RH Segments Disclosure
NOTE 19—SEGMENT REPORTING
We define reportable and operating segments on the same basis that we use to evaluate our performance internally by the chief operating decision maker (“CODM”), which we have determined is our Chief Executive Officer. We have three operating segments: RH Segment, Waterworks and Real Estate. The RH Segment and Waterworks operating segments (the “retail operating segments”) include all sales channels accessed by our customers, including sales through retail locations and outlets, including hospitality, websites, Sourcebooks, and the Trade and Contract channels. The Real Estate segment represents operations associated with certain of our equity method investments and consolidated VIEs that have operations not directly related to the activities of the retail operating segments.
The retail operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared senior leadership team and customer base, we have determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors.
Segment Information
The CODM uses segment adjusted operating income to evaluate segment profitability for the retail operating segments and to allocate resources and analyze variances of actual performance to our forecasts when making decisions. Operating income is defined as net income before interest expense—net, other (income) expense—net, income tax expense and our share of equity method investments net (income) loss. Segment adjusted operating income excludes (i) certain asset impairments, (ii) product recall, (iii) severance costs associated with reorganizations, (iv) non-cash compensation amortization related to an option grant made to Mr. Friedman in October 2020, (v) contract termination settlement—net and (vi) legal settlements—net. These items are excluded from segment adjusted operating income in order to provide better transparency of segment operating results. Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that the CODM and our senior leadership team review.
Segment net revenues, which represent our disaggregated net revenues in accordance with ASC 606, significant segment expenses and segment adjusted operating income, by reportable segment, were as follows:
| YEAR ENDED | ||||||||||||||||||||||||||
| JANUARY 31, | FEBRUARY 1, | FEBRUARY 3, | ||||||||||||||||||||||||
| | 2026 | | 2025 | | 2024 | |||||||||||||||||||||
RH SEGMENT | WATERWORKS | TOTAL(1) | RH SEGMENT | WATERWORKS | TOTAL(1) | RH SEGMENT | WATERWORKS | TOTAL(1) | |||||||||||||||||||
(in thousands) | |||||||||||||||||||||||||||
Net revenues | $ | 3,241,389 | $ | 198,147 | $ | 3,439,536 | $ | 2,987,818 | $ | 192,935 | $ | 3,180,753 | $ | 2,835,617 | $ | 193,509 | $ | 3,029,126 | |||||||||
Cost of goods sold | 1,830,472 | 93,307 | 1,923,779 | 1,674,644 | 91,177 | 1,765,821 | 1,549,510 | 90,597 | 1,640,107 | ||||||||||||||||||
Advertising expense | 102,652 | 3,012 | 105,664 | 119,238 | 3,243 | 122,481 | 103,690 | 3,210 | 106,900 | ||||||||||||||||||
Other segment expenses(2) | 938,714 | 79,892 | 1,018,606 | 857,742 | 76,471 | 934,213 | 812,959 | 75,373 | 888,332 | ||||||||||||||||||
Segment adjusted operating income(1) | $ | 369,551 | $ | 21,936 | $ | 391,487 | $ | 336,194 | $ | 22,044 | $ | 358,238 | $ | 369,458 | $ | 24,329 | $ | 393,787 | |||||||||
Asset impairments |
| 3,597 |
| 36,071 |
| 3,531 | |||||||||||||||||||||
Product recall |
| 1,913 |
| — |
| (1,576) | |||||||||||||||||||||
1,233 | 4,423 | 7,621 | |||||||||||||||||||||||||
Non-cash compensation | 851 | 4,532 | 9,640 | ||||||||||||||||||||||||
Contract termination settlement—net | (3,375) | — | — | ||||||||||||||||||||||||
Legal settlements—net | — | (9,375) | 8,500 | ||||||||||||||||||||||||
Operating income |
| 387,268 |
| 322,587 |
| 366,071 | |||||||||||||||||||||
Interest expense—net |
| 225,378 |
| 230,601 |
| 198,296 | |||||||||||||||||||||
Other (income) expense—net | (5,048) | 3,395 | 1,078 | ||||||||||||||||||||||||
Income before taxes and equity method investments | $ | 166,938 | $ | 88,591 | $ | 166,697 | |||||||||||||||||||||
| (1) | All intercompany transactions are not material and have been eliminated. |
| (2) | Other segment expenses primarily include compensation and occupancy costs classified as selling, general and administrative expenses, and other general and administrative expenses. |
The Real Estate segment share of equity method investments operations, which is the measure of segment profitability reviewed by the CODM to evaluate performance internally for the Real Estate segment, was income of $4.3 million in fiscal 2025 and loss of $11 million in both fiscal 2024 and fiscal 2023. The share of (income) loss from equity method investments for the Waterworks segment was immaterial in all fiscal periods presented.
