RH's Q3 Revenue Jumps 8.8%, Net Income Up 9.3%

Ticker: RH · Form: 10-Q · Filed: 2025-12-11T00:00:00.000Z

Sentiment: bullish

Topics: Luxury Retail, Home Furnishings, Q3 Earnings, Inventory Management, Strategic Acquisition, Revenue Growth, Net Income Increase

Related Tickers: RH, WMS, ETD

TL;DR

**RH is crushing it, with revenue and net income up, and they're smartly expanding their luxury brand portfolio – definitely a buy.**

AI Summary

RH reported a strong third quarter for fiscal year 2025, with net revenues increasing by 8.8% to $883.8 million for the three months ended November 1, 2025, compared to $811.7 million in the prior year. Net income also saw a healthy rise of 9.3% to $36.3 million, up from $33.2 million in the same period last year. For the nine months ended November 1, 2025, net revenues grew by 9.7% to $2.60 billion, and net income surged by 64.1% to $96.0 million, compared to $58.5 million in the prior nine-month period. The company's operating income for the quarter increased to $105.9 million from $101.5 million year-over-year. A key business change was the acquisition of the Formations and Dennis & Leen home furnishings business on July 8, 2025, for $32 million, expanding RH's brand portfolio. Merchandise inventories decreased significantly by 14.2% from $1.02 billion on February 1, 2025, to $874.9 million on November 1, 2025, indicating improved inventory management. Total assets increased to $4.79 billion from $4.55 billion, while total liabilities rose to $4.79 billion from $4.72 billion. The company's stockholders' equity shifted from a deficit of $163.6 million to a positive $3.3 million, driven by net income and foreign currency translation gains.

Why It Matters

RH's robust Q3 performance, marked by an 8.8% revenue increase and a 9.3% net income jump, signals strong consumer demand in the luxury home furnishings market, which is positive for investors. The significant reduction in merchandise inventories by 14.2% suggests effective supply chain management and potentially higher profit margins, enhancing investor confidence. The acquisition of Formations and Dennis & Leen indicates strategic expansion and a move to diversify its luxury brand offerings, potentially increasing market share and competitive advantage against rivals like Williams-Sonoma and Ethan Allen. This growth could lead to more job opportunities within RH and its acquired brands, while customers benefit from an expanded product selection.

Risk Assessment

Risk Level: medium — While RH shows strong financial performance, its total liabilities of $4.79 billion are nearly equal to its total assets of $4.79 billion as of November 1, 2025, indicating a highly leveraged position. The company also carries significant debt, including a Term Loan B of $1.89 billion and Term Loan B-2 of $467.5 million, which could pose interest rate risk and refinancing challenges in a volatile economic environment.

Analyst Insight

Investors should consider RH's strong revenue and net income growth, coupled with strategic acquisitions, as indicators of continued market strength. However, they should closely monitor the company's high debt levels and assess its ability to manage interest rate fluctuations and refinance obligations effectively. A balanced approach would be to hold existing positions while watching for further deleveraging or sustained profitability to justify additional investment.

Financial Highlights

debt To Equity
N/A
revenue
$883.8M
operating Margin
12.0%
total Assets
$4.79B
total Debt
$2.37B
net Income
$36.3M
eps
$1.83
gross Margin
44.1%
cash Position
$43.1M
revenue Growth
+8.8%

Key Numbers

Key Players & Entities

FAQ

What were RH's net revenues for the third quarter of fiscal 2025?

RH's net revenues for the three months ended November 1, 2025, were $883.8 million, representing an 8.8% increase compared to $811.7 million for the same period in the prior year.

How did RH's net income change in Q3 2025 compared to the previous year?

RH's net income for the third quarter of fiscal 2025 increased by 9.3% to $36.3 million, up from $33.2 million in the three months ended November 2, 2024.

What significant business acquisition did RH complete in fiscal 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, funded through available cash.

What was the change in RH's merchandise inventories?

Merchandise inventories for RH decreased by 14.2%, from $1.02 billion as of February 1, 2025, to $874.9 million as of November 1, 2025.

What is RH's current risk level based on its financial statements?

RH's risk level is assessed as medium due to its high leverage, with total liabilities of $4.79 billion nearly matching total assets of $4.79 billion, and significant outstanding debt including a $1.89 billion Term Loan B.

What was RH's diluted net income per share for the nine months ended November 1, 2025?

RH's diluted net income per share for the nine months ended November 1, 2025, was $4.84, a substantial increase from $2.93 for the nine months ended November 2, 2024.

