10-Q: Quarterly report pursuant to Section 13 or 15(d)
Published on June 3, 2022
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of |
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(I.R.S. Employer |
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(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
(Title of each class) |
(Trading symbol) |
(Name of each exchange on which registered) |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of May 27, 2022,
RH
INDEX TO FORM 10-Q
PART I
ITEM 1. FINANCIAL STATEMENTS
RH
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
c |
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APRIL 30, |
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JANUARY 29, |
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2022 |
2022 |
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(in thousands) |
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ASSETS |
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Cash and cash equivalents |
$ |
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$ |
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Accounts receivable—net |
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Merchandise inventories |
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Prepaid expense and other current assets |
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Total current assets |
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Property and equipment—net |
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Operating lease right-of-use assets |
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Goodwill |
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Tradenames, trademarks and other intangible assets |
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Deferred tax assets |
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Equity method investments |
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Other non-current assets |
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Total assets |
$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Accounts payable and accrued expenses |
$ |
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$ |
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Deferred revenue and customer deposits |
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Convertible senior notes due 2023 |
— |
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Convertible senior notes due 2024 |
— |
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Convertible senior notes repurchase obligation (Note 9) |
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— |
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Operating lease liabilities |
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Other current liabilities |
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Total current liabilities |
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Asset based credit facility |
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— |
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— |
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Term loan—net |
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Convertible senior notes due 2023—net |
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Convertible senior notes due 2024—net |
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Non-current operating lease liabilities |
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Non-current finance lease liabilities |
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Other non-current obligations |
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Total liabilities |
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Commitments and contingencies (Note 16) |
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Stockholders’ equity: |
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Preferred stock—$ |
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Common stock—$ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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( |
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( |
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Retained earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
$ |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
RH
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
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THREE MONTHS ENDED |
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APRIL 30, |
MAY 1, |
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2022 |
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2021 |
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(in thousands, except share and per share amounts) |
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Net revenues |
$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Selling, general and administrative expenses |
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Income from operations |
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Other expenses |
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Interest expense—net |
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Loss on extinguishment of debt |
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Other income—net |
( |
— |
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Total other expenses |
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Income before income taxes |
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Income tax expense (benefit) |
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( |
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Income before equity method investments |
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Share of equity method investments losses |
( |
( |
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Net income |
$ |
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$ |
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Weighted-average shares used in computing basic net income per share |
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Basic net income per share (Note 13) |
$ |
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$ |
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Weighted-average shares used in computing diluted net income per share |
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Diluted net income per share (Note 13) |
$ |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 4 |
RH
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
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THREE MONTHS ENDED |
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APRIL 30, |
MAY 1, |
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2022 |
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2021 |
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(in thousands) |
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Net income |
$ |
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$ |
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Net gains (losses) from foreign currency translation |
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( |
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Total comprehensive income |
$ |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 5 |
RH
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(Unaudited)
THREE MONTHS ENDED |
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COMMON STOCK |
TREASURY STOCK |
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ACCUMULATED |
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RETAINED |
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ADDITIONAL |
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OTHER |
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EARNINGS |
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TOTAL |
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PAID-IN |
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COMPREHENSIVE |
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(ACCUMULATED |
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STOCKHOLDERS' |
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SHARES |
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AMOUNT |
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CAPITAL |
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INCOME (LOSS) |
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DEFICIT) |
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SHARES |
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AMOUNT |
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EQUITY |
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(in thousands, except share amounts) |
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Balances—January 29, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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— |
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$ |
— |
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$ |
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Stock-based compensation |
— |
— |
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— |
— |
— |
— |
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Vested and delivered restricted stock units |
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— |
( |
— |
— |
— |
— |
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( |
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Exercise of stock options |
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— |
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— |
— |
— |
— |
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Exercise of call option under bond hedge upon settlement of convertible senior notes |
( |
— |
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— |
— |
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( |
— |
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Settlement of convertible senior notes |
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— |
( |
— |
— |
( |
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— |
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Termination of common stock warrants |
— |
— |
( |
— |
— |
— |
— |
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( |
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Termination of convertible note hedge |
— |
— |
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— |