Depreciation and amortization for our segments was as follows:
| YEAR ENDED | ||||||||
| JANUARY 31, | FEBRUARY 1, | FEBRUARY 3, | ||||||
| | 2026 | | 2025 | | 2024 | |||
(in thousands) | |||||||||
RH Segment | $ | 142,644 | $ | 124,156 | $ | 113,695 | |||
Waterworks | 5,856 | 6,035 | 5,294 | ||||||
Real Estate(1) | — | — | — | ||||||
Total depreciation and amortization |
| $ | 148,500 |
| $ | 130,191 |
| $ | 118,989 |
| (1) | There is no depreciation and amortization for the Real Estate segment since all assets represent construction in progress. |
Balance sheet information for our segments consisted of the following:
| TRADENAMES, | |||||||||||
TRADEMARKS AND | ||||||||||||
OTHER INTANGIBLE | EQUITY METHOD | TOTAL | ||||||||||
| GOODWILL(1) | ASSETS(2) | INVESTMENTS | ASSETS | ||||||||
(in thousands) | ||||||||||||
February 1, 2025 |
| |||||||||||
RH Segment | $ | 140,943 | $ | 59,118 | $ | — | $ | 4,228,829 | ||||
Waterworks | — | 17,000 | 3,276 | 165,442 | ||||||||
Real Estate |
| — |
| — |
| 123,633 |
| 160,418 | ||||
Total | $ | 140,943 | $ | 76,118 | $ | 126,909 | $ | 4,554,689 | ||||
January 31, 2026 | ||||||||||||
RH Segment | $ | 144,239 | $ | 62,777 | $ | — | $ | 4,499,349 | ||||
Waterworks | — | 17,000 | 4,363 | 184,203 | ||||||||
Real Estate | — | — | 115,391 | 152,158 | ||||||||
Total | $ | 144,239 | $ | 79,777 | $ | 119,754 | $ | 4,835,710 | ||||
| (1) | The Waterworks reporting unit goodwill of $51 million recognized upon acquisition in fiscal 2016 was fully impaired as of fiscal 2018. |
| (2) | The Waterworks reporting unit tradename is presented net of an impairment charge of $35 million in prior fiscal years. |
We are domiciled in the United States and primarily operate our retail locations and outlets in the United States. As of January 31, 2026, we operated the following number of retail locations and outlets outside the United States:
COUNT | ||
Canada | 6 | |
United Kingdom | 3 | |
Germany | 2 | |
Belgium | 1 | |
France | 1 | |
Spain | 1 | |
Total(1) | 14 |
| (1) | Geographic revenues generated outside of the United States did not exceed 10% of total consolidated net revenues in any fiscal period presented. |
Long-lived assets by geographic location were as follows:
| JANUARY 31, | FEBRUARY 1, | |||||
2026 | | 2025 | |||||
(in thousands) | |||||||
North America | $ | 2,700,339 | $ | 2,514,275 | |||
All other countries |
| 619,424 |
| 365,678 | |||
Total long-lived assets(1) | $ | 3,319,763 | $ | 2,879,953 | |||
| (1) | As of January 31, 2026 and February 1, 2025, includes $128 million and $148 million, respectively, of deferred tax assets, substantially all of which are related to North America. |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Apr 1, 2026 | Showing above |
| 2025 | Apr 2, 2025 | |
| 2024 | Mar 28, 2024 | |
| 2023 | Mar 29, 2023 | |
| 2022 | Mar 30, 2022 | |
| 2021 | Mar 30, 2021 | |
| 2020 | Mar 30, 2020 | |
| 2019 | Mar 29, 2019 | |
| 2018 | Mar 29, 2018 | |
| 2017 | Mar 29, 2017 | |
| 2016 | Mar 30, 2016 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.