How many RH Galleries and Outlet stores did the company operate as of November 1, 2025?

As of November 1, 2025, RH operated a total of 73 RH Galleries and 43 RH Outlet stores across the United States, Canada, and Europe.

What was the net cash provided by RH's operating activities for the nine months ended November 1, 2025?

For the nine months ended November 1, 2025, RH generated $356.2 million in net cash from operating activities, a significant increase from $35.9 million in the prior nine-month period.

What was the total stockholders' equity (deficit) for RH as of November 1, 2025?

As of November 1, 2025, RH reported total stockholders' equity of $3.3 million, a positive shift from a deficit of $163.6 million as of February 1, 2025.

What new accounting standards is RH assessing for future impact?

RH is currently assessing the impact of several new accounting standards, including ASU 2024-03 (Expense Disaggregation Disclosures), ASU 2025-05 (Measurement of Credit Losses), and ASU 2025-06 (Internal-Use Software).

Risk Factors

Industry Context

RH operates in the luxury home furnishings market, a segment often sensitive to economic cycles and consumer discretionary spending. The industry is characterized by a blend of high-end design, quality craftsmanship, and a focus on brand experience. Competition comes from other luxury retailers, direct-to-consumer brands, and interior designers. Trends include the increasing importance of e-commerce, personalized design services, and sustainable sourcing.

Regulatory Implications

RH must adhere to U.S. GAAP and SEC reporting requirements, including timely filing of 10-Q and 10-K reports. Any misstatements or non-compliance could lead to investigations, fines, and reputational damage. The company's financial statements are unaudited, underscoring the importance of internal controls and audit processes.

What Investors Should Do

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Key Dates

Glossary

Accumulated deficit
The cumulative net losses of a company that have not been offset by net income. (RH's accumulated deficit significantly decreased from $(510,852) thousand to $(414,840) thousand, reflecting improved profitability and a shift towards positive stockholders' equity.)
Operating lease right-of-use assets
Assets recognized by lessees under accounting standards for leases, representing the right to use an underlying asset for the lease term. (These assets increased from $617.1 million to $726.6 million, indicating expansion in leased facilities or longer lease terms.)
Equity method investments
Investments in other companies where the investor has significant influence but not control, accounted for by adjusting the investment's carrying amount for the investor's share of the investee's net income or loss. (RH's share of equity method investments resulted in a net income of $194 thousand for Q3 2025, a decrease from $1,427 thousand in the prior year, impacting overall net income.)
Foreign currency translation
The process of converting financial statements of foreign subsidiaries from their functional currency to the reporting currency of the parent company. (A net gain of $33,462 thousand from foreign currency translation for the nine months ended November 1, 2025, contributed positively to comprehensive income and stockholders' equity.)
Term loan B
A type of secured loan, typically provided by banks or institutional lenders, that matures in five to seven years and is often used for acquisitions or to refinance existing debt. (RH has substantial Term Loan B obligations ($1.89 billion net as of November 1, 2025), which are a significant component of its total debt.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, RH has demonstrated robust growth. Net revenues for the third quarter increased by 8.8% to $883.8 million, and net income rose by 9.3% to $36.3 million. For the nine-month period, revenue growth was 9.7% and net income surged by 64.1%. A key positive shift is the improvement in stockholders' equity, moving from a deficit of $163.6 million to a positive $3.3 million, driven by strong net income and foreign currency translation gains. Merchandise inventories saw a significant reduction of 14.2%, indicating improved operational efficiency.

Filing Stats: 4,326 words · 17 min read · ~14 pages · Grade level 19.5 · Accepted 2025-12-11 17:20:34

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 November 1, 2025 and February 1, 2025 3 Condensed Consolidated Statements of Income (Unaudited) for the three and nine months ended November 1, 2025 and November 2, 2024 4 Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the three and nine months ended November 1, 2025 and November 2, 2024 5 Condensed Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) for the three and nine months ended November 1, 2025 and November 2, 2024 6 Condensed Consolidated Statements of Cash Flows (Unaudited) for the nine months ended November 1, 2025 and November 2, 2024 8 Notes to Condensed Consolidated Financial Statements (Unaudited) 10 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 31 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 51 Item 4.

Controls and Procedures

Controls and Procedures 52

OTHER INFORMATION

PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 53 Item 1A.