— |
— |
— |
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Impact of ASU 2020-06 adoption |
— |
— |
( |
— |
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— |
— |
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( |
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Net income |
— |
— |
— |
— |
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— |
— |
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Net losses from foreign currency translation |
— |
— |
— |
( |
— |
— |
— |
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( |
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Balances—April 30, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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— |
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$ |
— |
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$ |
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Balances—January 30, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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— |
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$ |
— |
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$ |
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Stock-based compensation |
— |
— |
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— |
— |
— |
— |
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Vested and delivered restricted stock units |
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— |
( |
— |
— |
— |
— |
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( |
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Exercise of stock options |
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— |
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— |
— |
— |
— |
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Exercise of call option under bond hedge upon settlement of convertible senior notes |
( |
— |
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— |
— |
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( |
— |
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Settlement of convertible senior notes |
|
— |
( |
— |
— |
( |
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( |
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Net income |
— |
— |
— |
— |
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— |
— |
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Net losses from foreign currency translation |
— |
— |
— |
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— |
— |
— |
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Balances—May 1, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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— |
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$ |
— |
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$ |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 6 |
RH
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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THREE MONTHS ENDED |
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APRIL 30, |
MAY 1, |
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2022 |
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2021 |
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(in thousands) |
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CASH FLOWS FROM OPERATING ACTIVITIES |
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Net income |
$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Non-cash operating lease cost |
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Asset impairments |
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— |
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Amortization of debt discount |
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— |
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Stock-based compensation expense |
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Non-cash finance lease interest expense |
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Product recalls |
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Deferred income taxes |
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— |
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Loss on extinguishment of debt |
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Gain on derivative instruments—net |
( |
— |
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Share of equity method investments losses |
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Other non-cash items |
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( |
|||
Cash paid attributable to accretion of debt discount upon settlement of debt |
— |
( |
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Change in assets and liabilities: |
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Accounts receivable |
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( |
( |
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Merchandise inventories |
|
( |
( |
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Prepaid expense and other assets |
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( |
( |
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Landlord assets under construction—net of tenant allowances |
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( |
( |
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Accounts payable and accrued expenses |
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( |
( |
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Deferred revenue and customer deposits |
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Other current liabilities |
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( |
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Current and non-current operating lease liabilities |
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( |
( |
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Other non-current obligations |
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( |
( |
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Net cash provided by operating activities |
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THREE MONTHS ENDED |
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APRIL 30, |
MAY 1, |
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2022 |
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2021 |
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(in thousands) |
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CASH FLOWS FROM INVESTING ACTIVITIES |
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Capital expenditures |
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( |
( |
|||
Equity method investments |
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( |
( |
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Net cash used in investing activities |
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( |
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( |
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CASH FLOWS FROM FINANCING ACTIVITIES |
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Repayments under term loans |
( |
— |
||||
Repayments under promissory and equipment security notes |
|
( |
( |
|||
Repayments of convertible senior notes |
( |
( |
||||
Principal payments under finance leases |
( |
( |
||||
Proceeds from termination of convertible senior note hedges |
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— |
||||
Payments for termination of common stock warrants |
( |
— |
||||
Proceeds from exercise of stock options |
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Tax withholdings related to issuance of stock-based awards |
( |
( |
||||
Net cash used in financing activities |
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( |
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( |
||
Effects of foreign currency exchange rate translation |
|
( |
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Net increase in cash and cash equivalents and restricted cash equivalents |
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Cash and cash equivalents and restricted cash equivalents |
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Beginning of period—cash and cash equivalents |
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Beginning of period—restricted cash equivalents (acquisition related escrow deposits) |
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Beginning of period—cash and cash equivalents |
$ |
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$ |
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End of period—cash and cash equivalents |
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End of period—restricted cash equivalents (acquisition related escrow deposits) |
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End of period—cash and cash equivalents and restricted cash equivalents |
$ |
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$ |
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Non-cash transactions: |
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Property and equipment additions in accounts payable and accrued expenses at period-end |
$ |
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$ |
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Landlord asset additions in accounts payable and accrued expenses at period-end |
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Reclassification of assets from landlord assets under construction to finance lease right-of-use assets |
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— |
||||
Extinguishment of convertible senior notes related to repurchase obligation (Note 9) |
( |
— |
||||
Financing liability and embedded derivative arising from convertible senior notes repurchase (Note 9) |
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— |
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Shares issued on settlement of convertible senior notes |
( |
( |
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Shares received on exercise of call option under bond hedge upon settlement of convertible senior notes |
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The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 8 |
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 Source Books. We offer merchandise assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, and child and teen furnishings.
