Analysis of Solvency Ratios
Solvency ratios also known as long-term debt ratios measure a company ability to meet long-term obligations.
Solvency Ratios (Summary)
Debt Ratios
Coverage Ratios
RH, solvency 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).
The solvency profile exhibits significant volatility, particularly regarding leverage ratios and debt service capacity over the analyzed six-year period. There is a notable pattern of extreme fluctuation centered around 2020, followed by a period of relative stability and a subsequent increase in leverage accompanied by a decrease in coverage ratios in the most recent fiscal year.
- Leverage and Equity Ratios
- Debt to equity and financial leverage ratios reached anomalous peaks in February 2020, with debt to equity recorded at 71.17 and financial leverage at 131.13. Following a sharp correction in 2021 and 2022, these metrics rose again by January 28, 2023, with debt to equity increasing to 4.03 and financial leverage climbing to 6.77. When incorporating operating lease liabilities, the debt to equity ratio reached 4.78 in the final period, indicating a growing reliance on borrowed funds relative to shareholder equity.
- Asset-Based Solvency
- A general upward trend is observed in debt to assets, which grew from 0.50 in 2018 to 0.60 by 2023. When including operating lease liabilities, the debt to assets ratio increased from 0.50 to 0.71 over the same period, suggesting that a larger proportion of the asset base is financed through liabilities. Debt to capital ratios remained relatively stable between 0.71 and 1.03, though a slight increase to 0.80 was noted in the final year.
- Debt Service Coverage
- Interest coverage and fixed charge coverage demonstrated a strong positive trend from 2018 through 2022. Interest coverage peaked at 13.29 in January 2022, while fixed charge coverage reached 5.93. However, both metrics experienced a significant decline in 2023, with interest coverage dropping to 3.88 and fixed charge coverage falling to 2.73, indicating a reduction in the margin available to meet fixed financial obligations.
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Debt to Equity
RH, debt to equity 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) | |||||||
| Convertible senior notes due 2024, net | —) | 3,600) | —) | —) | —) | —) | |
| Convertible senior notes due 2023, net | 1,696) | 9,389) | 2,354) | —) | —) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | 290,532) | —) | —) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | 343,789) | —) | |
| Current portion of term loans | 25,000) | 20,000) | —) | —) | —) | —) | |
| Current finance lease liabilities | 17,007) | 15,511) | 14,671) | 9,188) | 1,074) | 471) | |
| Current portion of equipment promissory notes | 1,160) | 13,625) | 22,747) | 22,009) | 892) | 6,033) | |
| Asset based credit facility | —) | —) | —) | —) | 57,500) | 199,970) | |
| Term loan B, net | 1,936,529) | 1,953,203) | —) | —) | —) | —) | |
| Term loan B-2, net | 469,245) | —) | —) | —) | —) | —) | |
| Term loan, net | —) | —) | —) | —) | —) | 79,499) | |
| Real estate loans | 17,909) | —) | —) | —) | —) | —) | |
| Convertible senior notes due 2024, net | 41,724) | 184,461) | 281,454) | 264,982) | —) | —) | |
| Convertible senior notes due 2023, net | —) | 59,002) | 282,956) | 266,658) | 249,151) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | —) | 271,157) | 252,994) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | —) | 327,731) | |
| Non-current finance lease liabilities | 653,050) | 560,550) | 485,481) | 442,988) | 7,720) | 7,509) | |
| Non-current portion of equipment promissory notes, net | —) | 1,129) | 14,614) | 31,053) | —) | —) | |
| Total debt | 3,163,320) | 2,820,470) | 1,104,277) | 1,327,410) | 931,283) | 874,207) | |
| Stockholders’ equity (deficit) | 784,661) | 1,170,277) | 447,026) | 18,651) | (22,962) | (7,336) | |
| Solvency Ratio | |||||||
| Debt to equity1 | 4.03 | 2.41 | 2.47 | 71.17 | — | — | |
| Benchmarks | |||||||
| Debt to Equity, Competitors2 | |||||||
| Amazon.com Inc. | 0.39 | 0.59 | 0.54 | — | — | — | |
| Home Depot Inc. | 27.65 | — | 11.29 | — | — | — | |
| Lowe’s Cos. Inc. | — | — | 15.16 | — | — | — | |
| TJX Cos. Inc. | 0.53 | 0.56 | 1.04 | — | — | — | |
| Debt to Equity, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.82 | 1.06 | 0.93 | — | — | — | |
| Debt to Equity, Industry | |||||||
| Consumer Discretionary | 1.34 | 1.51 | 1.50 | — | — | — | |
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
Debt to equity = Total debt ÷ Stockholders’ equity (deficit)
= 3,163,320 ÷ 784,661 = 4.03
2 Click competitor name to see calculations.
The solvency profile demonstrates a substantial expansion of total debt and a volatile evolution of stockholders' equity over the analyzed six-year period. Total debt increased from 874,207 thousand US dollars in February 2018 to 3,163,320 thousand US dollars by January 2023, representing a significant accumulation of liabilities. A notable acceleration in borrowing occurred between January 2021 and January 2022, during which total debt more than doubled from approximately 1.1 billion to 2.8 billion US dollars.