Risk Factors

Risk Factors 53 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 54 Item 3. Defaults Upon Senior Securities 54 Item 4. Mine Safety Disclosures 54 Item 5. Other Information 54 Item 6. Exhibits 55

Signatures

Signatures 56 2 | 2025 THIRD QUARTER FORM 10-Q TABLE OF CONTENTS Table of Contents PART I

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS RH CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) NOVEMBER 1, FEBRUARY 1, 2025 2025 (in thousands) ASSETS Cash and cash equivalents $ 43,086 $ 30,413 Accounts receivable—net 63,138 63,484 Merchandise inventories 874,914 1,019,591 Prepaid expense and other current assets 143,262 177,843 Total current assets 1,124,400 1,291,331 Property and equipment—net 2,175,433 1,883,176 Operating lease right-of-use assets 726,556 617,103 Goodwill 143,755 140,943 Tradenames, trademarks and other intangible assets—net 79,708 76,118 Deferred tax assets 147,941 147,723 Equity method investments 121,404 126,909 Other non-current assets 274,544 271,386 Total assets $ 4,793,741 $ 4,554,689 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Accounts payable and accrued expenses $ 376,628 $ 413,406 Deferred revenue and customer deposits 348,932 291,815 Operating lease liabilities 107,011 100,944 Other current liabilities 113,676 98,961 Total current liabilities 946,247 905,126 Asset based credit facility 65,000 200,000 Term loan B—net 1,890,567 1,903,144 Term loan B-2—net 467,483 468,019 Real estate loans—net 15,280 15,524 Non-current operating lease liabilities 658,328 573,468 Non-current finance lease liabilities 721,613 630,655 Deferred tax liabilities 11,360 10,394 Other non-current liabilities 14,517 11,948 Total liabilities 4,790,395 4,718,278 Commitments and contingencies (Note 14) Stockholders' equity (deficit) Preferred stock—$ 0.0001 par value per share, 10,000,000 shares authorized, no shares issued or outstanding as of November 1, 2025 and February 1, 2025 — — Common stock— $ 0.0001 par value per share, 180,000,000 shares authorized, 18,776,949 shares issued and outstanding as of November 1, 2025; 18,726,116 shares issued and outstanding as of February 1, 2025 2 2 Additional paid-i

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 3 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED NOVEMBER 1, NOVEMBER 2, NOVEMBER 1, NOVEMBER 2, 2025 2024 2025 2024 (in thousands, except share and per share amounts) Net revenues $ 883,810 $ 811,732 $ 2,596,913 $ 2,368,347 Cost of goods sold 494,074 450,392 1,442,585 1,316,212 Gross profit 389,736 361,340 1,154,328 1,052,135 Selling, general and administrative expenses 283,806 259,872 863,611 799,877 Operating income 105,930 101,468 290,717 252,258 Other expenses Interest expense—net 57,152 57,590 171,113 173,624 Other (income) expense—net 694 27 ( 3,533 ) 529 Total other expenses 57,846 57,617 167,580 174,153 Income before taxes and equity method investments 48,084 43,851 123,137 78,105 Income tax expense 11,625 9,256 33,784 10,882 Income before equity method investments 36,459 34,595 89,353 67,223 Share of equity method investments (income) loss—net 194 1,427 ( 6,659 ) 8,728 Net income $ 36,265 $ 33,168 $ 96,012 $ 58,495 Weighted-average shares used in computing basic net income per share 18,760,088 18,534,815 18,742,109 18,439,159 Basic net income per share $ 1.93 $ 1.79 $ 5.12 $ 3.17 Weighted-average shares used in computing diluted net income per share 19,807,541 19,981,011 19,819,369 19,960,108 Diluted net income per share $ 1.83 $ 1.66 $ 4.84 $ 2.93 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements. 4 | 2025 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) THREE MONTHS ENDED NINE MONTHS ENDED NOVEMBER 1, NOVEMBER 2, NOVEMBER 1, NOVEMBER 2, 2025 2024 2025 2024 (in thousands) Net income $ 36,265 $ 33,168 $ 96,012 $ 58,495 Net gain (loss) from foreign currency translation ( 4,246 ) ( 862 ) 33,462 3,080 Comprehensive income $ 32,019 $ 32,306 $ 129,474 $ 61,575 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 5 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) THREE MONTHS ENDED COMMON STOCK ACCUMULATED ADDITIONAL OTHER TOTAL PAID-IN COMPREHENSIVE ACCUMULATED STOCKHOLDERS' SHARES AMOUNT CAPITAL INCOME (LOSS) DEFICIT EQUITY (DEFICIT) (in thousands, except share amounts) Balances—August 2, 2025 18,744,120 $ 2 $ 387,582 $ 22,621 $ ( 451,105 ) $ ( 40,900 ) Stock-based compensation — — 11,308 — — 11,308 Vested and delivered restricted stock units 192 — ( 24 ) — — ( 24 ) Exercise of stock options 32,637 — 943 — — 943 Net income — — — — 36,265 36,265 Net loss from foreign currency translation — — — ( 4,246 ) — ( 4,246 ) Balances—November 1, 2025 18,776,949 $ 2 $ 399,809 $ 18,375 $ ( 414,840 ) $ 3,346 Balances—August 3, 2024 18,482,697 $ 2 $ 321,214 $ 2,004 $ ( 557,937 ) $ ( 234,717 ) Stock-based compensation — — 11,684 — — 11,684 Issuance of restricted stock 8,000 — — — — — Vested and delivered restricted stock units 192 — ( 37 ) — — ( 37 ) Exercise of stock options 70,281 — 7,755 — — 7,755 Settlement of convertible senior notes 39,121 — — — — — Net income — — — — 33,168 33,168 Net loss from foreign currency translation — — — ( 862 ) — ( 862 ) Balances—November 2, 2024 18,600,291 $ 2 $ 340,616 $ 1,142 $ ( 524,769 ) $ ( 183,009 ) 6 | 2025 THIRD QUARTER FORM 10-Q

