Name: RH (NYSE:RH) | Income Statement
Creator: Stock Analysis on Net

Income Statement

The income statement presents information on the financial results of a company business activities over a period of time. The income statement communicates how much revenue the company generated during a period and what cost it incurred in connection with generating that revenue.

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RH, consolidated income statement

US$ in thousands

12 months ended:	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018
Net revenues	3,590,477)	3,758,820)	2,848,626)	2,647,437)	2,505,653)	2,440,174)
Cost of goods sold	(1,778,492)	(1,903,409)	(1,523,095)	(1,552,426)	(1,504,806)	(1,591,107)
Gross profit	1,811,985)	1,855,411)	1,325,531)	1,095,011)	1,000,847)	849,067)
Selling, general and administrative expenses	(1,089,828)	(928,230)	(858,673)	(732,180)	(711,617)	(717,766)
Income from operations	722,157)	927,181)	466,858)	362,831)	289,230)	131,301)
Interest expense	(151,730)	(66,883)	(70,648)	(88,509)	(75,908)	(63,084)
Interest income	38,520)	1,936)	1,398)	1,332)	834)	514)
Interest expense, net	(113,210)	(64,947)	(69,250)	(87,177)	(75,074)	(62,570)
(Gain) loss on extinguishment of debt	(169,578)	(29,138)	152)	(6,472)	(917)	(4,880)
Goodwill and tradename impairment	—)	—)	(20,459)	—)	(32,086)	(33,700)
Other expense, net	(30)	(2,778)	—)	—)	—)	—)
Other expenses	(282,818)	(96,863)	(89,557)	(93,649)	(108,077)	(101,150)
Income before income taxes and equity method investments	439,339)	830,318)	377,301)	269,182)	181,153)	30,151)
Income tax (expense) benefit	91,358)	(133,558)	(104,598)	(48,807)	(30,514)	(27,971)
Income before equity method investments	530,697)	696,760)	272,703)	220,375)	150,639)	2,180)
Share of equity method investments losses	(2,055)	(8,214)	(888)	—)	—)	—)
Net income	528,642)	688,546)	271,815)	220,375)	150,639)	2,180)

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).

Analysis of the financial performance from February 2018 to January 2023 reveals a period of significant expansion in both top-line revenue and profitability, followed by a slight contraction in the final fiscal year. Net revenues grew steadily from 2.44 billion in 2018 to a peak of 3.76 billion in 2022, before declining to 3.59 billion in 2023. This growth was accompanied by a consistent improvement in gross profit margins, which rose from approximately 34.8% in 2018 to over 50% by 2023, indicating enhanced pricing power or more efficient cost of goods sold management.

Operating Efficiency and Profitability: Income from operations exhibited a strong upward trajectory, increasing from 131.3 million in 2018 to a peak of 927.2 million in 2022. This growth was driven by gross profit expanding at a faster rate than selling, general, and administrative expenses. However, in 2023, operating income decreased to 722.2 million, reflecting a combination of lower net revenues and an increase in SG&A expenses, which reached their highest level of 1.09 billion in the final year analyzed.
Debt and Interest Dynamics: The company's financing costs showed volatility and a significant increase in the final period. Net interest expense remained relatively stable between 62.6 million and 87.2 million from 2018 to 2021, but surged to 113.2 million in 2023. This increase was partly offset by a substantial rise in interest income, which jumped to 38.5 million in 2023. Furthermore, losses on the extinguishment of debt became a significant drag on the bottom line in the latter years, specifically recording a loss of 169.6 million in 2023.
Net Income Trends: Net income transitioned from a marginal 2.2 million in 2018 to a peak of 688.5 million in 2022. The growth was characterized by a rapid acceleration between 2020 and 2022. While net income remained strong at 528.6 million in 2023, it represented a decrease from the previous year. This decline was influenced by lower operating income and the aforementioned losses on debt extinguishment, although it was partially mitigated by a substantial income tax benefit of 91.4 million in 2023, contrasted against consistent tax expenses in previous years.

Overall, the period is marked by a successful scaling of the business model and margin expansion, though the most recent data indicates emerging headwinds in the form of rising operating costs, increased interest burdens, and a softening of revenue growth.

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