Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
RH, profitability ratios
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).
- Gross Profit Margin
- The gross profit margin demonstrated a consistent upward trend over the observed periods, increasing from 34.8% in early 2018 to 50.47% by early 2023. This indicates an improving efficiency in production or service delivery, resulting in higher profitability from core operations before accounting for operating expenses.
- Operating Profit Margin
- Operating profit margin also showed a positive trajectory from 5.38% in 2018 to a peak of 24.67% in early 2022, before declining to 20.11% in 2023. The significant improvement suggests enhanced operational efficiency and cost control measures, although the slight reduction in the final period points to increased operating expenses or lower revenue growth.
- Net Profit Margin
- Net profit margin rose substantially from a negligible 0.09% in 2018 to a high of 18.32% in 2022, followed by a decrease to 14.72% in 2023. The initial growth reflects improved overall profitability including non-operating factors and tax management. The subsequent decline, while moderate, signals potential rises in taxes, interest, or exceptional costs impacting net earnings.
- Return on Equity (ROE)
- Return on equity figures are available starting in 2020, showing an extraordinary spike at 1181.57%, which is likely an outlier or anomaly, as subsequent years report 60.81%, 58.84%, and 67.37%. Ignoring the extreme value, the ROE remains strong and stable above 50%, indicating highly effective use of shareholders’ equity in generating profits during that period.
- Return on Assets (ROA)
- Return on assets increased from 0.13% in 2018 to a peak of 12.43% in 2022, before decreasing to 9.96% in 2023. This trend suggests the company has been progressively more efficient at utilizing its assets to create earnings, although the recent dip may reflect either asset growth outpacing earnings or reduced asset productivity.
Return on Sales
Return on Investment
Gross Profit Margin
RH, gross profit margin calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Gross profit | 1,811,985) | 1,855,411) | 1,325,531) | 1,095,011) | 1,000,847) | 849,067) | |
| Net revenues | 3,590,477) | 3,758,820) | 2,848,626) | 2,647,437) | 2,505,653) | 2,440,174) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 50.47% | 49.36% | 46.53% | 41.36% | 39.94% | 34.80% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 46.98% | 43.81% | 42.03% | 39.57% | — | — | |
| Home Depot Inc. | 33.53% | 33.63% | 33.95% | 34.09% | — | — | |
| Lowe’s Cos. Inc. | 33.23% | 33.30% | 33.01% | 31.80% | — | — | |
| TJX Cos. Inc. | 27.61% | 28.50% | 23.66% | 28.46% | — | — | |
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).
1 2023 Calculation
Gross profit margin = 100 × Gross profit ÷ Net revenues
= 100 × 1,811,985 ÷ 3,590,477 = 50.47%
2 Click competitor name to see calculations.
- Gross Profit
- Gross profit showed an overall upward trend from 2018 to 2022, increasing from approximately $849 million to about $1.86 billion. This reflects a strong growth trajectory in gross earnings over the five-year span. However, in 2023, there was a slight decline in gross profit to around $1.81 billion, indicating a potential deceleration or adjustment in profitability.
- Net Revenues
- Net revenues exhibited consistent growth from 2018 through 2022, rising from approximately $2.44 billion to nearly $3.76 billion. This steady increase suggests expanding sales or service inflows year over year. In 2023, net revenues decreased to about $3.59 billion, mirroring the slight drop seen in gross profit, which may warrant further examination of revenue streams or market conditions during this period.
- Gross Profit Margin
- The gross profit margin experienced continuous improvement throughout the entire period. Starting at 34.8% in 2018, the margin increased each year, reaching 50.47% in 2023. This indicates enhanced efficiency or improved cost management, enabling the company to retain a higher percentage of revenue as profit despite the recent slight declines in absolute gross profit and net revenues.
Operating Profit Margin
RH, operating profit margin calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Income from operations | 722,157) | 927,181) | 466,858) | 362,831) | 289,230) | 131,301) | |
| Net revenues | 3,590,477) | 3,758,820) | 2,848,626) | 2,647,437) | 2,505,653) | 2,440,174) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 20.11% | 24.67% | 16.39% | 13.70% | 11.54% | 5.38% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 6.41% | 2.38% | 5.30% | 5.93% | — | — | |
| Home Depot Inc. | 15.27% | 15.24% | 13.84% | 14.37% | — | — | |
| Lowe’s Cos. Inc. | 10.47% | 12.56% | 10.77% | 8.75% | — | — | |
| TJX Cos. Inc. | 9.73% | 9.79% | 1.81% | 10.59% | — | — | |
| Operating Profit Margin, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 8.63% | 6.44% | 7.38% | 8.11% | — | — | |
| Operating Profit Margin, Industry | |||||||
| Consumer Discretionary | 9.12% | 8.47% | 8.79% | 6.48% | — | — | |
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).
