RH(RH) - 2025 Q4 - Annual Report

Revenue and Growth Strategy - The company aims to achieve an expected annual revenue opportunity of $5 to$6 billion by transforming its real estate platform and opening new Design Galleries in major North American markets[35]. - The company is pursuing global expansion with a projected annual revenue of $20 to$25 billion, having opened locations in England, Munich, and Düsseldorf in 2023, with more planned in Brussels and Madrid in 2024[37]. - The company has identified key learnings from its real estate transformation to optimize market share and return on invested capital[49]. Product Development and Offerings - The company plans to introduce the most prolific collection of new products in its history, starting with the mailing of the RH Interiors Sourcebook in fall 2023 and continuing throughout 2024[34]. - The company has established a proprietary product development platform that enhances its ability to introduce new products and reduce costs[41]. - Approximately 98% of sales in the core RH business during fiscal 2024 were driven by the RH Members Program, which had around 265,000 members at year-end[70]. Retail and Distribution - The company operates 69 retail locations, including 64 in North America and 5 in Europe, with an average selling square footage of 34,100 for Design Galleries[44]. - The company operates 83 retail locations with a total selling square footage of 1,527 thousand square feet as of February 1, 2025, an increase from 1,378 thousand square feet at the end of the previous year[56]. - The company operates 40 outlet stores, including one in the United Kingdom, as part of its reverse logistics platform[67]. - The Design Galleries encompass approximately 30,000 to 50,000 square feet of selling space, integrating hospitality offerings while showcasing product collections[51]. Hospitality Integration - The company is integrating hospitality into its Design Galleries, which is expected to drive incremental sales of home furnishings[35]. - The company plans to incorporate hospitality offerings into many new Galleries, enhancing the retail experience and driving incremental sales[48]. Digital and Online Experience - The company is making significant investments to elevate its online experience, with plans to upgrade its website throughout 2025[38]. - The company is focused on digital reimagination to enhance customer experience and differentiate its online presence[38]. - The company utilizes a customer database to analyze buying behaviors and tailor marketing strategies, enhancing targeted marketing efforts[65]. Supply Chain and Sourcing - In fiscal 2024, the company sourced 77% of its purchase dollar volume from 28 vendors, with one vendor accounting for 16%[71]. - 72% of products were sourced from Asia, including 35% from Vietnam and 23% from China, while 18% were sourced from North America[71]. Financial Position and Risks - The company had $200 million in outstanding borrowings under the revolving line of credit and$2,424 million under the Term Loan Credit Agreement as of February 1, 2025[370]. - For every 100-basis point change in interest rates, the company's annual interest expense could change by approximately $26 million[370]. - The company has identified risks related to fluctuations in consumer spending and supply chain management that could adversely affect revenue[15]. - The company believes inflation has had primarily transitory effects on its operations, but acknowledges potential longer-term impacts on costs and pricing[374]. - The Inflation Reduction Act introduced a 15$1 billion, which did not materially impact the company in fiscal 2024[375]. Competition - The company continues to face competition from various home furnishings retailers, including larger competitors with greater resources[75].