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued) (Unaudited) NINE MONTHS ENDED COMMON STOCK ACCUMULATED ADDITIONAL OTHER TOTAL PAID-IN COMPREHENSIVE ACCUMULATED STOCKHOLDERS' SHARES AMOUNT CAPITAL INCOME (LOSS) DEFICIT EQUITY (DEFICIT) (in thousands, except share amounts) Balances—February 1, 2025 18,726,116 $ 2 $ 362,348 $ ( 15,087 ) $ ( 510,852 ) $ ( 163,589 ) Stock-based compensation — — 35,315 — — 35,315 Issuance of restricted stock 4,690 — — — — — Vested and delivered restricted stock units 1,212 — ( 55 ) — — ( 55 ) Exercise of stock options 44,931 — 2,201 — — 2,201 Net income — — — — 96,012 96,012 Net gain from foreign currency translation — — — 33,462 — 33,462 Balances—November 1, 2025 18,776,949 $ 2 $ 399,809 $ 18,375 $ ( 414,840 ) $ 3,346 Balances—February 3, 2024 18,315,613 $ 2 $ 287,806 $ ( 1,938 ) $ ( 583,264 ) $ ( 297,394 ) Stock-based compensation — — 33,757 — — 33,757 Issuance of restricted stock 15,829 — — — — — Vested and delivered restricted stock units 1,009 — ( 188 ) — — ( 188 ) Exercise of stock options 228,719 — 19,241 — — 19,241 Settlement of convertible senior notes 39,121 — — — — — Net income — — — — 58,495 58,495 Net gain from foreign currency translation — — — 3,080 — 3,080 Balances—November 2, 2024 18,600,291 $ 2 $ 340,616 $ 1,142 $ ( 524,769 ) $ ( 183,009 ) The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 7 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) NINE MONTHS ENDED NOVEMBER 1, NOVEMBER 2, 2025 2024 (in thousands) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 96,012 $ 58,495 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 108,241 96,082 Non-cash operating lease cost 78,050 72,211 Stock-based compensation expense 35,315 33,757 Asset impairments 5,883 20,535 Non-cash finance lease interest expense 28,883 23,223 Product recall 1,913 — Deferred income taxes — 5,399 Share of equity method investments (income) loss—net ( 6,659 ) 8,728 Distribution of return on equity method investment 4,630 — Other non-cash items 4,631 6,529 Change in assets and liabilities: Accounts receivable 497 ( 7,917 ) Merchandise inventories 155,251 ( 224,244 ) Prepaid expense and other assets ( 21,507 ) 13,084 Landlord assets under construction—net of tenant allowances ( 64,691 ) ( 33,032 ) Accounts payable and accrued expenses ( 30,070 ) 43,812 Deferred revenue and customer deposits 52,313 25,065 Other current liabilities 12,712 ( 9,974 ) Current and non-current operating lease liabilities ( 78,837 ) ( 73,137 ) Other non-current obligations ( 26,392 ) ( 22,747 ) Net cash provided by operating activities 356,175 35,869 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures ( 158,387 ) ( 179,897 ) Acquisition of business ( 32,119 ) — Equity method investments ( 374 ) ( 9,620 ) Acquisition of intangible asset ( 3,171 ) — Receipt of promissory note repayment from equity method investee 1,750 — Distribution of return of equity method investment 7,916 — Proceeds from insurance recoveries 2,325 — Net cash used in investing activities ( 182,060 ) ( 189,517 )

