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LEASES | 6 Months Ended
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Aug. 03, 2024
LEASES |
LEASES | NOTE 8—LEASES Lease costs—net consist of the following:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | THREE MONTHS ENDED | ​ | SIX MONTHS ENDED
​ | ​ | ​ | AUGUST 3, |  | JULY 29, | ​ | AUGUST 3, |  | JULY 29,
​ |  |  | 2024 |  | 2023 | ​ | 2024 |  | 2023
​ | ​ | ​ | (in thousands)
Operating lease cost(1) | ​ | ​ | $ | 33,357 | ​ | $ | 27,454 |  | $ | 66,238 | ​ | $ | 53,754
Finance lease costs | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Amortization of leased assets(1) | ​ | ​ | ​ | 12,913 | ​ | ​ | 13,641 | ​ | ​ | 25,318 | ​ | ​ | 27,345
Interest on lease liabilities(2) | ​ | ​ | ​ | 7,922 | ​ | ​ | 8,794 | ​ | ​ | 15,329 | ​ | ​ | 17,280
Variable lease costs(3) | ​ | ​ | ​ | 6,478 | ​ | ​ | 5,997 | ​ | ​ | 13,121 | ​ | ​ | 12,165
Sublease income(4) | ​ | ​ | ​ | (1,179) | ​ | ​ | (1,420) | ​ | ​ | (2,333) | ​ | ​ | (2,966)
Total lease costs—net | ​ | ​ | $ | 59,491 | ​ | $ | 54,466 | ​ | $ | 117,673 | ​ | $ | 107,578
(1) | Operating lease costs and amortization of finance lease right-of-use assets are included in cost of goods sold or selling, general and administrative expenses on the condensed consolidated statements of income based on our accounting policy.
(2) | Included in interest expense—net on the condensed consolidated statements of income.
(3) | Represents variable lease payments under operating and finance lease agreements, primarily associated with contingent rent based on a percentage of retail sales over contractual levels of $3.6 million and $3.7 million for the three months ended August 3, 2024 and July 29, 2023, respectively, and $7.5 million and $7.6 million for the six months ended August 3, 2024 and July 29, 2023, respectively, as well as charges associated with common area maintenance of $2.9 million and $2.3 million for the three months ended August 3, 2024 and July 29, 2023, respectively, and $5.6 million and $4.6 million for the six months ended August 3, 2024 and July 29, 2023, respectively. Other variable costs, which include single lease cost related to variable lease payments based on an index or rate that were not included in the measurement of the initial lease liability and right-of-use asset, were not material in any period presented.
(4) | Included in selling, general and administrative expenses on the condensed consolidated statements of income.
Lease right-of-use assets and lease liabilities consist of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | AUGUST 3, | ​ | FEBRUARY 3,
​ | ​ | ​ |  | 2024 |  | 2024
​ | ​ | ​ | ​ | (in thousands)
​ | ​ | Balance Sheet Classification | ​ | ​ | ​ | ​ | ​ | ​
Assets | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | Operating lease right-of-use assets | ​ | $ | 624,641 | ​ | $ | 625,801
Finance leases(1)(2)(3) | ​ | Property and equipment—net | ​ | ​ | 877,301 | ​ | ​ | 836,814
Total lease right-of-use assets | ​ | ​ | ​ | $ | 1,501,942 | ​ | $ | 1,462,615
Liabilities | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Current(4) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | Operating lease liabilities | ​ | $ | 86,106 | ​ | $ | 85,523
Finance leases | ​ | Other current liabilities | ​ | ​ | 15,755 | ​ | ​ | 14,668
Total lease liabilities—current | ​ | ​ | ​ | ​ | 101,861 | ​ | ​ | 100,191
Non-current | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | Non-current operating lease liabilities | ​ | ​ | 573,204 | ​ | ​ | 576,166
Finance leases | ​ | Non-current finance lease liabilities | ​ | ​ | 584,677 | ​ | ​ | 566,829
Total lease liabilities—non-current | ​ | ​ | ​ | ​ | 1,157,881 | ​ | ​ | 1,142,995
Total lease liabilities | ​ | ​ | ​ | $ | 1,259,742 | ​ | $ | 1,243,186
(1) | Includes capitalized amounts related to our completed construction activities to design and build leased assets, which are reclassified from other non-current assets upon lease commencement.
(2) | Recorded net of accumulated amortization of $293 million and $268 million as of August 3, 2024 and February 3, 2024, respectively.
(3) | Includes $36 million and $37 million as of August 3, 2024 and February 3, 2024, respectively, related to an RH Design Gallery lease with a landlord that is an affiliate of the managing member of the Aspen LLCs. Refer to Note 5—Variable Interest Entities.
