VARIABLE INTEREST ENTITIES

3 Months Ended

May 02, 2026

NOTE 5—VARIABLE INTEREST ENTITIES

Consolidated Variable Interest Entities and Noncontrolling Interests

In fiscal 2022, we formed eight privately-held limited liability companies (each, a “Member LLC” and collectively, the “Member LLCs” or the “consolidated variable interest entities”) with a third-party real estate developer affiliated with the managing member of the Aspen LLCs (as defined in “Equity Method Investments” below) for real estate development activities related to our Gallery transformation and global expansion strategies.

In fiscal 2024, one Member LLC became a wholly owned subsidiary and is no longer a VIE.

As of May 2, 2026 and January 31, 2026, of the remaining seven Member LLCs, we hold a 50 percent membership interest in six of the Member LLCs, and the remaining noncontrolling interest of 50 percent in each Member LLC is held by the same developer. In one Member LLC, we hold approximately 75 percent membership interest with the remaining noncontrolling interest of approximately 25 percent held by the same developer.

The carrying amounts and classification of the VIEs’ assets and liabilities included in the condensed consolidated balance sheets were as follows:


		MAY 2,			JANUARY 31,
		2026			2026

		(in thousands)
ASSETS
Cash and cash equivalents		$	1,472		$	1,414
Prepaid expense and other current assets			1,142			1,085
Total current assets			2,614			2,499
Property and equipment—net⁽¹⁾			288,142			290,077
Other non-current assets			7			7
Total assets		$	290,763		$	292,583
LIABILITIES
Accounts payable and accrued expenses		$	1,272		$	1,262
Other current liabilities			455			367
Total current liabilities			1,727			1,629
Real estate loan—net⁽²⁾			15,112			15,199
Other non-current liabilities			1,018			1,026
Total liabilities		$	17,857		$	17,854

(1)	Includes $21 million of construction in progress as of both May 2, 2026 and January 31, 2026.

(2)

On September 9, 2022, a Member LLC as the borrower executed a Promissory Note (the “Promissory Note”) with a third-party bank in an aggregate principal amount equal to $16 million with a maturity date of September 9, 2032. The Promissory Note bears interest at a fixed rate per annum equal to 5.37% until September 15, 2027, on which date the interest rate will reset based on the five-year treasury rate plus 2.00%, subject to a total interest rate floor of 3.00%. The Promissory Note is secured by the assets of the Member LLC and the creditor does not have recourse against RH’s general assets.

Equity Method Investments

Equity method investments primarily represent our membership interests in three privately-held limited liability companies in Aspen, Colorado (each, an “Aspen LLC” and collectively, the “Aspen LLCs” or the “equity method investments”) that were formed for the purpose of acquiring, developing, operating and selling certain real estate projects in Aspen, Colorado. Additionally, Waterworks has membership interests in two European entities that are equity method investments.

In March 2025, the Aspen LLC in which we hold a 70 percent interest sold its sole real estate property. Subsequent to the property sale, we received $15 million from the Aspen LLC, which consisted of $2.9 million for the repayment of its outstanding promissory note to us, including accrued interest, and a capital distribution of $13 million. The capital distribution of $13 million represented a return of our contributed capital of $7.9 million and a return on investment of $4.6 million.

Other than as described above, we did not receive any distributions or have any undistributed earnings of equity method investments during the three months ended May 2, 2026 and May 3, 2025.

Our maximum exposure to loss is the carrying value of each of the equity method investments as of May 2, 2026.