As of April 30, 2022, we operated a total of
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 April 30, 2022, and the results of operations for the three months ended April 30, 2022, and May 1, 2021. Our current fiscal year, which consists of 52 weeks, ends on January 28, 2023 (“fiscal 2022”).
Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements.
The preparation of our condensed consolidated financial statements in conformity with GAAP requires our senior leadership team to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and such differences could be material to the condensed consolidated financial statements.
We have assessed various accounting estimates and other matters, including those that require consideration of forecasted financial information, in context of the unknown future impacts of the novel coronavirus disease (“COVID-19” or “the pandemic”) using information that is reasonably available to us at this time. The accounting estimates and other matters we have assessed include, but were not limited to, sales return reserve, inventory reserve, allowance for doubtful accounts, goodwill, intangible and other long-lived assets. Our current assessment of these estimates is included in our condensed consolidated financial statements as of and for the three months ended April 30, 2022. As additional information becomes available to us, our future assessment of these estimates, including our expectations at the time regarding the duration, scope and severity of the pandemic, as well as other factors, could materially and adversely impact our condensed consolidated financial statements in future reporting periods.
These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (the “2021 Form 10-K”).
The results of operations for the three months ended April 30, 2022, presented herein are not necessarily indicative of the results to be expected for the full fiscal year. Our business, like the businesses of retailers generally, is subject to uncertainty surrounding the financial impact of the pandemic and other factors as discussed in COVID-19 Pandemic and Macro-Economic Factors below.
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 9 |
COVID-19 Pandemic and Macro-Economic Factors
The COVID-19 pandemic continues to cause challenges in certain aspects of our business operations primarily related to our supply chain, including delays in our receipt of products from vendors, which have affected our ability to convert demand into revenues at normal historic rates. While our performance during the pandemic demonstrates the desirability of our exclusive products, we may see consumer spending patterns shift away from spending on the home and home-related categories as customers return to pre-COVID consumption trends, such as spending on travel and leisure, and other activities.
There are a number of macro-economic factors and uncertainties affecting the overall business climate as well as our business including increased inflation and rising interest rates. These factors may have a number of adverse effects on overall economic conditions and markets in which we operate. A slowdown in the housing market or continued negative trends in stock market prices could have a negative impact on our customers and demand for our products.
Our decisions regarding the sources and uses of capital will continue to reflect and adapt to changes in market conditions and our business including further developments with respect to the pandemic. For more information, refer to the section entitled “Risk Factors” in our 2021 Form 10-K.
NOTE 2—RECENTLY ISSUED ACCOUNTING STANDARDS
New Accounting Standards or Updates Adopted
Convertible Instruments and Contracts in an Entity’s Own Equity
In August 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2020-06—Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”). ASU 2020-06 simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Specifically, ASU 2020-06 removes the separation models for convertible debt with a cash conversion feature or convertible instruments with a beneficial conversion feature. As a result, after adopting ASU 2020-06’s guidance, we no longer separately present in equity an embedded conversion feature of such debt. Instead, we will account for a convertible debt instrument wholly as debt unless (i) a convertible instrument contains features that require bifurcation as a derivative or (ii) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 removes certain conditions for equity classification related to contracts in an entity’s own equity (e.g., warrants) and amends certain guidance related to the computation of earnings per share for convertible instruments and contracts on an entity’s own equity.
