RH's Net Income Soars 79% on Strong Revenue Growth

Ticker: RH · Form: 10-Q · Filed: 2025-09-11T00:00:00.000Z

Sentiment: bullish

Topics: Luxury Retail, Home Furnishings, Earnings Growth, Acquisition, Financial Performance, SEC Filing, 10-Q

Related Tickers: RH, WMS, ETH

TL;DR

**RH is crushing it, with net income nearly doubling, making it a strong buy in luxury home furnishings.**

AI Summary

RH reported a significant increase in net income for the three and six months ended August 2, 2025. Net income for the three months rose to $51.7 million, up 78.6% from $28.95 million in the prior year, while six-month net income increased 135.9% to $59.75 million from $25.33 million. Revenue also saw healthy growth, with net revenues reaching $899.15 million for the three months, an 8.4% increase from $829.66 million, and $1.71 billion for the six months, up 10.0% from $1.56 billion. Operating income for the three months jumped 34.1% to $128.88 million from $96.13 million. Key business changes include the acquisition of home furnishings brands Formations and Dennis & Leen for $32 million on July 8, 2025, aimed at enhancing RH's luxury design market position. Risks include the inherent uncertainties in accounting estimates like inventory reserves and goodwill, which could materially impact future financial statements. Strategically, RH is focused on expanding its luxury product assortment and integrating new acquisitions to drive future growth.

Why It Matters

This strong performance signals RH's resilience and effective strategy in the luxury home furnishings market, potentially boosting investor confidence. For employees, continued growth could mean job security and expansion opportunities. Customers might see an enriched product offering with the acquisition of Formations and Dennis & Leen, enhancing RH's competitive edge against rivals like Williams-Sonoma and Ethan Allen. The broader market will watch if RH can sustain this momentum amidst evolving consumer spending habits and a competitive retail landscape, especially in the high-end segment.

Risk Assessment

Risk Level: medium — The risk level is medium due to the reliance on significant accounting estimates, such as sales return reserves, inventory reserves, and goodwill, as noted in 'Note 1—The Company'. While net income and revenue are up, the company's total liabilities of $4.74 billion as of August 2, 2025, slightly exceed total assets of $4.70 billion, resulting in a stockholders' deficit of $40.9 million, indicating a leveraged balance sheet.

Analyst Insight

Investors should consider RH's strong net income and revenue growth as a positive indicator, but also monitor the company's debt levels and the integration of its recent acquisition. A deeper dive into the competitive landscape and consumer spending trends in luxury goods would be prudent before making a significant investment decision.

Financial Highlights

debt To Equity
N/A
revenue
$899.15M
operating Margin
14.3%
total Assets
$4.70B
total Debt
$4.74B
net Income
$51.71M
eps
$2.62
gross Margin
45.5%
cash Position
$34.56M
revenue Growth
+8.4%

Revenue Breakdown

SegmentRevenueGrowth
Net Revenues$899.15M+8.4%

Key Numbers

Key Players & Entities

FAQ

What were RH's net revenues for the three months ended August 2, 2025?

RH's net revenues for the three months ended August 2, 2025, were $899.15 million, an increase from $829.66 million for the same period in 2024.

How much did RH's net income increase for the six months ended August 2, 2025?

RH's net income for the six months ended August 2, 2025, increased to $59.75 million, a significant rise from $25.33 million for the six months ended August 3, 2024.

What business did RH acquire on July 8, 2025?

On July 8, 2025, RH acquired a home furnishings business operating under the brand names of Formations and Dennis & Leen for a total consideration of $32 million.

What was RH's total stockholders' deficit as of August 2, 2025?

As of August 2, 2025, RH's total stockholders' deficit was $40.9 million, an improvement from $163.59 million as of February 1, 2025.

What are some key accounting estimates RH's senior leadership team assesses?

RH's senior leadership team assesses various accounting estimates including sales return reserve, inventory reserve, allowance for doubtful accounts, goodwill, and intangible and other long-lived assets.

What is the purpose of RH's acquisition of Formations and Dennis & Leen?

The acquisition of Formations and Dennis & Leen is intended to further position RH as a leader in the luxury design market and enhance the RH product assortment.