(4) | Current portion of lease liabilities represents the reduction of the related lease liability over the next 12 months.
​ The maturities of lease liabilities are as follows as of August 3, 2024:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | OPERATING | ​ | FINANCE | ​ | ​
FISCAL YEAR | ​ | ​ |  | LEASES |  | LEASES |  | TOTAL
​ | ​ | ​ | ​ | (in thousands)
Remainder of fiscal 2024 | ​ | ​ | ​ | $ | 53,793 | ​ | $ | 20,615 | ​ | $ | 74,408
2025 | ​ | ​ | ​ | ​ | 124,837 | ​ | ​ | 50,533 | ​ | ​ | 175,370
2026 | ​ | ​ | ​ | ​ | 116,388 | ​ | ​ | 51,300 | ​ | ​ | 167,688
2027 | ​ | ​ | ​ | ​ | 109,207 | ​ | ​ | 52,107 | ​ | ​ | 161,314
2028 | ​ | ​ | ​ | ​ | 75,534 | ​ | ​ | 51,292 | ​ | ​ | 126,826
2029 | ​ | ​ | ​ | ​ | 63,793 | ​ | ​ | 50,799 | ​ | ​ | 114,592
Thereafter | ​ | ​ | ​ | ​ | 339,049 | ​ | ​ | 745,649 | ​ | ​ | 1,084,698
Total lease payments(1)(2) | ​ | ​ | ​ | ​ | 882,601 | ​ | ​ | 1,022,295 | ​ | ​ | 1,904,896
Less—imputed interest(3) | ​ | ​ | ​ | ​ | (223,291) | ​ | ​ | (421,863) | ​ | ​ | (645,154)
Present value of lease liabilities | ​ | ​ | ​ | $ | 659,310 | ​ | $ | 600,432 | ​ | $ | 1,259,742
(1) | Total lease payments include future obligations for renewal options that are reasonably certain to be exercised and are included in the measurement of the lease liability. Total lease payments exclude $727 million of legally binding payments under the non-cancellable term for leases signed but not yet commenced under our accounting policy as of August 3, 2024, of which $14 million, $40 million, $38 million, $40 million, $41 million and $44 million will be paid in the remainder of fiscal 2024, fiscal 2025, fiscal 2026, fiscal 2027, fiscal 2028 and fiscal 2029, respectively, and $510 million will be paid subsequent to fiscal 2029.
(2) | Excludes an immaterial amount of future commitments under short-term lease agreements.
(3) | Calculated using the discount rate for each lease at lease commencement.
Supplemental information related to leases consists of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | SIX MONTHS ENDED
​ | ​ | ​ | AUGUST 3, | ​ | JULY 29,
​ | ​ | ​ | 2024 | ​ | 2023
Weighted-average remaining lease term (years) | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | ​ | ​ | 8.9 | ​ | ​ | ​ | 8.1 | ​
Finance leases | ​ | ​ | ​ | 19.7 | ​ | ​ | ​ | 21.5 | ​
Weighted-average discount rate | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | ​ | ​ | 5.5 | % | ​ | ​ | 4.3 | %
Finance leases | ​ | ​ | ​ | 5.3 | % | ​ | ​ | 5.3 | %
​ Other information related to leases consists of the following: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | SIX MONTHS ENDED
​ | ​ | ​ | AUGUST 3, | ​ | JULY 29,
​ | ​ | ​ | 2024 | ​ | 2023
​ | ​ | ​ | (in thousands)
Cash paid for amounts included in the measurement of lease liabilities | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating cash flows from operating leases | ​ | ​ | $ | (64,645) | ​ | $ | (53,745)
Operating cash flows from finance leases | ​ | ​ | ​ | (15,329) | ​ | ​ | (17,280)
Financing cash flows from finance leases—net(1) | ​ | ​ | ​ | (11,957) | ​ | ​ | (5,454)
Total cash outflows from leases | ​ | ​ | $ | (91,931) | ​ | $ | (76,479)
Non-cash transactions: | ​ | ​ | ​ | ​ | ​ | ​ | ​
Lease right-of-use assets obtained in exchange for lease obligations—net of lease terminations | ​ | ​ | ​ | ​ | ​ | ​ | ​
Operating leases | ​ | ​ | $ | 45,747 | ​ | $ | 45,219
Finance leases | ​ | ​ | ​ | 28,278 | ​ | ​ | 750
Reclassification from other non-current assets to finance lease right-of-use assets | ​ | ​ | ​ | 38,182 | ​ | ​ | —
​
(1) | Represents the principal portion of lease payments, partially offset by tenant allowances received subsequent to lease commencement of $2.4 million for the six months ended July 29, 2023. No such amounts were received from landlords during the six months ended August 3, 2024.

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