:

Stock option activity was as follows:

WEIGHTED-AVERAGE

EXERCISE PRICE

Outstanding—January 28, 2023

Outstanding—February 3, 2024

The fair value of stock options granted was estimated on the date of grant using the following assumptions:

Outstanding—February 1, 2025

PART II — FINANCIAL STATEMENTS

FORM 10-K | 109

The fair value of stock options granted was estimated on the date of grant using the following weighted-average assumptions:

Expected volatility

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Dividend yield

A summary of additional information about stock options was as follows:

Additional information about stock options was as follows:

(in thousands, except per share amounts)

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Fair value of stock options vested

PART II — FINANCIAL STATEMENTS

FORM 10-K | 109

Information about stock options outstanding, vested or expected to vest, and exercisable as of February 3, 2024 is as follows:

Information about stock options outstanding, vested or expected to vest, and exercisable as of February 1, 2025 was as follows:

OPTIONS OUTSTANDING

OPTIONS EXERCISABLE

CONTRACTUAL LIFE

RANGE OF EXERCISE PRICES

LIFE (IN YEARS)

$ 25.39 — $ 45.21

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Vested or expected to vest

The aggregate intrinsic value of options outstanding, options vested or expected to vest, and options exercisable as of February 3, 2024 was $ 373 million, $ 366 million and $ 323 million, respectively.

Stock options exercisable as of February 3, 2024 had a weighted-average remaining contractual life of 4.4 years.

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PART II — FINANCIAL STATEMENTS

Stock Options Under the Plans

Options outstanding, vested or expected to vest, and exercisable as of February 1, 2025 were as follows:

REMAINING TERM

(in thousands)

Options outstanding

Options vested or expected to vest

Options exercisable

Stock-based compensation expense related to stock options, which is included in selling, general and administrative expenses on the consolidated statements of income, was as follows:

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Friedman an option to purchase 700,000 shares of our common stock with an exercise price equal to $ 385.30 per share under the Stock Incentive Plan.

The option will result in aggregate non-cash stock compensation expense of $ 174 million, of which $ 9.6 million, $ 18 million and $ 24 million was recognized during fiscal 2023, fiscal 2022 and fiscal 2021, respectively.

The option will result in aggregate non-cash stock compensation expense of $ 174 million.

Amounts presented include $ 4.5 million, $ 9.6 million and $ 18 million in fiscal 2024, fiscal 2023 and fiscal 2022, respectively, related to Mr.

Friedman’s option.

As of February 1, 2025, the total unrecognized compensation expense related to unvested options was $ 128 million, which is expected to be recognized on a straight-line basis over a weighted-average period of 4.6 years.

In addition, as of February 1, 2025, the total unrecognized compensation expense related to the fully vested option grant made to Mr.

Friedman in October 2020 was $ 5.4 million, which will be recognized on an accelerated basis through May 2025.

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PART II — FINANCIAL STATEMENTS

Friedman in October 2020 was $ 0.9 million, which will be recognized in the first quarter of fiscal 2025.

Restricted Stock Awards Under the Plans

We grant restricted stock awards, which include restricted stock and restricted stock units, to our employees and members of our Board of Directors.

A summary of restricted stock award activity is as follows:

Restricted stock award activity was as follows:

GRANT DATE FAIR

(in thousands)

Outstanding—January 28, 2023

Outstanding—February 3, 2024

A summary of additional information about restricted stock awards is as follows:

Outstanding—February 1, 2025

Additional information about restricted stock awards was as follows:

Weighted-average fair value per share of awards granted

Grant date fair value of awards released (in thousands)

PART II — FINANCIAL STATEMENTS

FORM 10-K | 111

Stock-based compensation expense related to restricted stock awards, which is included in selling, general and administrative expenses on the consolidated statements of income, was as follows:

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Compensation Related to Consolidated VIEs

Refer to Note 7— Variable Interest Entities for details of non-cash compensation related to consolidated variable interest entities.

Refer to Note 7— Variable Interest Entities for details of non-cash compensation related to consolidated variable interest entities in fiscal 2022.

NOTE 18—EMPLOYEE BENEFIT PLANS

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We had no material off balance sheet commitments as of February 1, 2025.

PART II — FINANCIAL STATEMENTS

FORM 10-K | 111

Contingencies

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In addition, we are subject to governmental and regulatory examinations, information requests, and investigations from time to time at the state and federal levels.

Certain legal proceedings that we currently face involve various class-action allegations, including cases related to our employment practices, the application of state wage-and-hour laws and other causes of action.

We have faced similar litigation in the past, including class action cases.

We have faced similar litigation in the past.

Due to the inherent difficulty of predicting the course of legal actions related to complex legal matters, including class-action allegations, such as the eventual scope, duration or outcome, we may be unable to estimate the amount or range of any potential loss that could result from an unfavorable outcome arising from such matters.

Our assessment of these legal proceedings, as well as other lawsuits, could change based upon the discovery of facts that are not presently known or developments during the course of the litigation.

We have settled certain class action cases, but continue to defend a variety of legal actions and our estimates of our exposure in such cases may evolve over time.

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.

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PART II — FINANCIAL STATEMENTS

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.

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Although we believe that the ultimate resolution of our current legal proceedings will not have a material adverse effect on the 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 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.

As a result, the outcome of any matters in which we are involved could result in unexpected expenses and liability that could adversely affect our operations.

In addition, any claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of our senior leadership team’s time, result in the diversion of significant operational resources, and require changes to our business operations, policies and practices.