How many RH Galleries did the company operate as of August 2, 2025?

As of August 2, 2025, RH operated a total of 71 RH Galleries across the United States, Canada, the United Kingdom, Germany, Belgium, and Spain.

What was the change in cash and cash equivalents for RH during the six months ended August 2, 2025?

RH experienced a net increase of $4.15 million in cash and cash equivalents for the six months ended August 2, 2025, bringing the total to $34.56 million.

What new accounting standard related to income tax disclosures is RH assessing?

RH is currently assessing the impact of ASU 2023-09, 'Improvements to Income Tax Disclosures', which is effective for fiscal years beginning after December 15, 2024.

What is RH's strategic outlook based on this filing?

RH's strategic outlook involves continued enhancement of its luxury product assortment and leveraging acquisitions like Formations and Dennis & Leen to strengthen its market position and drive future growth.

Risk Factors

Industry Context

RH operates in the luxury home furnishings sector, characterized by high-end design, quality, and brand reputation. The industry is influenced by consumer discretionary spending, housing market trends, and evolving interior design preferences. Competition comes from other luxury brands, high-end retailers, and custom design services.

Regulatory Implications

RH must adhere to U.S. GAAP for financial reporting, including proper accounting for acquisitions, inventory valuation, and lease accounting. Any misstatements or non-compliance could lead to SEC scrutiny and potential penalties.

What Investors Should Do

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Key Dates

Glossary

Stockholders' Deficit
A situation where a company's total liabilities exceed its total assets, resulting in a negative equity position. (RH reported a significantly reduced stockholders' deficit of ($40.9 million) as of August 2, 2025, down from ($163.6 million) on February 1, 2025, indicating improved financial health.)
Operating Lease Right-of-Use Assets
Assets recognized under accounting standards for leases, representing the right to use an asset for the lease term. (These assets, along with corresponding liabilities, are significant on RH's balance sheet, reflecting its extensive use of leased properties.)
Equity Method Investments
Investments in other companies where the investor has significant influence but not control, and the investment's value is adjusted based on the investee's net income or loss. (RH's share of income/loss from these investments impacts its overall net income, as seen in the Statements of Income.)
Deferred Revenue
Revenue that has been received by the company but not yet earned, typically from customer deposits or advance payments for services or goods not yet delivered. (An increase in deferred revenue ($351.5 million as of August 2, 2025) suggests strong future sales commitments.)
Goodwill
An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. (RH has $143.8 million in goodwill, which is subject to impairment testing and could impact future earnings if its value declines.)

Year-Over-Year Comparison

Compared to the prior year's comparable periods, RH has demonstrated robust financial performance. Net revenues for the three months ended August 2, 2025, increased by 8.4% to $899.15 million, and for the six months, by 10.0% to $1.71 billion. Net income saw a substantial surge, up 78.6% to $51.71 million for the quarter and 135.9% to $59.75 million for the six months. The company also significantly improved its stockholders' deficit, reducing it from ($163.59 million) to ($40.90 million), indicating a stronger balance sheet. New risks related to recent acquisitions are now present, alongside ongoing concerns about inventory and accounting estimates.

Filing Stats: 4,351 words · 17 min read · ~15 pages · Grade level 19.2 · Accepted 2025-09-11 17:15:35

Key Financial Figures

Filing Documents

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 3 Condensed Consolidated Balance Sheets (Unaudited) as of August 2, 2025 and February 1, 2025 3 Condensed Consolidated Statements of Income (Unaudited) for the three and six months ended August 2, 2025 and August 3, 2024 4 Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and six months ended August 2, 2025 and August 3, 2024 5 Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) for the three and six months ended August 2, 2025 and August 3, 2024 6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the six months ended August 2, 2025 and August 3, 2024 7 Notes to Condensed Consolidated Financial Statements (Unaudited) 9 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 29 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 50 Item 4.

Controls and Procedures

Controls and Procedures 50

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 51 Item 1A.