- Equity Position and Capital Structure
- The company transitioned from a deficit position in 2018 and 2019, where stockholders' equity reached a low of -22,962 thousand US dollars, to a positive equity position starting in February 2020. Equity growth peaked in January 2022 at 1,170,277 thousand US dollars before declining to 784,661 thousand US dollars in January 2023.
- Debt to Equity Ratio Volatility
- The debt to equity ratio shows extreme fluctuations corresponding to the shift in equity. In February 2020, the ratio stood at 71.17, a result of total debt being measured against a very small positive equity base. This figure normalized significantly by January 2021 and January 2022, stabilizing between 2.41 and 2.47 as equity increased.
- Recent Solvency Deterioration
- A sharp increase in the debt to equity ratio is observed in January 2023, rising to 4.03. This deterioration is the result of two simultaneous movements: a continued increase in total debt and a contraction in stockholders' equity, indicating a higher reliance on leveraged financing relative to shareholder investment.
Overall, the trend indicates an aggressive increase in leverage. While the company successfully moved away from a deficit equity position in the early part of the period, the most recent data shows a weakening solvency ratio, reflecting a higher risk profile due to the expanded debt load and reduced equity cushion.
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Debt to Equity (including Operating Lease Liability)
RH, debt to equity (including operating lease liability) 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) | |||||||
| Convertible senior notes due 2024, net | —) | 3,600) | —) | —) | —) | —) | |
| Convertible senior notes due 2023, net | 1,696) | 9,389) | 2,354) | —) | —) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | 290,532) | —) | —) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | 343,789) | —) | |
| Current portion of term loans | 25,000) | 20,000) | —) | —) | —) | —) | |
| Current finance lease liabilities | 17,007) | 15,511) | 14,671) | 9,188) | 1,074) | 471) | |
| Current portion of equipment promissory notes | 1,160) | 13,625) | 22,747) | 22,009) | 892) | 6,033) | |
| Asset based credit facility | —) | —) | —) | —) | 57,500) | 199,970) | |
| Term loan B, net | 1,936,529) | 1,953,203) | —) | —) | —) | —) | |
| Term loan B-2, net | 469,245) | —) | —) | —) | —) | —) | |
| Term loan, net | —) | —) | —) | —) | —) | 79,499) | |
| Real estate loans | 17,909) | —) | —) | —) | —) | —) | |
| Convertible senior notes due 2024, net | 41,724) | 184,461) | 281,454) | 264,982) | —) | —) | |
| Convertible senior notes due 2023, net | —) | 59,002) | 282,956) | 266,658) | 249,151) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | —) | 271,157) | 252,994) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | —) | 327,731) | |
| Non-current finance lease liabilities | 653,050) | 560,550) | 485,481) | 442,988) | 7,720) | 7,509) | |
| Non-current portion of equipment promissory notes, net | —) | 1,129) | 14,614) | 31,053) | —) | —) | |
| Total debt | 3,163,320) | 2,820,470) | 1,104,277) | 1,327,410) | 931,283) | 874,207) | |
| Current operating lease liabilities | 80,384) | 73,834) | 71,524) | 58,924) | —) | —) | |
| Non-current operating lease liabilities | 505,809) | 540,513) | 448,169) | 409,930) | —) | —) | |
| Total debt (including operating lease liability) | 3,749,513) | 3,434,817) | 1,623,970) | 1,796,264) | 931,283) | 874,207) | |
| Stockholders’ equity (deficit) | 784,661) | 1,170,277) | 447,026) | 18,651) | (22,962) | (7,336) | |
| Solvency Ratio | |||||||
| Debt to equity (including operating lease liability)1 | 4.78 | 2.94 | 3.63 | 96.31 | — | — | |
| Benchmarks | |||||||
| Debt to Equity (including Operating Lease Liability), Competitors2 | |||||||
| Amazon.com Inc. | 0.77 | 1.06 | 0.96 | — | — | — | |
| Home Depot Inc. | 32.24 | — | 13.16 | — | — | — | |
| Lowe’s Cos. Inc. | — | — | 18.24 | — | — | — | |
| TJX Cos. Inc. | 2.00 | 2.08 | 2.66 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 1.31 | 1.67 | 1.46 | — | — | — | |
| Debt to Equity (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 1.69 | 1.90 | 1.87 | — | — | — | |
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
Debt to equity (including operating lease liability) = Total debt (including operating lease liability) ÷ Stockholders’ equity (deficit)
= 3,749,513 ÷ 784,661 = 4.78
2 Click competitor name to see calculations.
The financial position of the entity has been characterized by a substantial increase in total liabilities and a volatile equity base over the six-year period ending January 28, 2023. A significant expansion in total debt, including operating lease liabilities, is evident, rising from 874,207 thousand US dollars in 2018 to 3,749,513 thousand US dollars in 2023. This growth was particularly pronounced between 2021 and 2022, where debt levels more than doubled.
