Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

RH, balance sheet: goodwill and intangible assets

US$ in thousands

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Goodwill	141,048)	141,100)	141,100)	124,367)	124,379)	141,893)
Tradenames, trademarks and other intangible assets	74,633)	73,161)	71,663)	86,022)	86,022)	100,702)
Goodwill, tradenames, trademarks and other intangible assets	215,681)	214,261)	212,763)	210,389)	210,401)	242,595)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.
Tradenames, trademarks and other intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	RH tradenames, trademarks and other intangible assets increased from 2021 to 2022 and from 2022 to 2023.
Goodwill, tradenames, trademarks and other intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	RH goodwill, tradenames, trademarks and other intangible assets increased from 2021 to 2022 and from 2022 to 2023.

RH, adjustments to financial statements

US$ in thousands

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Adjustment to Total Assets
Total assets (as reported)	5,309,289)	5,540,470)	2,898,313)	2,445,694)	1,806,034)	1,732,866)
Less: Goodwill	141,048)	141,100)	141,100)	124,367)	124,379)	141,893)
Total assets (adjusted)	5,168,241)	5,399,370)	2,757,213)	2,321,327)	1,681,655)	1,590,973)
Adjustment to Stockholders’ Equity (deficit)
Stockholders’ equity (deficit) (as reported)	784,661)	1,170,277)	447,026)	18,651)	(22,962)	(7,336)
Less: Goodwill	141,048)	141,100)	141,100)	124,367)	124,379)	141,893)
Stockholders’ equity (deficit) (adjusted)	643,613)	1,029,177)	305,926)	(105,716)	(147,341)	(149,229)
Adjustment to Net Income
Net income (as reported)	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)
Add: Goodwill impairment	—)	—)	—)	—)	17,445)	33,700)
Net income (adjusted)	528,642)	688,546)	271,815)	220,375)	168,084)	35,880)

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

RH, Financial Data: Reported vs. Adjusted

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RH, adjusted financial ratios

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Net Profit Margin
Reported net profit margin	14.72%	18.32%	9.54%	8.32%	6.01%	0.09%
Adjusted net profit margin	14.72%	18.32%	9.54%	8.32%	6.71%	1.47%
Total Asset Turnover
Reported total asset turnover	0.68	0.68	0.98	1.08	1.39	1.41
Adjusted total asset turnover	0.69	0.70	1.03	1.14	1.49	1.53
Financial Leverage
Reported financial leverage	6.77	4.73	6.48	131.13	—	—
Adjusted financial leverage	8.03	5.25	9.01	—	—	—
Return on Equity (ROE)
Reported ROE	67.37%	58.84%	60.81%	1,181.57%	—	—
Adjusted ROE	82.14%	66.90%	88.85%	—	—	—
Return on Assets (ROA)
Reported ROA	9.96%	12.43%	9.38%	9.01%	8.34%	0.13%
Adjusted ROA	10.23%	12.75%	9.86%	9.49%	10.00%	2.26%

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	RH adjusted net profit margin ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	RH adjusted total asset turnover ratio deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	RH adjusted financial leverage ratio decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	RH adjusted ROE deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	RH adjusted ROA improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

RH, Financial Ratios: Reported vs. Adjusted

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	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)
Net revenues	3,590,477)	3,758,820)	2,848,626)	2,647,437)	2,505,653)	2,440,174)
Profitability Ratio
Net profit margin¹	14.72%	18.32%	9.54%	8.32%	6.01%	0.09%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted net income	528,642)	688,546)	271,815)	220,375)	168,084)	35,880)
Net revenues	3,590,477)	3,758,820)	2,848,626)	2,647,437)	2,505,653)	2,440,174)
Profitability Ratio
Adjusted net profit margin²	14.72%	18.32%	9.54%	8.32%	6.71%	1.47%

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

2023 Calculations

¹ Net profit margin = 100 × Net income ÷ Net revenues
= 100 × 528,642 ÷ 3,590,477 = 14.72%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Net revenues
= 100 × 528,642 ÷ 3,590,477 = 14.72%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	RH adjusted net profit margin ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net revenues	3,590,477)	3,758,820)	2,848,626)	2,647,437)	2,505,653)	2,440,174)
Total assets	5,309,289)	5,540,470)	2,898,313)	2,445,694)	1,806,034)	1,732,866)
Activity Ratio
Total asset turnover¹	0.68	0.68	0.98	1.08	1.39	1.41
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net revenues	3,590,477)	3,758,820)	2,848,626)	2,647,437)	2,505,653)	2,440,174)
Adjusted total assets	5,168,241)	5,399,370)	2,757,213)	2,321,327)	1,681,655)	1,590,973)
Activity Ratio
Adjusted total asset turnover²	0.69	0.70	1.03	1.14	1.49	1.53

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

2023 Calculations

¹ Total asset turnover = Net revenues ÷ Total assets
= 3,590,477 ÷ 5,309,289 = 0.68

² Adjusted total asset turnover = Net revenues ÷ Adjusted total assets
= 3,590,477 ÷ 5,168,241 = 0.69

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	RH adjusted total asset turnover ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets	5,309,289)	5,540,470)	2,898,313)	2,445,694)	1,806,034)	1,732,866)
Stockholders’ equity (deficit)	784,661)	1,170,277)	447,026)	18,651)	(22,962)	(7,336)
Solvency Ratio
Financial leverage¹	6.77	4.73	6.48	131.13	—	—
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets	5,168,241)	5,399,370)	2,757,213)	2,321,327)	1,681,655)	1,590,973)
Adjusted stockholders’ equity (deficit)	643,613)	1,029,177)	305,926)	(105,716)	(147,341)	(149,229)
Solvency Ratio
Adjusted financial leverage²	8.03	5.25	9.01	—	—	—

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity (deficit)
= 5,309,289 ÷ 784,661 = 6.77

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity (deficit)
= 5,168,241 ÷ 643,613 = 8.03

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	RH adjusted financial leverage ratio decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)
Stockholders’ equity (deficit)	784,661)	1,170,277)	447,026)	18,651)	(22,962)	(7,336)
Profitability Ratio
ROE¹	67.37%	58.84%	60.81%	1,181.57%	—	—
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted net income	528,642)	688,546)	271,815)	220,375)	168,084)	35,880)
Adjusted stockholders’ equity (deficit)	643,613)	1,029,177)	305,926)	(105,716)	(147,341)	(149,229)
Profitability Ratio
Adjusted ROE²	82.14%	66.90%	88.85%	—	—	—

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

2023 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity (deficit)
= 100 × 528,642 ÷ 784,661 = 67.37%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity (deficit)
= 100 × 528,642 ÷ 643,613 = 82.14%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	RH adjusted ROE deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)
Total assets	5,309,289)	5,540,470)	2,898,313)	2,445,694)	1,806,034)	1,732,866)
Profitability Ratio
ROA¹	9.96%	12.43%	9.38%	9.01%	8.34%	0.13%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted net income	528,642)	688,546)	271,815)	220,375)	168,084)	35,880)
Adjusted total assets	5,168,241)	5,399,370)	2,757,213)	2,321,327)	1,681,655)	1,590,973)
Profitability Ratio
Adjusted ROA²	10.23%	12.75%	9.86%	9.49%	10.00%	2.26%

Based on: 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03).

2023 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 528,642 ÷ 5,309,289 = 9.96%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 528,642 ÷ 5,168,241 = 10.23%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	RH adjusted ROA improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

RH (NYSE:RH)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

RH, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

RH, Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)