Risk Factors

Risk Factors 51 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 52 Item 3. Defaults Upon Senior Securities 52 Item 4. Mine Safety Disclosures 52 Item 5. Other Information 52 Item 6. Exhibits 53

Signatures

Signatures 54 2 | 2025 SECOND QUARTER FORM 10-Q TABLE OF CONTENTS Table of Contents PART I

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS RH CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) AUGUST 2, FEBRUARY 1, 2025 2025 (in thousands) ASSETS Cash and cash equivalents $ 34,560 $ 30,413 Accounts receivable—net 61,248 63,484 Merchandise inventories 956,947 1,019,591 Prepaid expense and other current assets 148,911 177,843 Total current assets 1,201,666 1,291,331 Property and equipment—net 2,018,159 1,883,176 Operating lease right-of-use assets 638,085 617,103 Goodwill 143,774 140,943 Tradenames, trademarks and other intangible assets—net 79,656 76,118 Deferred tax assets 147,954 147,723 Equity method investments 121,599 126,909 Other non-current assets 346,128 271,386 Total assets $ 4,697,021 $ 4,554,689 LIABILITIES AND STOCKHOLDERS' DEFICIT Accounts payable and accrued expenses $ 380,533 $ 413,406 Deferred revenue and customer deposits 351,502 291,815 Operating lease liabilities 105,866 100,944 Other current liabilities 116,000 98,961 Total current liabilities 953,901 905,126 Asset based credit facility 135,000 200,000 Term loan B—net 1,894,761 1,903,144 Term loan B-2—net 467,665 468,019 Real estate loans—net 15,360 15,524 Non-current operating lease liabilities 588,083 573,468 Non-current finance lease liabilities 657,784 630,655 Deferred tax liabilities 11,433 10,394 Other non-current liabilities 13,934 11,948 Total liabilities 4,737,921 4,718,278 Commitments and contingencies (Note 14) Stockholders' deficit: Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of August 2, 2025 and February 1, 2025 — — Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,744,120 shares issued and outstanding as of August 2, 2025; 18,726,116 shares issued and outstanding as of February 1, 2025 2 2 Additional paid-in capital 387,582 3

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 SECOND QUARTER FORM 10-Q | 3 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3, 2025 2024 2025 2024 (in thousands, except share and per share amounts) Net revenues $ 899,151 $ 829,655 $ 1,713,103 $ 1,556,615 Cost of goods sold 489,892 454,898 948,511 865,820 Gross profit 409,259 374,757 764,592 690,795 Selling, general and administrative expenses 280,383 278,630 579,805 540,005 Operating income 128,876 96,127 184,787 150,790 Other expenses Interest expense—net 57,358 59,262 113,961 116,034 Other (income) expense—net ( 574 ) ( 663 ) ( 4,227 ) 502 Total other expenses 56,784 58,599 109,734 116,536 Income before taxes and equity method investments 72,092 37,528 75,053 34,254 Income tax expense 19,032 3,717 22,159 1,626 Income before equity method investments 53,060 33,811 52,894 32,628 Share of equity method investments (income) loss—net 1,352 4,859 ( 6,853 ) 7,301 Net income $ 51,708 $ 28,952 $ 59,747 $ 25,327 Weighted-average shares used in computing basic net income per share 18,737,234 18,458,207 18,733,119 18,391,331 Basic net income per share $ 2.76 $ 1.57 $ 3.19 $ 1.38 Weighted-average shares used in computing diluted net income per share 19,737,331 19,961,610 19,825,282 19,949,657 Diluted net income per share $ 2.62 $ 1.45 $ 3.01 $ 1.27 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 4 | 2025 SECOND QUARTER FORM 10-Q