- Equity Position and Solvency Transition
- The organization transitioned from a state of negative stockholders' equity in 2018 and 2019, where deficits reached 22,962 thousand US dollars, to a positive equity position starting in 2020. Equity peaked in January 2022 at 1,170,277 thousand US dollars before declining to 784,661 thousand US dollars by January 2023.
- Debt to Equity Ratio Trends
- The debt to equity ratio exhibited extreme volatility corresponding to the fluctuations in the equity base. In 2020, the ratio was exceptionally high at 96.31, reflecting a precarious balance between high debt and minimal positive equity. This ratio improved significantly in 2021 and 2022, reaching a low of 2.94 as equity grew substantially.
- Recent Leverage Deterioration
- A reversal in the solvency trend is observed in the final period. By January 28, 2023, the debt to equity ratio increased to 4.78. This deterioration was driven by the simultaneous increase in total debt and a reduction in stockholders' equity, indicating a higher reliance on leveraged financing relative to shareholder capital.
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Debt to Capital
RH, debt to capital 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) | |||||||
| Convertible senior notes due 2024, net | —) | 3,600) | —) | —) | —) | —) | |
| Convertible senior notes due 2023, net | 1,696) | 9,389) | 2,354) | —) | —) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | 290,532) | —) | —) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | 343,789) | —) | |
| Current portion of term loans | 25,000) | 20,000) | —) | —) | —) | —) | |
| Current finance lease liabilities | 17,007) | 15,511) | 14,671) | 9,188) | 1,074) | 471) | |
| Current portion of equipment promissory notes | 1,160) | 13,625) | 22,747) | 22,009) | 892) | 6,033) | |
| Asset based credit facility | —) | —) | —) | —) | 57,500) | 199,970) | |
| Term loan B, net | 1,936,529) | 1,953,203) | —) | —) | —) | —) | |
| Term loan B-2, net | 469,245) | —) | —) | —) | —) | —) | |
| Term loan, net | —) | —) | —) | —) | —) | 79,499) | |
| Real estate loans | 17,909) | —) | —) | —) | —) | —) | |
| Convertible senior notes due 2024, net | 41,724) | 184,461) | 281,454) | 264,982) | —) | —) | |
| Convertible senior notes due 2023, net | —) | 59,002) | 282,956) | 266,658) | 249,151) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | —) | 271,157) | 252,994) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | —) | 327,731) | |
| Non-current finance lease liabilities | 653,050) | 560,550) | 485,481) | 442,988) | 7,720) | 7,509) | |
| Non-current portion of equipment promissory notes, net | —) | 1,129) | 14,614) | 31,053) | —) | —) | |
| Total debt | 3,163,320) | 2,820,470) | 1,104,277) | 1,327,410) | 931,283) | 874,207) | |
| Stockholders’ equity (deficit) | 784,661) | 1,170,277) | 447,026) | 18,651) | (22,962) | (7,336) | |
| Total capital | 3,947,981) | 3,990,747) | 1,551,303) | 1,346,061) | 908,321) | 866,871) | |
| Solvency Ratio | |||||||
| Debt to capital1 | 0.80 | 0.71 | 0.71 | 0.99 | 1.03 | 1.01 | |
| Benchmarks | |||||||
| Debt to Capital, Competitors2 | |||||||
| Amazon.com Inc. | 0.28 | 0.37 | 0.35 | — | — | — | |
| Home Depot Inc. | 0.97 | 1.04 | 0.92 | — | — | — | |
| Lowe’s Cos. Inc. | 1.72 | 1.24 | 0.94 | — | — | — | |
| TJX Cos. Inc. | 0.35 | 0.36 | 0.51 | — | — | — | |
| Debt to Capital, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.45 | 0.51 | 0.48 | — | — | — | |
| Debt to Capital, Industry | |||||||
| Consumer Discretionary | 0.57 | 0.60 | 0.60 | — | — | — | |
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
Debt to capital = Total debt ÷ Total capital
= 3,163,320 ÷ 3,947,981 = 0.80
2 Click competitor name to see calculations.
The financial data indicates a period of significant capital expansion and shifting leverage patterns between 2018 and 2023. While total debt has increased substantially over the period, the proportion of debt relative to total capital experienced notable volatility, including a period of deleveraging followed by a recent increase in the solvency ratio.
- Total Debt Trajectory
- Total debt exhibited a steady increase from 2018 to 2020, followed by a temporary reduction in 2021. A substantial escalation occurred between 2021 and 2023, with total debt rising from approximately 1.10 billion to 3.16 billion. This indicates a significant increase in total borrowing over the six-year period.