We adopted ASU 2020-06 in the first quarter of fiscal 2022 using a modified retrospective transition method. Accordingly, the cumulative effect of the adoption on our opening fiscal 2022 condensed consolidated balance sheets was as follows:
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ASU 2020-06 |
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JANUARY 29, |
ADOPTION |
JANUARY 29, |
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2022 |
ADJUSTMENTS |
2022 |
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(in thousands) |
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Assets |
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Property and equipment—net |
$ |
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$ |
( |
$ |
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Deferred tax assets |
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Liabilities |
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Convertible senior notes due 2023—net |
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Convertible senior notes due 2024—net |
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Equity |
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Additional paid-in capital |
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( |
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Retained earnings |
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PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 10 |
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04—Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). In January 2021, the FASB issued ASU 2021-01—Reference Rate Reform (Topic 848): Scope, (“ASU 2021-01” and, together with ASU 2020-04, the “ASUs”). The ASUs provide optional expedients and exceptions, if certain criteria are met, for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates, such as the Secured Overnight Financing Rate (“SOFR”). These transactions include contract modifications, hedge accounting, and the sale or transfer of debt securities classified as held-to-maturity. The primary contracts for which we currently use LIBOR include our asset based credit facility and certain term loan debt arrangements. The guidance was effective upon issuance and allows entities to adopt the amendments on a prospective basis through December 31, 2022. All new arrangements are using alternative reference rates and we are evaluating the impact of adoption on our existing contracts.
NOTE 3—PREPAID EXPENSE AND OTHER ASSETS
Prepaid expense and other current assets consist of the following:
|
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APRIL 30, |
|
JANUARY 29, |
||
|
2022 |
2022 |
||||
(in thousands) |
||||||
Federal and state tax receivable(1) |
$ |
|
$ |
— |
||
Prepaid expense and other current assets |
|
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||||
Vendor deposits |
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||||
Capitalized catalog costs |
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Tenant allowance receivable |
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Promissory notes receivable, including interest(2) |
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Right of return asset for merchandise |
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Acquisition related escrow deposits |
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||||
Total prepaid expense and other current assets |
$ |
|
$ |
|
(1) | Refer to Note 12—Income Taxes. |
(2) | Represents promissory notes, including principal and accrued interest, due from a related party. Refer to Note 5—Equity Method Investments. |
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 11 |
Other non-current assets consist of the following:
|
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APRIL 30, |
|
JANUARY 29, |
||
|
2022 |
2022 |
||||
(in thousands) |
||||||
Landlord assets under construction—net of tenant allowances |
$ |
|
$ |
|
||
Initial direct costs prior to lease commencement |
|
|
|
|||
Capitalized cloud computing costs—net(1) |
|
|
||||
Other deposits |
|
|
|
|
||
Deferred financing fees |
|
|
|
|
||
Other non-current assets |
|
|
|
|
||
Total other non-current assets |
$ |
|
$ |
|
(1) |
Presented net of accumulated amortization of $ |
NOTE 4—GOODWILL, TRADENAMES, TRADEMARKS AND OTHER INTANGIBLE ASSETS
The following sets forth the goodwill, tradenames, trademarks and other intangible assets activity for the RH Segment and Waterworks (Refer to Note 17—Segment Reporting), for the three months ended April 30, 2022:
|
|
|
|
FOREIGN |
|
|||||||
|