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) THREE MONTHS ENDED SIX MONTHS ENDED AUGUST 2, AUGUST 3, AUGUST 2, AUGUST 3, 2025 2024 2025 2024 (in thousands) Net income $ 51,708 $ 28,952 $ 59,747 $ 25,327 Net gain from foreign currency translation 6,099 5,227 37,708 3,942 Comprehensive income $ 57,807 $ 34,179 $ 97,455 $ 29,269 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 SECOND QUARTER FORM 10-Q | 5 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (Unaudited) THREE MONTHS ENDED COMMON STOCK ACCUMULATED ADDITIONAL OTHER TOTAL PAID-IN COMPREHENSIVE ACCUMULATED STOCKHOLDERS' SHARES AMOUNT CAPITAL INCOME (LOSS) DEFICIT DEFICIT (in thousands, except share amounts) Balances—May 3, 2025 18,732,265 $ 2 $ 375,521 $ 16,522 $ ( 502,813 ) $ ( 110,768 ) Stock-based compensation — — 11,633 — — 11,633 Issuance of restricted stock 4,690 — — — — — Exercise of stock options 7,165 — 428 — — 428 Net income — — — — 51,708 51,708 Net gain from foreign currency translation — — — 6,099 — 6,099 Balances—August 2, 2025 18,744,120 $ 2 $ 387,582 $ 22,621 $ ( 451,105 ) $ ( 40,900 ) Balances—May 4, 2024 18,342,797 $ 2 $ 300,189 $ ( 3,223 ) $ ( 586,889 ) $ ( 289,921 ) Stock-based compensation — — 11,529 — — 11,529 Issuance of restricted stock 3,829 — — — — — Exercise of stock options 136,071 — 9,496 — — 9,496 Net income — — — — 28,952 28,952 Net gain from foreign currency translation — — — 5,227 — 5,227 Balances—August 3, 2024 18,482,697 $ 2 $ 321,214 $ 2,004 $ ( 557,937 ) $ ( 234,717 ) SIX MONTHS ENDED COMMON STOCK ACCUMULATED ADDITIONAL OTHER TOTAL PAID-IN COMPREHENSIVE ACCUMULATED STOCKHOLDERS' SHARES AMOUNT CAPITAL INCOME (LOSS) DEFICIT DEFICIT (in thousands, except share amounts) Balances—February 1, 2025 18,726,116 $ 2 $ 362,348 $ ( 15,087 ) $ ( 510,852 ) $ ( 163,589 ) Stock-based compensation — — 24,007 — — 24,007 Issuance of restricted stock 4,690 — — — — — Vested and delivered restricted stock units 1,020 — ( 31 ) — — ( 31 ) Exercise of stock options 12,294 — 1,258 — — 1,258 Net income — —

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) SIX MONTHS ENDED AUGUST 2, AUGUST 3, 2025 2024 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 59,747 $ 25,327 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 69,865 63,084 Non-cash operating lease cost 51,106 48,358 Stock-based compensation expense 24,007 22,073 Asset impairments 3,948 776 Non-cash finance lease interest expense 18,193 15,329 Product recall 1,913 — Share of equity method investments (income) loss—net ( 6,853 ) 7,301 Distribution of return on equity method investment 4,630 — Other non-cash items 2,098 4,366 Change in assets and liabilities: Accounts receivable 2,407 ( 11,563 ) Merchandise inventories 73,595 ( 162,577 ) Prepaid expense and other assets ( 13,118 ) 6,219 Landlord assets under construction—net of tenant allowances ( 46,486 ) ( 17,461 ) Accounts payable and accrued expenses ( 22,239 ) 122,657 Deferred revenue and customer deposits 54,800 19,632 Other current liabilities 13,451 ( 13,509 ) Current and non-current operating lease liabilities ( 50,447 ) ( 48,383 ) Other non-current obligations ( 16,298 ) ( 14,323 ) Net cash provided by operating activities 224,319 67,306 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 109,565 ) ( 115,340 ) Acquisition of business ( 32,119 ) — Equity method investments ( 374 ) ( 9,423 ) Acquisition of intangible asset ( 3,031 ) — Receipt of promissory note repayment from equity method investee 1,750 — Distribution of return of equity method investment 7,916 — Proceeds from insurance recoveries 1,275 — Net cash used in investing activities ( 134,148 ) ( 124,763 )