- Total Capital Expansion
- Total capital followed an upward trajectory, growing from 866.87 million in 2018 to a peak of 3.99 billion in 2022. The most pronounced expansion of the capital base occurred between 2021 and 2022, mirroring the sharp increase in debt during the same interval.
- Debt to Capital Ratio Analysis
- The debt to capital ratio remained elevated and near or above unity from 2018 to 2020, peaking at 1.03 in 2019. A marked improvement in the solvency profile was observed in 2021, where the ratio dropped to 0.71 and remained stable through 2022, suggesting an increase in equity or other non-debt capital components. However, the ratio rose to 0.80 by 2023, signaling a renewed increase in the proportion of debt within the total capital structure.
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Debt to Capital (including Operating Lease Liability)
RH, debt to capital (including operating lease liability) 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) | |||||||
| Convertible senior notes due 2024, net | —) | 3,600) | —) | —) | —) | —) | |
| Convertible senior notes due 2023, net | 1,696) | 9,389) | 2,354) | —) | —) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | 290,532) | —) | —) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | 343,789) | —) | |
| Current portion of term loans | 25,000) | 20,000) | —) | —) | —) | —) | |
| Current finance lease liabilities | 17,007) | 15,511) | 14,671) | 9,188) | 1,074) | 471) | |
| Current portion of equipment promissory notes | 1,160) | 13,625) | 22,747) | 22,009) | 892) | 6,033) | |
| Asset based credit facility | —) | —) | —) | —) | 57,500) | 199,970) | |
| Term loan B, net | 1,936,529) | 1,953,203) | —) | —) | —) | —) | |
| Term loan B-2, net | 469,245) | —) | —) | —) | —) | —) | |
| Term loan, net | —) | —) | —) | —) | —) | 79,499) | |
| Real estate loans | 17,909) | —) | —) | —) | —) | —) | |
| Convertible senior notes due 2024, net | 41,724) | 184,461) | 281,454) | 264,982) | —) | —) | |
| Convertible senior notes due 2023, net | —) | 59,002) | 282,956) | 266,658) | 249,151) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | —) | 271,157) | 252,994) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | —) | 327,731) | |
| Non-current finance lease liabilities | 653,050) | 560,550) | 485,481) | 442,988) | 7,720) | 7,509) | |
| Non-current portion of equipment promissory notes, net | —) | 1,129) | 14,614) | 31,053) | —) | —) | |
| Total debt | 3,163,320) | 2,820,470) | 1,104,277) | 1,327,410) | 931,283) | 874,207) | |
| Current operating lease liabilities | 80,384) | 73,834) | 71,524) | 58,924) | —) | —) | |
| Non-current operating lease liabilities | 505,809) | 540,513) | 448,169) | 409,930) | —) | —) | |
| Total debt (including operating lease liability) | 3,749,513) | 3,434,817) | 1,623,970) | 1,796,264) | 931,283) | 874,207) | |
| Stockholders’ equity (deficit) | 784,661) | 1,170,277) | 447,026) | 18,651) | (22,962) | (7,336) | |
| Total capital (including operating lease liability) | 4,534,174) | 4,605,094) | 2,070,996) | 1,814,915) | 908,321) | 866,871) | |
| Solvency Ratio | |||||||
| Debt to capital (including operating lease liability)1 | 0.83 | 0.75 | 0.78 | 0.99 | 1.03 | 1.01 | |
| Benchmarks | |||||||
| Debt to Capital (including Operating Lease Liability), Competitors2 | |||||||
| Amazon.com Inc. | 0.43 | 0.51 | 0.49 | — | — | — | |
| Home Depot Inc. | 0.97 | 1.04 | 0.93 | — | — | — | |
| Lowe’s Cos. Inc. | 1.60 | 1.20 | 0.95 | — | — | — | |
| TJX Cos. Inc. | 0.67 | 0.68 | 0.73 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.57 | 0.63 | 0.59 | — | — | — | |
| Debt to Capital (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.63 | 0.65 | 0.65 | — | — | — | |
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
Debt to capital (including operating lease liability) = Total debt (including operating lease liability) ÷ Total capital (including operating lease liability)
= 3,749,513 ÷ 4,534,174 = 0.83
2 Click competitor name to see calculations.
An analysis of the solvency metrics from February 2018 to January 2023 reveals a period of substantial expansion in both total debt and total capital, characterized by a fluctuating leverage profile. While the absolute volume of liabilities increased significantly over the six-year period, the relative proportion of debt to total capital showed a non-linear trend, shifting from a high-leverage position to a more balanced structure before trending upward again in the final year.
