Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

RH, income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Federal	(6,773)	111,975)	85,708)	45,985)	24,012)	18,593)
State	1,013)	28,141)	23,684)	10,806)	6,275)	2,761)
Foreign	7,012)	363)	126)	403)	1,270)	933)
Current tax expense	1,252)	140,479)	109,518)	57,194)	31,557)	22,287)
Federal	(78,032)	(3,841)	(2,251)	(7,173)	(465)	6,042)
State	(18,639)	(2,885)	(2,536)	(1,477)	(731)	(355)
Foreign	4,061)	(195)	(133)	263)	153)	(3)
Deferred tax expense (benefit)	(92,610)	(6,921)	(4,920)	(8,387)	(1,043)	5,684)
Income tax expense (benefit)	(91,358)	133,558)	104,598)	48,807)	30,514)	27,971)

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
Current tax expense	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	RH current tax expense increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Deferred tax expense (benefit)	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	RH deferred tax expense (benefit) decreased from 2021 to 2022 and from 2022 to 2023.
Income tax expense (benefit)	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	RH income tax expense (benefit) increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

RH, effective income tax rate (EITR) reconciliation

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%	33.70%
State income taxes, net of federal tax impact	-2.80%	2.40%	4.20%	2.50%	2.10%	4.80%
Stock compensation, excess benefits	-50.00%	-8.00%	-4.90%	-6.60%	-8.80%	-20.90%
Tax impact of convertible senior notes repurchase	9.40%	0.00%	0.00%	0.00%	0.00%	0.00%
Non-deductible stock-based compensation	0.90%	0.60%	6.50%	0.00%	0.00%	26.70%
Goodwill impairment	0.00%	0.00%	0.00%	0.00%	1.60%	17.90%
Federal statutory tax rate change	0.00%	0.00%	0.00%	0.00%	0.00%	20.10%
Foreign income inclusion, transition tax	0.00%	0.00%	0.00%	0.00%	0.00%	3.30%
Net adjustments to tax accruals and other	0.00%	0.00%	0.00%	0.00%	0.00%	1.40%
Valuation allowance	0.50%	0.00%	0.10%	0.00%	0.30%	1.10%
Donation of appreciated property	0.00%	0.00%	0.00%	0.00%	0.00%	-0.20%
Foreign income	0.00%	0.00%	0.00%	0.00%	0.00%	-0.90%
Tax rate adjustments and other	0.10%	0.20%	0.30%	0.20%	0.10%	-0.60%
Other permanent items	0.00%	0.00%	0.60%	1.00%	0.50%	6.40%
Effective tax rate	-20.90%	16.20%	27.80%	18.10%	16.80%	92.80%

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
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	RH effective tax rate decreased from 2021 to 2022 and from 2022 to 2023.

RH, components of deferred tax assets and liabilities

US$ in thousands

	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Lease liabilities	339,911)	317,971)	275,517)	249,243)	—)	—)
Net operating loss carryforwards	120,586)	2,884)	1,988)	1,763)	1,654)	1,584)
Accrued expenses	30,108)	19,572)	21,308)	21,362)	16,657)	10,488)
Interest expense carryforwards	28,584)	—)	—)	—)	—)	—)
Stock-based compensation	14,974)	26,205)	24,922)	22,400)	22,721)	25,047)
Merchandise inventories	13,346)	10,318)	9,097)	8,028)	14,735)	16,132)
Deferred revenue	3,242)	1,739)	635)	2,235)	—)	3,313)
Deferred lease credits	—)	4,854)	4,917)	6,395)	20,900)	18,355)
Convertible senior notes	—)	779)	914)	717)	—)	—)
Other	4,483)	1,152)	2,269)	1,846)	2,618)	3,105)
Non-current deferred tax assets	555,234)	385,474)	341,567)	313,989)	79,285)	78,024)
Valuation allowance	(4,202)	(1,959)	(2,049)	(1,007)	(1,618)	(1,190)
Non-current deferred tax assets, net	551,032)	383,515)	339,518)	312,982)	77,667)	76,834)
Property and equipment	(212,424)	(154,821)	(147,143)	(137,448)	(27,583)	(21,869)
Lease right-of-use assets	(142,199)	(146,368)	(122,306)	(110,075)	—)	—)
Prepaid expense and other	(15,894)	(11,077)	(8,010)	(4,882)	(4,209)	(12,379)
Tradename, trademarks and intangibles	(11,452)	(12,603)	(10,349)	(13,026)	(12,386)	(14,991)
State benefit	(8,339)	(1,803)	(1,786)	(2,546)	(2,250)	(2,394)
Convertible senior notes	—)	—)	—)	—)	(1,054)	(1,890)
Deferred revenue	—)	—)	—)	—)	(152)	—)
Non-current deferred tax liabilities	(390,308)	(326,672)	(289,594)	(267,977)	(47,634)	(53,523)
Non-current deferred tax assets (liabilities), net	160,724)	56,843)	49,924)	45,005)	30,033)	23,311)

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
Non-current deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	RH non-current deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Non-current deferred tax assets, net	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	RH non-current deferred tax assets, net increased from 2021 to 2022 and from 2022 to 2023.
Non-current deferred tax assets (liabilities), net	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	RH non-current deferred tax assets (liabilities), net increased from 2021 to 2022 and from 2022 to 2023.