1 2023 Calculation
Operating profit margin = 100 × Income from operations ÷ Net revenues
= 100 × 722,157 ÷ 3,590,477 = 20.11%
2 Click competitor name to see calculations.
- Income from operations
- The income from operations demonstrated a consistent upward trend from 2018 through 2022, increasing nearly sevenfold from approximately 131 million to over 927 million US dollars. However, a decline is observed in 2023, with income from operations decreasing to around 722 million US dollars. This suggests strong growth in operating income over the initial years, followed by a noticeable contraction in the most recent year.
- Net revenues
- Net revenues showed a steady increase from 2018 to 2022, rising from about 2.44 billion to nearly 3.76 billion US dollars. In 2023, net revenues experienced a slight decrease to approximately 3.59 billion US dollars. The pattern indicates sustained revenue growth over five years, offset by a moderate decline in the last period.
- Operating profit margin
- The operating profit margin improved significantly over the period from 2018 to 2022, rising from 5.38% to a peak of 24.67%. This indicates enhanced efficiency and profitability in the company's operations. In 2023, the margin dropped to 20.11%, which, while lower than the previous year’s peak, remains substantially higher than earlier years. This decrease in margin aligns with the reduction in income from operations and net revenues observed in 2023.
Net Profit Margin
RH, net profit margin calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| 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% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Amazon.com Inc. | 5.29% | -0.53% | 7.10% | 5.53% | — | — | |
| Home Depot Inc. | 10.87% | 10.87% | 9.74% | 10.20% | — | — | |
| Lowe’s Cos. Inc. | 6.63% | 8.77% | 6.51% | 5.93% | — | — | |
| TJX Cos. Inc. | 7.00% | 6.76% | 0.28% | 7.84% | — | — | |
| Net Profit Margin, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 6.54% | 3.14% | 7.21% | 6.58% | — | — | |
| Net Profit Margin, Industry | |||||||
| Consumer Discretionary | 7.92% | 5.15% | 9.20% | 5.24% | — | — | |
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).
1 2023 Calculation
Net profit margin = 100 × Net income ÷ Net revenues
= 100 × 528,642 ÷ 3,590,477 = 14.72%
2 Click competitor name to see calculations.
- Net Income
- The net income shows a significant upward trend from 2018 through 2022, starting at 2,180 thousand US dollars and peaking at 688,546 thousand US dollars in 2022. This represents an exceptional increase over the five-year period. However, in 2023, there is a noticeable decline to 528,642 thousand US dollars, which, while still substantially higher than earlier years, indicates a reduction from the prior year's peak.
- Net Revenues
- Net revenues display a steady growth from 2018 to 2022, increasing from approximately 2,440,174 thousand US dollars to 3,758,820 thousand US dollars. This growth trajectory suggests consistent expansion in sales or service income over these years. In 2023, there is a slight decrease to 3,590,477 thousand US dollars, indicating a minor contraction or plateauing following the previous upward trend.
- Net Profit Margin
- The net profit margin experiences substantial improvement over the timeframe. From a marginal 0.09% in 2018, it rises steadily each year until reaching a peak of 18.32% in 2022. This improvement reflects enhanced profitability relative to revenue. In 2023, the margin declines to 14.72%, which, although lower than the peak, remains significantly above earlier years, suggesting sustained strong profitability.
- Overall Financial Trends
- The combined data indicates robust growth in both earnings and revenue between 2018 and 2022, accompanied by improved profitability ratios. The peak fiscal year appears to be 2022 with the highest net income and profit margin recorded. The subsequent year, 2023, shows a noticeable downturn in net income and profit margin alongside a modest revenue decline, which may suggest emerging challenges impacting profitability and sales volume or pricing.