Legal costs related to such claims are expensed as incurred.

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.

NOTE 20—SEGMENT REPORTING

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The RH Segment and Waterworks operating segments (the “retail operating segments”) include all sales channels accessed by our customers, including sales through retail locations and outlets, including hospitality, websites, Sourcebooks, and the Trade and Contract channels.

The Real Estate segment represents operations associated with certain of our equity method investments and consolidated variable interest entities that are non-wholly-owned subsidiaries and have operations that are not directly related to RH’s operations.

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PART II — FINANCIAL STATEMENTS

The Real Estate segment represents operations associated with certain of our equity method investments and consolidated variable interest entities and have operations that are not directly related to the activities of the retail operating segments.

The retail operating segments are strategic business units that offer products for the home furnishings customer.

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Segment Information

We use operating income to evaluate segment profitability for the retail operating segments and to allocate resources.

Operating income is defined as net income before interest expense—net, loss on extinguishment of debt, other expense—net, income tax expense (benefit) and our share of equity method investments loss.

Segment operating income excludes (i) non-cash compensation amortization related to an option grant made to Mr.

Friedman in October 2020, (ii) legal settlements, (iii) severance costs associated with a reorganization, (iv) asset impairments, (v) product recalls, (vi) employer payroll tax expense related to option exercises by Mr.

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 expense—net, income tax expense (benefit) and our share of equity method investments loss—net.

Segment adjusted operating income excludes (i) certain asset impairments, (ii) legal settlements, (iii) non-cash compensation amortization related to an option grant made to Mr.

Friedman in October 2020, (iv) severance costs associated with a reorganization, (v) costs associated with product recalls, (vi) employer payroll tax expense related to option exercises by Mr.

Friedman, (vii) professional fees related to the 2023 Notes and 2024 Notes transactions (refer to Note 11— Convertible Senior Notes ), (viii) non-cash compensation attributed to the noncontrolling interests holder of our consolidated variable interest entities (refer to Note 7— Variable Interest Entities ), (ix) compensation settlements related to the Rollover Units and Profit Interest Units in the Waterworks subsidiary and (x) gain on sale of building and land.

These items are excluded from segment operating income in order to provide better transparency of segment operating results.

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.

The following table presents segment operating income and a reconciliation to income from operations and income before taxes and equity method investments :

PART II — FINANCIAL STATEMENTS

FORM 10-K | 113

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:

(in thousands)

Operating income:

Total segment operating income

Cost of goods sold

Advertising expense

Other segment expenses (2)

Segment adjusted operating income (1)

Asset impairments

Non-cash compensation

Legal settlements

Reorganization related costs

Asset impairments

Legal settlements—net

Recall accrual

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Income before taxes and equity method investments

PART II — FINANCIAL STATEMENTS

(1) All intercompany transactions are immaterial and have been eliminated.

(2) Other segment expenses primarily include compensation and occupancy costs classified as selling, general and administrative expenses, and other general and administrative expenses .

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The following table presents the statements of income metrics reviewed by the CODM to evaluate performance internally or as required under ASC 280— Segment Reporting :

PART II — FINANCIAL STATEMENTS

In fiscal 2024, fiscal 2023 and fiscal 2022, the Real Estate segment share of equity method investments loss, which is the measure of segment profitability reviewed by the CODM to evaluate performance internally for the Real Estate segment, was $ 11 million, $ 11 million and $ 2.1 million, respectively.

The share of loss from equity method investments for the Waterworks segment was immaterial in all fiscal periods presented.

Depreciation and amortization for our segments was as follows:

(in thousands)

Depreciation and amortization

In fiscal 2023, fiscal 2022 and fiscal 2021, the Real Estate segment share of equity method investments loss was $ 11 million, $ 2.1 million and $ 8.2 million, respectively.

Our share of income from equity method investments for the Waterworks segment was immaterial in all periods presented.

The following table presents the balance sheet metrics as required under ASC 280— Segment Reporting :

Real Estate (1)

Total depreciation and amortization

(1) There is no expense for the Real Estate segment since all assets represent construction in progress.

Balance sheet information for our segments consisted of the following:

(in thousands)

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Refer to Note 7— Variable Interest Entities related to the Real Estate segment equity method investments.

We classify our sales into furniture and non-furniture product lines.

Furniture includes both indoor and outdoor furniture.

Non-furniture includes lighting, textiles, fittings, fixtures, surfaces, accessories and home décor, as well as our hospitality operations.

Net revenues in each category were as follows:

(in thousands)

Non-furniture

Total net revenues

We are domiciled in the United States and primarily operate our retail locations and outlets in the United States.

As of February 3, 2024 we operated four retail locations and one outlet in Canada, two retail locations and one outlet in the United Kingdom and two retail locations in Germany.

Geographic revenues in Canada, the United Kingdom and Germany are based upon revenues recognized at the retail locations in the respective country and were not material in any fiscal period presented.

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As of February 1, 2025, we operated the following number of retail locations and outlets outside the United States:

United Kingdom

(1) Geographic revenues generated outside of the United States did not exceed 10% of total consolidated net revenues in any fiscal period presented.

PART II — FINANCIAL STATEMENTS

The following table presents our long-lived assets by geographic location:

FORM 10-K | 115

Long-lived assets by geographic location were as follows:

(in thousands)

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Total long-lived assets

PART II — FINANCIAL STATEMENTS

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PART II — FINANCIAL STATEMENTS

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data