- Debt to Capital Ratio Trends
- The debt to capital ratio remained elevated between 2018 and 2020, peaking at 1.03 in February 2019. This indicates that during this period, debt and operating lease liabilities constituted the vast majority of the total capital structure. A notable decompression of leverage occurred between January 2021 and January 2022, with the ratio declining to 0.75. This suggests a strategic shift or an increase in equity financing. By January 2023, the ratio increased to 0.83, reflecting a renewed increase in the relative weight of debt within the capital base.
- Growth in Total Debt and Liabilities
- Total debt, inclusive of operating lease liabilities, exhibited an aggressive upward trajectory, rising from 874.2 million USD in 2018 to 3.75 billion USD by 2023. The most pronounced acceleration in debt accumulation occurred between January 2021 and January 2022, where liabilities increased by approximately 1.81 billion USD in a single year.
- Total Capital Evolution
- Total capital expanded from 866.9 million USD in 2018 to 4.53 billion USD in 2023. The growth in total capital largely mirrored the increase in total debt; however, the divergent movement of the debt-to-capital ratio between 2020 and 2022 indicates that capital expansion was not driven solely by debt during that specific window, implying a temporary strengthening of the equity position relative to total liabilities.
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Debt to Assets
RH, debt to assets 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) | |||||||
| Convertible senior notes due 2024, net | —) | 3,600) | —) | —) | —) | —) | |
| Convertible senior notes due 2023, net | 1,696) | 9,389) | 2,354) | —) | —) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | 290,532) | —) | —) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | 343,789) | —) | |
| Current portion of term loans | 25,000) | 20,000) | —) | —) | —) | —) | |
| Current finance lease liabilities | 17,007) | 15,511) | 14,671) | 9,188) | 1,074) | 471) | |
| Current portion of equipment promissory notes | 1,160) | 13,625) | 22,747) | 22,009) | 892) | 6,033) | |
| Asset based credit facility | —) | —) | —) | —) | 57,500) | 199,970) | |
| Term loan B, net | 1,936,529) | 1,953,203) | —) | —) | —) | —) | |
| Term loan B-2, net | 469,245) | —) | —) | —) | —) | —) | |
| Term loan, net | —) | —) | —) | —) | —) | 79,499) | |
| Real estate loans | 17,909) | —) | —) | —) | —) | —) | |
| Convertible senior notes due 2024, net | 41,724) | 184,461) | 281,454) | 264,982) | —) | —) | |
| Convertible senior notes due 2023, net | —) | 59,002) | 282,956) | 266,658) | 249,151) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | —) | 271,157) | 252,994) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | —) | 327,731) | |
| Non-current finance lease liabilities | 653,050) | 560,550) | 485,481) | 442,988) | 7,720) | 7,509) | |
| Non-current portion of equipment promissory notes, net | —) | 1,129) | 14,614) | 31,053) | —) | —) | |
| Total debt | 3,163,320) | 2,820,470) | 1,104,277) | 1,327,410) | 931,283) | 874,207) | |
| Total assets | 5,309,289) | 5,540,470) | 2,898,313) | 2,445,694) | 1,806,034) | 1,732,866) | |
| Solvency Ratio | |||||||
| Debt to assets1 | 0.60 | 0.51 | 0.38 | 0.54 | 0.52 | 0.50 | |
| Benchmarks | |||||||
| Debt to Assets, Competitors2 | |||||||
| Amazon.com Inc. | 0.15 | 0.19 | 0.18 | — | — | — | |
| Home Depot Inc. | 0.57 | 0.56 | 0.53 | — | — | — | |
| Lowe’s Cos. Inc. | 0.78 | 0.55 | 0.47 | — | — | — | |
| TJX Cos. Inc. | 0.12 | 0.12 | 0.20 | — | — | — | |
| Debt to Assets, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.24 | 0.25 | 0.24 | — | — | — | |
| Debt to Assets, Industry | |||||||
| Consumer Discretionary | 0.34 | 0.35 | 0.36 | — | — | — | |
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
Debt to assets = Total debt ÷ Total assets
= 3,163,320 ÷ 5,309,289 = 0.60
2 Click competitor name to see calculations.
The financial trajectory from 2018 to 2023 is characterized by a substantial expansion in both total debt and total assets, resulting in a fluctuating solvency profile. While total assets grew from 1.73 billion USD in 2018 to 5.31 billion USD by 2023, total debt increased more aggressively, rising from 874.2 million USD to 3.16 billion USD over the same period.
- Debt to Assets Ratio Trends
- The debt to assets ratio exhibited a period of relative stability between 2018 and 2020, ranging from 0.50 to 0.54. A notable divergence occurred in 2021, where the ratio declined to 0.38, representing the lowest leverage point in the analyzed period. However, this trend reversed sharply in 2022 and 2023, with the ratio climbing to 0.51 and eventually reaching a peak of 0.60.