Return on Equity (ROE)
RH, ROE calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| 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% | — | — | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Amazon.com Inc. | 15.07% | -1.86% | 24.13% | 22.84% | — | — | |
| Home Depot Inc. | 1,095.07% | — | 390.00% | — | — | — | |
| Lowe’s Cos. Inc. | — | — | 406.05% | 217.09% | — | — | |
| TJX Cos. Inc. | 54.97% | 54.69% | 1.55% | 55.01% | — | — | |
| ROE, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 29.39% | 17.48% | 35.05% | 40.86% | — | — | |
| ROE, Industry | |||||||
| Consumer Discretionary | 30.61% | 21.65% | 34.37% | 25.29% | — | — | |
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).
1 2023 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity (deficit)
= 100 × 528,642 ÷ 784,661 = 67.37%
2 Click competitor name to see calculations.
- Net Income
- The net income exhibits a pronounced upward trajectory from 2018 through 2022, starting at 2,180 thousand US dollars in 2018 and surging to a peak of 688,546 thousand US dollars in 2022. However, there is a notable decline in 2023, with net income decreasing to 528,642 thousand US dollars. This pattern suggests robust growth during the earlier years, followed by a contraction in profitability in the most recent fiscal period.
- Stockholders’ Equity (Deficit)
- The stockholders’ equity shows significant fluctuations over the examined period. Initially, the company faced deficits in 2018 and 2019, reporting negative equity values of -7,336 and -22,962 thousand US dollars respectively. From 2020 onwards, equity turned positive, reaching 18,651 thousand US dollars, and then increased substantially to 447,026 thousand US dollars in 2021. The growth continued sharply through 2022, with equity peaking at 1,170,277 thousand US dollars. However, this was followed by a reduction in 2023, falling to 784,661 thousand US dollars. These movements indicate a recovery and capitalization growth beginning in 2020, with some retrenchment in the last year assessed.
- Return on Equity (ROE)
- ROE data is partially available, with no values prior to 2020. At that point, ROE was extremely elevated at 1,181.57%, which may partly reflect the low or negative equity base during the preceding years. Subsequently, ROE stabilizes at a lower but still strong range, being 60.81% in 2021, slightly decreasing to 58.84% in 2022, and then rising to 67.37% in 2023. These figures reflect strong profitability relative to equity in the more recent years, despite the decline in net income in 2023.
- Overall Trends
- The financial indicators collectively reveal a period of significant transformation. Beginning with negative equity and low profitability, the entity rapidly improved its financial position starting in 2020, both in terms of profitability and capitalization. Despite some volatility, including a sharp decrease in net income and equity in 2023, the company's returns on equity remained robust. This suggests effective utilization of equity capital during the period under review, notwithstanding the fluctuations in absolute profit levels.
Return on Assets (ROA)
RH, ROA calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| 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% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Amazon.com Inc. | 5.76% | -0.59% | 7.93% | 6.64% | — | — | |
| Home Depot Inc. | 22.38% | 22.86% | 18.23% | 21.94% | — | — | |
| Lowe’s Cos. Inc. | 14.73% | 18.91% | 12.49% | 10.85% | — | — | |
| TJX Cos. Inc. | 12.34% | 11.53% | 0.29% | 13.55% | — | — | |
| ROA, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 8.50% | 4.19% | 9.17% | 9.20% | — | — | |
| ROA, Industry | |||||||
| Consumer Discretionary | 7.66% | 4.94% | 8.07% | 4.42% | — | — | |
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).
1 2023 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × 528,642 ÷ 5,309,289 = 9.96%
2 Click competitor name to see calculations.
- Net Income
- Net income showed a substantial increase from 2018 to 2022, rising from 2.18 million USD to a peak of 688.55 million USD in 2022. However, there was a notable decline in 2023 to 528.64 million USD, indicating a setback after consecutive years of growth.
- Total Assets
- Total assets exhibited a consistent upward trajectory from 1.73 billion USD in 2018 to a maximum of approximately 5.54 billion USD in 2022. In 2023, assets slightly decreased to 5.31 billion USD, suggesting cautious asset management or divestitures following peak expansion.
- Return on Assets (ROA)
- ROA increased markedly from a very low 0.13% in 2018 to a peak of 12.43% in 2022, reflecting improved efficiency in asset utilization over the period. The decline to 9.96% in 2023 signals a reduction in profitability relative to assets, though it remains significantly higher than earlier years.
- Overall Trends
- The data reveals a period of strong growth in net income, assets, and efficiency through 2022, followed by a correction or normalization in 2023 across these financial metrics. The peak performance in 2022 may indicate a high point in operational or market conditions, with the subsequent decline suggesting emerging challenges or strategic realignment.