RH, deferred tax assets and liabilities, classification

US$ in thousands

		Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
	Non-current deferred tax assets, net	167,039)	56,843)	49,924)	45,005)	30,033)	23,311)
	Non-current deferred tax liabilities	6,315)	—)	—)	—)	—)	—)

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
Non-current deferred tax assets, net	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	RH non-current deferred tax assets, net increased from 2021 to 2022 and from 2022 to 2023.
Non-current deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.

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: Noncurrent deferred tax assets, net	167,039)	56,843)	49,924)	45,005)	30,033)	23,311)
Total assets (adjusted)	5,142,250)	5,483,627)	2,848,389)	2,400,689)	1,776,001)	1,709,555)
Adjustment to Total Liabilities
Total liabilities (as reported)	4,524,628)	4,370,193)	2,451,287)	2,427,043)	1,828,996)	1,740,202)
Less: Noncurrent deferred tax liabilities, net	6,315)	—)	—)	—)	—)	—)
Total liabilities (adjusted)	4,518,313)	4,370,193)	2,451,287)	2,427,043)	1,828,996)	1,740,202)
Adjustment to Stockholders’ Equity (deficit)
Stockholders’ equity (deficit) (as reported)	784,661)	1,170,277)	447,026)	18,651)	(22,962)	(7,336)
Less: Net deferred tax assets (liabilities)	160,724)	56,843)	49,924)	45,005)	30,033)	23,311)
Stockholders’ equity (deficit) (adjusted)	623,937)	1,113,434)	397,102)	(26,354)	(52,995)	(30,647)
Adjustment to Net Income
Net income (as reported)	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)
Add: Deferred income tax expense (benefit)	(92,610)	(6,921)	(4,920)	(8,387)	(1,043)	5,684)
Net income (adjusted)	436,032)	681,625)	266,895)	211,988)	149,596)	7,864)

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	12.14%	18.13%	9.37%	8.01%	5.97%	0.32%
Total Asset Turnover
Reported total asset turnover	0.68	0.68	0.98	1.08	1.39	1.41
Adjusted total asset turnover	0.70	0.69	1.00	1.10	1.41	1.43
Financial Leverage
Reported financial leverage	6.77	4.73	6.48	131.13	—	—
Adjusted financial leverage	8.24	4.92	7.17	—	—	—
Return on Equity (ROE)
Reported ROE	67.37%	58.84%	60.81%	1,181.57%	—	—
Adjusted ROE	69.88%	61.22%	67.21%	—	—	—
Return on Assets (ROA)
Reported ROA	9.96%	12.43%	9.38%	9.01%	8.34%	0.13%
Adjusted ROA	8.48%	12.43%	9.37%	8.83%	8.42%	0.46%

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 total revenue.	RH adjusted net profit margin ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.
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 but then slightly improved 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 exceeding 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 exceeding 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 deteriorated significantly from 2022 to 2023.

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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	436,032)	681,625)	266,895)	211,988)	149,596)	7,864)
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	12.14%	18.13%	9.37%	8.01%	5.97%	0.32%

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 × 436,032 ÷ 3,590,477 = 12.14%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	RH adjusted net profit margin ratio improved from 2021 to 2022 but then slightly deteriorated 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 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 Deferred Taxes
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	5,142,250)	5,483,627)	2,848,389)	2,400,689)	1,776,001)	1,709,555)
Activity Ratio
Adjusted total asset turnover²	0.70	0.69	1.00	1.10	1.41	1.43

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 ÷ 5,142,250 = 0.70

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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 but then slightly improved 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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	5,142,250)	5,483,627)	2,848,389)	2,400,689)	1,776,001)	1,709,555)
Adjusted stockholders’ equity (deficit)	623,937)	1,113,434)	397,102)	(26,354)	(52,995)	(30,647)
Solvency Ratio
Adjusted financial leverage²	8.24	4.92	7.17	—	—	—

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)
= 5,142,250 ÷ 623,937 = 8.24

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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 exceeding 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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	436,032)	681,625)	266,895)	211,988)	149,596)	7,864)
Adjusted stockholders’ equity (deficit)	623,937)	1,113,434)	397,102)	(26,354)	(52,995)	(30,647)
Profitability Ratio
Adjusted ROE²	69.88%	61.22%	67.21%	—	—	—

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 × 436,032 ÷ 623,937 = 69.88%

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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 exceeding 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 Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	436,032)	681,625)	266,895)	211,988)	149,596)	7,864)
Adjusted total assets	5,142,250)	5,483,627)	2,848,389)	2,400,689)	1,776,001)	1,709,555)
Profitability Ratio
Adjusted ROA²	8.48%	12.43%	9.37%	8.83%	8.42%	0.46%

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 × 436,032 ÷ 5,142,250 = 8.48%

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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 deteriorated significantly from 2022 to 2023.

RH (NYSE:RH)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

RH, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (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)