- Asset and Debt Correlation
- A significant escalation in the balance sheet size is observed between 2021 and 2022, during which total assets increased by approximately 91% and total debt increased by 155%. This indicates a period of aggressive capital expansion funded primarily through debt. In the final year of the analysis, a slight contraction in total assets coincided with a continued increase in total debt, which accelerated the rise of the solvency ratio to 0.60.
- Solvency Implications
- The increase in the debt to assets ratio from 0.50 in 2018 to 0.60 in 2023 suggests a heightened reliance on borrowed capital to finance the organization's asset base. The shift indicates that a larger proportion of the total assets are now encumbered by debt, reflecting an increase in financial leverage over the six-year horizon.
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Debt to Assets (including Operating Lease Liability)
RH, debt to assets (including operating lease liability) 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) | |||||||
| Convertible senior notes due 2024, net | —) | 3,600) | —) | —) | —) | —) | |
| Convertible senior notes due 2023, net | 1,696) | 9,389) | 2,354) | —) | —) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | 290,532) | —) | —) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | 343,789) | —) | |
| Current portion of term loans | 25,000) | 20,000) | —) | —) | —) | —) | |
| Current finance lease liabilities | 17,007) | 15,511) | 14,671) | 9,188) | 1,074) | 471) | |
| Current portion of equipment promissory notes | 1,160) | 13,625) | 22,747) | 22,009) | 892) | 6,033) | |
| Asset based credit facility | —) | —) | —) | —) | 57,500) | 199,970) | |
| Term loan B, net | 1,936,529) | 1,953,203) | —) | —) | —) | —) | |
| Term loan B-2, net | 469,245) | —) | —) | —) | —) | —) | |
| Term loan, net | —) | —) | —) | —) | —) | 79,499) | |
| Real estate loans | 17,909) | —) | —) | —) | —) | —) | |
| Convertible senior notes due 2024, net | 41,724) | 184,461) | 281,454) | 264,982) | —) | —) | |
| Convertible senior notes due 2023, net | —) | 59,002) | 282,956) | 266,658) | 249,151) | —) | |
| Convertible senior notes due 2020, net | —) | —) | —) | —) | 271,157) | 252,994) | |
| Convertible senior notes due 2019, net | —) | —) | —) | —) | —) | 327,731) | |
| Non-current finance lease liabilities | 653,050) | 560,550) | 485,481) | 442,988) | 7,720) | 7,509) | |
| Non-current portion of equipment promissory notes, net | —) | 1,129) | 14,614) | 31,053) | —) | —) | |
| Total debt | 3,163,320) | 2,820,470) | 1,104,277) | 1,327,410) | 931,283) | 874,207) | |
| Current operating lease liabilities | 80,384) | 73,834) | 71,524) | 58,924) | —) | —) | |
| Non-current operating lease liabilities | 505,809) | 540,513) | 448,169) | 409,930) | —) | —) | |
| Total debt (including operating lease liability) | 3,749,513) | 3,434,817) | 1,623,970) | 1,796,264) | 931,283) | 874,207) | |
| Total assets | 5,309,289) | 5,540,470) | 2,898,313) | 2,445,694) | 1,806,034) | 1,732,866) | |
| Solvency Ratio | |||||||
| Debt to assets (including operating lease liability)1 | 0.71 | 0.62 | 0.56 | 0.73 | 0.52 | 0.50 | |
| Benchmarks | |||||||
| Debt to Assets (including Operating Lease Liability), Competitors2 | |||||||
| Amazon.com Inc. | 0.29 | 0.33 | 0.31 | — | — | — | |
| Home Depot Inc. | 0.66 | 0.64 | 0.62 | — | — | — | |
| Lowe’s Cos. Inc. | 0.87 | 0.66 | 0.56 | — | — | — | |
| TJX Cos. Inc. | 0.45 | 0.44 | 0.50 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Sector | |||||||
| Consumer Discretionary Distribution & Retail | 0.38 | 0.40 | 0.38 | — | — | — | |
| Debt to Assets (including Operating Lease Liability), Industry | |||||||
| Consumer Discretionary | 0.43 | 0.44 | 0.44 | — | — | — | |
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
Debt to assets (including operating lease liability) = Total debt (including operating lease liability) ÷ Total assets
= 3,749,513 ÷ 5,309,289 = 0.71
2 Click competitor name to see calculations.
Between 2018 and 2023, the company exhibited a general upward trend in financial leverage, with the debt-to-assets ratio increasing from 0.50 to 0.71. This period was characterized by significant fluctuations in both the total debt obligations, including operating lease liabilities, and the overall asset base, indicating a shift toward a more debt-heavy capital structure.
- Analysis of Ratio Volatility
- A notable peak in the debt-to-assets ratio occurred in 2020, where it reached 0.73. This spike was driven by a substantial increase in total debt, which rose from approximately $931 million in 2019 to nearly $1.80 billion in 2020. A temporary correction followed in 2021, with the ratio decreasing to 0.56, reflecting a combination of a slight reduction in debt and continued growth in total assets.