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 SECOND QUARTER FORM 10-Q | 7 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) SIX MONTHS ENDED AUGUST 2, AUGUST 3, 2025 2024 (in thousands) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under asset based credit facility 260,000 25,000 Repayments under asset based credit facility ( 325,000 ) — Repayments under term loans ( 12,500 ) ( 12,500 ) Repayments under real estate loans ( 169 ) ( 16 ) Debt issuance costs ( 2,766 ) — Principal payments under finance lease agreements—net of tenant allowances ( 8,031 ) ( 11,957 ) Proceeds from exercise of stock options 1,258 11,486 Tax withholdings related to issuance of stock-based awards ( 31 ) ( 151 ) Net cash provided by (used in) financing activities ( 87,239 ) 11,862 Effects of foreign currency exchange rate translation on cash 1,215 240 Net increase (decrease) in cash and cash equivalents 4,147 ( 45,355 ) Cash and cash equivalents Beginning of period 30,413 123,688 End of period $ 34,560 $ 78,333 Non-cash transactions Property and equipment additions in accounts payable and accrued expenses at period-end $ 32,089 $ 38,654 Landlord asset additions in accounts payable and accrued expenses at period-end 11,439 12,530 Excise tax from share repurchases in accounts payable and accrued expenses at period-end — 11,988 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 8 | 2025 SECOND QUARTER FORM 10-Q

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents RH NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1—THE COMPANY Nature of Business RH, a Delaware corporation, together with its subsidiaries (collectively, "we," "us," "our" or the "Company"), is a leading retailer and luxury lifestyle brand operating primarily in the home furnishings market. Our curated and fully integrated assortments are presented consistently across our sales channels, including our retail locations, websites and Sourcebooks. We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, dcor, outdoor and garden, and baby, child and teen furnishings. As of August 2, 2025, we operated a total of 71 RH Galleries and 43 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. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team's opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of August 2, 2025, and the results of operations for the three and six months ended August 2, 2025 and August 3, 2024. Our current fiscal year, which consists of 52 weeks, ends on January 31, 2026 ("fiscal 2025"). The condensed consolidated financial statements include our accounts and those of our wholly-owned subsidiaries, as well as the financial information of variable interest entities ("VIEs") where we represent the primary beneficiary and have the power to direct the activities that most significantly impact the entity's performance (refer to Note 6— Variable Interest Entities ). Accordingly, all intercompany balances and transactions have been eliminated through the co

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 SECOND QUARTER FORM 10-Q | 9 Table of Contents NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS New Accounting Standards or Updates Adopted Joint Venture Formations: Recognition and Initial Measurement In August 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-05—Business Combinations—Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement ("ASU 2023-05"). ASU 2023-05 applies to the formation of a "joint venture" or a "corporate joint venture" and requires a joint venture to initially measure all contributions received upon its formation at fair value. The guidance does not impact accounting by the venturers. We adopted this new guidance in the first quarter of fiscal 2025 on a prospective basis. 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 in the updated standard, we will apply this guidance to any future arrangements we enter into that meet the definition of a joint venture. New Accounting Standards or Updates Not Yet Adopted Income Taxes: Improvements to Income Tax Disclosures In December 2023, the FASB issued ASU 2023-09—Improvements to Income Tax Disclosures ("ASU 2023-09") . This new guidance is designed to enhance the transparency and decision usefulness of income tax disclosures. The amendments of this update are related to the rate reconciliation and income taxes paid, requiring consistent categories and greater disaggregation of information in the rate reconciliation as well as income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024. We are currently assessing the impact that adopting this ASU will have on our fiscal 2025 annual consolidated financial statements. Income Statement: Disaggregation of Income Statement Expenses In November 2024, the FA

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents NOTE 3—BUSINESS COMBINATION On July 8, 2025, we acquired a home furnishings business operating under the brand names of Formations and Dennis & Leen for total consideration of $ 32 million, funded through available cash. The transaction was accounted for as a business combination under ASC 805— Business Combinations . We believe that this addition to the RH platform further positions us as a leader in the luxury design market as we continue to enhance the RH product assortment. During the three and six months ended August 2, 2025, we incurred $ 1.5 million and $ 2.2 million, respectively, of acquisition-related costs associated with the transaction. These costs include fees associated with financial, legal and accounting advisors, and are included in selling, general and administrative expenses on the condensed consolidated statements of income. The following table summarizes the preliminary purchase price allocation based on the fair value of the assets acquired and liabilities assumed as of July 8, 2025: PURCHASE PRICE ALLOCATION (in thousands) Merchandise inventories $ 5,451 Property and equipment 27,461 Operating lease right-of-use assets 4,443 Goodwill (1) 2,770 Other assets 981 Deferred revenue and customer deposits ( 3,471 ) Operating lease liabilities ( 4,273 ) Other liabilities ( 1,243 ) Total $ 32,119 (1) Goodwill of $ 2.8 million, included in the RH Segment, represents the expected synergies from integrating the acquired business into our operations and is expected to be deductible for tax purposes. The fair values assigned to assets acquired and liabilities assumed are preliminary based on our best estimates and assumptions as of the reporting date and may be subject to change as additional information is obtained within the measurement period (not to exceed 12 months from the acquisition date). Results of operations of the acquired company have been included