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 8 Table of Contents RH CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (continued) (Unaudited) NINE MONTHS ENDED NOVEMBER 1, NOVEMBER 2, 2025 2024 (in thousands) CASH FLOWS FROM FINANCING ACTIVITIES Borrowings under asset based credit facility 290,000 190,000 Repayments under asset based credit facility ( 425,000 ) — Repayments under term loans ( 18,750 ) ( 18,750 ) Repayments under real estate loans ( 254 ) ( 44 ) Repayments of convertible senior notes — ( 41,904 ) Debt issuance costs ( 2,997 ) — Principal payments under finance lease agreements—net of tenant allowances ( 7,789 ) ( 19,609 ) Repurchases of common stock—inclusive of excise taxes paid — ( 11,988 ) Proceeds from exercise of stock options 2,201 19,241 Tax withholdings related to issuance of stock-based awards ( 55 ) ( 188 ) Net cash provided by (used in) financing activities ( 162,644 ) 116,758 Effects of foreign currency exchange rate translation on cash 1,202 214 Net increase (decrease) in cash and cash equivalents 12,673 ( 36,676 ) Cash and cash equivalents Beginning of period 30,413 123,688 End of period $ 43,086 $ 87,012 Non-cash transactions Property and equipment additions in accounts payable and accrued expenses at period-end $ 29,140 $ 48,186 Landlord asset additions in accounts payable and accrued expenses at period-end 18,243 9,792 The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 9 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 November 1, 2025, we operated a total of 73 RH Galleries and 43 RH Outlet stores, one RH Guesthouse, one RH Interior Design Office and 14 Waterworks Showrooms throughout the United States, Canada and Europe. We also have sourcing operations in Shanghai. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared from our records and, in our senior leadership team's opinion, include all adjustments, consisting of normal recurring adjustments, necessary to fairly state our financial position as of November 1, 2025, and the results of operations for the three and nine months ended November 1, 2025 and November 2, 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

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 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 expect to include additional disclosures within the annual financial statements for the fiscal year ended January 31, 2026 to comply with the requirements of ASU 2023-09. Income Statement: Disaggregation of Income Statement Expenses In November 2024,

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 11 Table of Contents NOTE 3—BUSINESS COMBINATION On July 8, 2025, we acquired a home furnishings business operating under the brand names of Formations and Dennis & Leen for total consideration of $ 32 million, funded through available cash. The transaction was accounted for as a business combination under Accounting Standards Codification ("ASC") 805— Business Combinations . We believe that this addition to the RH platform further positions us as a leader in the luxury design market as we continue to enhance the RH product assortment. During the nine months ended November 1, 2025, we incurred $ 2.3 million 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 ac

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Table of Contents NOTE 4—PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consisted of the following: NOVEMBER 1, FEBRUARY 1, 2025 2025 (in thousands) Value added tax (VAT) receivable $ 32,252 $ 9,866 Prepaid expenses 21,371 29,595 Vendor deposits 19,637 20,441 Capitalized cloud computing costs 11,419 9,851 Capitalized catalog costs 7,921 30,162 Tenant allowance receivable 6,744 12,668 Right of return asset for merchandise 6,548 6,237 Federal and state tax receivable (1) 4,106 24,729 Promissory notes receivable, including interest (2) 1,154 3,674 Other current assets 32,110 30,620 Total prepaid expense and other current assets $ 143,262 $ 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: NOVEMBER 1, FEBRUARY 1, 2025 2025 (in thousands) Landlord assets under construction—net of tenant allowances $ 113,423 $ 138,701 Initial direct costs prior to lease commencement 82,503 80,897 Capitalized cloud computing costs—net (1) 29,304 22,738 Federal tax receivable—non-current (2) 19,483 — Other deposits 8,354 7,754 Deferred financing fees 3,732 1,512 Vendor deposits—non-current 3,285 2,684 Other non-current assets 14,460 17,100 Total other non-current assets $ 274,544 $ 271,386 (1) Presented net of accumulated amortization of $ 40 million and $ 30 million as of November 1, 2025 and February 1, 2025, respectively. (2) Represents a federal tax receivable from a carryback claim.

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION 2025 THIRD QUARTER FORM 10-Q | 13 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 3,872 — — Other (3) — ( 282 ) — — Foreign currency translation 42 — — — November 1, 2025 $ 143,755 $ 62,708 $ — $ 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 disposals and amortization of patents. There are no goodwill, tradenames, trademarks and other intangible assets for the Re

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