- Balance Sheet Expansion
- The 2022 fiscal year marked a period of aggressive expansion. Total assets increased sharply to $5.54 billion, while total debt climbed to $3.43 billion. Despite the massive increase in absolute debt levels, the ratio remained relatively stable at 0.62, suggesting that the acquisition of assets during this period largely offset the increase in liabilities.
- Recent Solvency Trajectory
- By 2023, the solvency position weakened further as the debt-to-assets ratio rose to 0.71. This trend was the result of total debt continuing to climb to $3.75 billion, while total assets experienced a contraction to $5.31 billion. This divergence indicates that the most recent increase in leverage was not supported by asset growth, returning the company to a solvency level nearly identical to the 2020 peak.
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Financial Leverage
RH, financial leverage calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| 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 | — | — | |
| Benchmarks | |||||||
| Financial Leverage, Competitors2 | |||||||
| Amazon.com Inc. | 2.61 | 3.17 | 3.04 | — | — | — | |
| Home Depot Inc. | 48.94 | — | 21.39 | — | — | — | |
| Lowe’s Cos. Inc. | — | — | 32.52 | — | — | — | |
| TJX Cos. Inc. | 4.45 | 4.74 | 5.28 | — | — | — | |
| Financial Leverage, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 3.46 | 4.18 | 3.82 | — | — | — | |
| Financial Leverage, Industry | |||||||
| Consumer Discretionary | 3.95 | 4.32 | 4.22 | — | — | — | |
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
Financial leverage = Total assets ÷ Stockholders’ equity (deficit)
= 5,309,289 ÷ 784,661 = 6.77
2 Click competitor name to see calculations.
The financial structure exhibits a significant transition from a position of equity deficit to a stabilized capital base, accompanied by substantial asset expansion over the analyzed six-year period. The overall trend indicates a strategic shift in solvency, moving from a high-risk leverage profile to a more sustainable capital arrangement, despite a slight reversal in the most recent fiscal year.
- Equity Evolution and Solvency
- A critical shift in the balance sheet is observed between 2018 and 2022. The company operated with a stockholders' equity deficit in 2018 and 2019, reaching a low of negative 22.9 million US dollars in February 2019. This deficit was reversed by February 2020, followed by a rapid acceleration in equity growth, peaking at 1.17 billion US dollars in January 2022. This trajectory indicates a substantial improvement in the company's net worth and a strengthened solvency position.
- Financial Leverage Volatility
- The financial leverage ratio demonstrates extreme volatility corresponding to the changes in equity. In February 2020, the ratio reached an outlier peak of 131.13, a direct result of the very thin positive equity margin relative to total assets. Following this, leverage decreased sharply to 6.48 in 2021 and further to 4.73 in 2022, signaling a significant reduction in reliance on debt to finance assets. However, by January 2023, the ratio increased to 6.77, reflecting a contraction in stockholders' equity.
- Asset Growth and Capitalization
- Total assets experienced consistent growth from 1.73 billion US dollars in 2018 to a peak of 5.54 billion US dollars in 2022, representing a more than threefold increase. The correlation between asset growth and equity accumulation suggests that the expansion was supported by internal capital generation or equity financing rather than purely through debt. The slight decline in both total assets and equity in 2023 suggests a period of contraction or capital reallocation.
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Interest Coverage
RH, interest coverage 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) | |
| Add: Income tax expense | (91,358) | 133,558) | 104,598) | 48,807) | 30,514) | 27,971) | |
| Add: Interest expense | 151,730) | 66,883) | 70,648) | 88,509) | 75,908) | 63,084) | |
| Earnings before interest and tax (EBIT) | 589,014) | 888,987) | 447,061) | 357,691) | 257,061) | 93,235) | |
| Solvency Ratio | |||||||
| Interest coverage1 | 3.88 | 13.29 | 6.33 | 4.04 | 3.39 | 1.48 | |
| Benchmarks | |||||||
| Interest Coverage, Competitors2 | |||||||
| Amazon.com Inc. | 12.80 | -1.51 | 22.09 | — | — | — | |
| Home Depot Inc. | 14.90 | 17.14 | 13.60 | — | — | — | |
| Lowe’s Cos. Inc. | 8.79 | 13.49 | 9.88 | — | — | — | |
| TJX Cos. Inc. | 56.19 | 37.80 | 1.46 | — | — | — | |
| Interest Coverage, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 13.19 | 7.64 | 15.91 | — | — | — | |
| Interest Coverage, Industry | |||||||
| Consumer Discretionary | 12.23 | 9.30 | 13.23 | — | — | — | |
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
Interest coverage = EBIT ÷ Interest expense
= 589,014 ÷ 151,730 = 3.88
2 Click competitor name to see calculations.
The interest coverage trend reveals a period of significant strengthening in solvency from 2018 to 2022, followed by a sharp contraction in 2023. Overall, the capacity to service debt increased substantially over a five-year period before facing a simultaneous decline in operating earnings and a surge in financing costs in the most recent fiscal year.