JANUARY 29, |
CURRENCY |
APRIL 30, |
|||||||||
|
2022 |
ADDITIONS |
TRANSLATION |
2022 |
||||||||
(in thousands) |
||||||||||||
RH Segment |
|
|
|
|
|
|
|
|
||||
Goodwill |
$ |
|
$ |
— |
$ |
( |
$ |
|
||||
Tradenames, trademarks and other intangible assets |
|
|
|
|
|
— |
|
|
||||
Waterworks(1) |
|
|
|
|
|
|
||||||
Tradename(2) |
|
|
|
— |
|
— |
|
|
(1) |
Waterworks reporting unit goodwill of $ |
(2) |
Presented net of an impairment charge of $ |
NOTE 5—EQUITY METHOD INVESTMENTS
Equity method investments represent our
As of April 30, 2022 and January 29, 2022, $
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 12 |
During the three months ended April 30, 2022 and January 29, 2022, we recorded our proportionate share of equity method investments losses of $
NOTE 6—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accounts payable and accrued expenses consist of the following:
|
|
APRIL 30, |
|
JANUARY 29, |
||
|
2022 |
2022 |
||||
(in thousands) |
||||||
Accounts payable |
$ |
|
$ |
|
||
Accrued compensation |
|
|
|
|
||
Accrued freight and duty |
|
|
|
|
||
Accrued sales taxes |
|
|
|
|
||
Accrued occupancy |
|
|
|
|
||
Accrued professional fees |
|
|
|
|
||
Accrued catalog costs |
|
|
|
|
||
Other accrued expenses |
|
|
|
|
||
Total accounts payable and accrued expenses |
$ |
|
$ |
|
Other current liabilities consist of the following:
|
|
APRIL 30, |
|
JANUARY 29, |
||
|
2022 |
2022 |
||||
(in thousands) |
||||||
Unredeemed gift card and merchandise credit liability |
$ |
|
$ |
|
||
Allowance for sales returns |
|
|
||||
Current portion of term loan |
|
|
||||
Finance lease liabilities |
|
|
||||
Current portion of equipment promissory notes |
|
|
||||
Federal and state tax payable(1) |
— |
|
||||
Other current liabilities |
|
|
|
|
||
Total other current liabilities |
$ |
|
$ |
|
(1) | Refer to Note 12—Income Taxes. |
Contract Liabilities
We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue and customer deposits as of April 30, 2022 will be recognized within the next six months as the performance obligations are satisfied. Deferred revenue also includes the unrecognized portion of the annual RH Members Program fee. New membership fees are recorded as deferred revenue when collected from customers and recognized as revenue based on expected product revenues over the annual membership period, based on historical trends of sales to members. Membership renewal fees are recorded as deferred revenue when collected from customers and are recognized as revenue on a straight-line basis over the membership period, or
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 13 |
In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards. During the three months ended April 30, 2022 and May 1, 2021, we recognized $
We recognize breakage associated with gift cards proportional to actual gift card redemptions. Breakage of $
We expect that approximately
NOTE 7—OTHER NON-CURRENT OBLIGATIONS
Other non-current obligations consist of the following:
|
|
APRIL 30, |
|
JANUARY 29, |
||
|
2022 |
2022 |
||||
(in thousands) |
||||||
Unrecognized tax benefits |
$ |
|
$ |
|
||
Non-current portion of equipment promissory notes—net |
— |
|
||||
Other non-current obligations |
|
|
|
|
||
Total other non-current obligations |
$ |
|
$ |
|
.
NOTE 8—LEASES
|
THREE MONTHS ENDED |
||||||
APRIL 30, |
|
MAY 1, |
|||||
|
2022 |
|
2021 |
||||
(in thousands) |
|||||||
Operating lease cost(1) |
|
$ |
|
$ |
|
||
Finance lease costs |
|||||||
Amortization of leased assets(1) |
|
|
|||||
Interest on lease liabilities(2) |
|
|
|||||
Variable lease costs(3) |
|
|
|||||
Sublease income(4) |
( |
( |
|||||
Total lease costs—net |
$ |
|
$ |
|
(1) | Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on our accounting policy. Refer to Note 3—Significant Accounting Policies in the 2021 Form 10-K. |
(2) | Included in interest expense—net on the condensed consolidated statements of income. |
(3) |
Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $ |
(4) | Included as an offset to selling, general and administrative expenses on the condensed consolidated statements of income. |
PART I. FINANCIAL INFORMATION |
2022 FIRST QUARTER FORM 10-Q | 14 |
APRIL 30, |
JANUARY 29, |
|||||||
|
2022 |
|
2022 |
|||||
(in thousands) |
||||||||
Balance Sheet Classification |
||||||||
Assets |
||||||||
Operating leases |
$ |
|
$ |
|
||||
Finance leases(1)(2) |
|
|
||||||
Total lease right-of-use assets |
$ |
|
$ |
|
||||
Liabilities |
||||||||
Current(3) |
||||||||
Operating leases |
$ |
|
$ |
|
||||
Finance leases |
|
|
||||||
Total lease liabilities—current |
|
|
||||||
Non-current |