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 SECOND QUARTER FORM 10-Q | 11 Table of Contents NOTE 4—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consisted of the following: AUGUST 2, FEBRUARY 1, 2025 2025 (in thousands) Value added tax (VAT) receivable $ 26,629 $ 9,866 Prepaid expenses 24,853 29,595 Vendor deposits 18,809 20,441 Capitalized catalog costs 14,838 30,162 Tenant allowance receivable 14,454 12,668 Capitalized cloud computing costs 11,219 9,851 Right of return asset for merchandise 6,271 6,237 Federal and state tax receivable (1) 4,017 24,729 Promissory notes receivable, including interest (2) 1,144 3,674 Other current assets 26,677 30,620 Total prepaid expense and other current assets $ 148,911 $ 177,843 (1) As of February 1, 2025, includes $ 19 million 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 6— Variable Interest Entities . Other non-current assets consisted of the following: AUGUST 2, FEBRUARY 1, 2025 2025 (in thousands) Landlord assets under construction—net of tenant allowances $ 166,256 $ 138,701 Initial direct costs prior to lease commencement 107,786 80,897 Capitalized cloud computing costs—net (1) 27,069 22,738 Federal tax receivable—non-current (2) 19,483 — Other deposits 8,153 7,754 Deferred financing fees 3,942 1,512 Other non-current assets 13,439 19,784 Total other non-current assets $ 346,128 $ 271,386 (1) Presented net of accumulated amortization of $ 36 million and $ 30 million as of August 2, 2025 and February 1, 2025, respectively. (2) Represents a federal tax receivable from a carryback claim. 12 | 2025 SECOND QUARTER FORM 10-Q

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents NOTE 5—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS Goodwill, tradenames, trademarks and other intangible assets for the RH Segment and Waterworks consisted of the following: RH SEGMENT WATERWORKS TRADENAMES, TRADENAMES, TRADEMARKS AND TRADEMARKS AND OTHER INTANGIBLE OTHER INTANGIBLE GOODWILL ASSETS GOODWILL (1) ASSETS (2) (in thousands) February 1, 2025 $ 140,943 $ 59,118 $ — $ 17,000 Additions 2,770 3,583 — — Other (3) — ( 45 ) — — Foreign currency translation 61 — — — August 2, 2025 $ 143,774 $ 62,656 $ — $ 17,000 (1) Waterworks reporting unit goodwill of $ 51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. (2) Presented net of an impairment charge of $ 35 million recognized in prior fiscal years. (3) Represents amortization of patents. There are no goodwill, tradenames, trademarks and other intangible assets for the Real Estate segment.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 SECOND QUARTER FORM 10-Q | 13 Table of Contents NOTE 6—VARIABLE INTEREST ENTITIES Consolidated Variable Interest Entities and Noncontrolling Interests In fiscal 2022, we formed eight privately-held limited liability companies (each, a "Member LLC" and collectively, the "Member LLCs" or the "consolidated variable interest entities") for real estate development activities related to our Gallery transformation and global expansion strategies. In fiscal 2024, one Member LLC became a wholly-owned subsidiary and is no longer a VIE. As of August 2, 2025 and 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. The carrying amounts and classification of the VIEs' assets and liabilities included in the condensed consolidated balance sheets were as follows: AUGUST 2, FEBRUARY 1, 2025 2025 (in thousands) ASSETS Cash and cash equivalents $ 1,695 $ 2,177 Prepaid expense and other current assets 1,068 9

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