- Earnings Before Interest and Tax (EBIT)
- A strong growth trajectory is observed from 2018 through 2022, with EBIT rising from $93.2 million to a peak of $888.9 million. This period indicates a substantial expansion in operational profitability. However, this trend reversed in 2023, as EBIT decreased to $589.0 million, marking a significant reduction in the primary income stream used to cover interest obligations.
- Interest Expense
- Interest costs remained relatively stable between 2018 and 2022, fluctuating between $63.1 million and $88.5 million, with a slight downward trend occurring in the two years immediately preceding 2023. In 2023, a substantial increase in interest expense occurred, reaching $151.7 million, which represents more than a twofold increase compared to the 2022 levels.
- Interest Coverage Ratio
- The coverage ratio improved consistently from a low of 1.48 in 2018 to a peak of 13.29 in 2022, indicating a vastly improved margin of safety and a reduced risk of default. This positive momentum was abruptly halted in 2023, as the ratio fell to 3.88. This decline is a direct result of the simultaneous contraction in EBIT and the spike in interest expenses, returning the solvency position to levels similar to those observed in 2019 and 2020.
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Fixed Charge Coverage
RH, fixed charge coverage calculation, comparison to benchmarks
| Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income | 528,642) | 688,546) | 271,815) | 220,375) | 150,639) | 2,180) | |
| Add: Income tax expense | (91,358) | 133,558) | 104,598) | 48,807) | 30,514) | 27,971) | |
| Add: Interest expense | 151,730) | 66,883) | 70,648) | 88,509) | 75,908) | 63,084) | |
| Earnings before interest and tax (EBIT) | 589,014) | 888,987) | 447,061) | 357,691) | 257,061) | 93,235) | |
| Add: Operating lease cost | 100,646) | 99,985) | 84,852) | 86,448) | 91,674) | 99,215) | |
| Earnings before fixed charges and tax | 689,660) | 988,972) | 531,913) | 444,139) | 348,735) | 192,450) | |
| Interest expense | 151,730) | 66,883) | 70,648) | 88,509) | 75,908) | 63,084) | |
| Operating lease cost | 100,646) | 99,985) | 84,852) | 86,448) | 91,674) | 99,215) | |
| Fixed charges | 252,376) | 166,868) | 155,500) | 174,957) | 167,582) | 162,299) | |
| Solvency Ratio | |||||||
| Fixed charge coverage1 | 2.73 | 5.93 | 3.42 | 2.54 | 2.08 | 1.19 | |
| Benchmarks | |||||||
| Fixed Charge Coverage, Competitors2 | |||||||
| Amazon.com Inc. | 3.73 | 0.47 | 5.24 | — | — | — | |
| Home Depot Inc. | 9.07 | 9.94 | 8.97 | — | — | — | |
| Lowe’s Cos. Inc. | 5.77 | 8.02 | 6.05 | — | — | — | |
| TJX Cos. Inc. | 3.31 | 3.17 | 1.04 | — | — | — | |
| Fixed Charge Coverage, Sector | |||||||
| Consumer Discretionary Distribution & Retail | 4.61 | 2.82 | 5.29 | — | — | — | |
| Fixed Charge Coverage, Industry | |||||||
| Consumer Discretionary | 4.95 | 3.65 | 5.60 | — | — | — | |
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
Fixed charge coverage = Earnings before fixed charges and tax ÷ Fixed charges
= 689,660 ÷ 252,376 = 2.73
2 Click competitor name to see calculations.
The analysis of fixed charge coverage over the six-year period ending January 28, 2023, reveals a trajectory of significant solvency improvement followed by a recent contraction in coverage capacity.
- Earnings Before Fixed Charges and Tax
- A consistent upward trend in earnings is observed from February 2018 through January 2022, during which earnings grew from 192,450 thousand to a peak of 988,972 thousand. This expansion suggests a period of robust operational growth. However, a reversal occurred in the period ending January 2023, with earnings decreasing to 689,660 thousand.
- Fixed Charges Obligations
- Fixed charges remained relatively stable for the first five years of the analyzed period, fluctuating between a low of 155,500 thousand in January 2021 and a high of 174,957 thousand in February 2020. A significant escalation in these obligations is noted in January 2023, where fixed charges rose to 252,376 thousand, indicating a substantial increase in mandatory financial commitments.
- Fixed Charge Coverage Ratio
- The coverage ratio experienced a steady ascent from 1.19 in February 2018 to a peak of 5.93 in January 2022, reflecting a strengthening margin of safety and an enhanced ability to service fixed obligations. This positive trend was interrupted in January 2023, as the ratio declined sharply to 2.73. This contraction is the direct result of the simultaneous decrease in earnings and the marked increase in fixed charges.
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