Reworded10-Q Sep 10, 2026 vs 10-K Apr 1, 2026
The risks and uncertainties described below in our 2025 Form 10-K are not the only ones risks we face.
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SEC EDGAR
/CIK 0001528849
/10-K filed Apr 1, 2026, compared with Apr 2, 2025
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Consumer discretionary · Furniture Stores
RH RH
New risk paragraphs, branching off last year
Each branch is a paragraph in Risk Factors with nothing like it in the 10-K filed Apr 2, 2025. A box jumps to the paragraph as filed, below.
Paragraphs with nothing like them in last year's 10-K
1 paragraph in Risk Factors of the 10-K filed Apr 1, 2026 with nothing like it in the 10-K filed Apr 2, 2025. Quoted exactly. Paragraphs that were only edited are under 10-K change.
global economic, geopolitical, legal and regulatory changes unrelated to our performance.
Paragraphs in the 10-Q filed Sep 10, 2026 that were not in the one before
New in the latest 10-Q
26 paragraphs in the 10-Q filed Sep 10, 2026 with nothing like them in the 10-Q filed Jun 11, 2026 (at least half the words must differ; new numbers alone do not count). Quoted exactly, grouped by the item heading above them. This is text that changed, not a judgement of how serious it is.
Financial statements and notes
NOTE 3 - BUSINESS COMBINATION On July 8, 2025, we acquired a home furnishings business operating under the brand names of Formations and Dennis & Leen for total consideration of $32 million, funded through available cash. The transaction was accounted for as a business combination under Accounting Standards Codification (“ASC”) 805 - Business Combinations. We believe that this addition to the RH platform further positions us as a leader in the luxury design market as we continue to enhance the RH product assortment. During the three and six months ended August 2, 2025, we incurred $1.5 million and $2.2 million, respectively, of acquisition-related costs associated with the transaction. These costs include fees associated with financial, legal and accounting advisors, and are included in selling, general and administrative expenses on the condensed consolidated statements of income. The following table summarizes the purchase price allocation based on the fair value of the assets acquired and liabilities assumed as of July 8, 2025: PURCHASE PRICE ALLOCATION (in thousands) Merchandise inventories $ 5,451 Property and equipment 27,461 Operating lease right-of-use assets 4,443 Goodwill(1) 3,220 Other assets 923 Deferred revenue and customer deposits (3,471) Operating lease liabilities (4,273) Other liabilities (1,635) Total $ 32,119 (1) Goodwill of $3.2 million, included in the RH Segment, represents the expected synergies from integrating the acquired business into our operations and is expected to be deductible for tax purposes. Results of operations of the acquired company have been included in our condensed consolidated statements of income since July 8, 2025, the acquisition date. Pro forma results of the acquired business have not been presented as the results were not considered material to our condensed consolidated financial statements for all periods presented and would not have been material had the acquisition occurred at the beginning of fiscal 2025.
Read in the 10-Q
NOTE 4 - PREPAID EXPENSE AND OTHER ASSETS Prepaid expense and other current assets consisted of the following: AUGUST 1, JANUARY 31, 2026 2026 (in thousands) ─────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Current portion of value added tax (VAT) receivable $ 50,637 $ 39,169 Prepaid expenses 24,125 30,355 Capitalized catalog costs 22,550 23,274 Vendor deposits 18,417 26,230 Current portion of capitalized cloud computing costs 13,995 11,344 Tenant allowance receivable 9,323 5,633 Right of return asset for merchandise 6,145 6,423 Federal and state tax receivable 3,459 11,528 Promissory note receivable, including interest(1) 1,183 1,164 Other current assets 31,990 29,354 Total prepaid expense and other current assets $ 181,824 $ 184,474 (1) Represents promissory note, including principal and accrued interest, due from an affiliate of the managing member of the Aspen LLCs. Refer to Note 6 - Variable Interest Entities. Other non-current assets consisted of the following: AUGUST 1, JANUARY 31, 2026 2026 (in thousands) ───────────────────────────────────────────────────────────────────────────────────────────────────────────────────────────── Capitalized cloud computing costs - net(1) $ 32,416 $ 31,224 Landlord assets under construction - net of tenant allowances 12,903 156,252 Value added tax (VAT) receivable 10,651 - Other deposits 8,587 12,234 Initial direct costs prior to lease commencement 4,624 81,066 Vendor deposits - non-current 3,773 3,336 Deferred financing fees 2,702 3,377 Other non-current assets 15,558 14,344 Total other non-current assets $ 91,214 $ 301,833 (1) Presented net of accumulated amortization of $51 million and $43 million as of August 1, 2026 and January 31, 2026, respectively.
Read in the 10-Q
Additionally, upon obtaining control of the company that owns the property planned for the RH Guesthouse Aspen, we acquired its net assets and settled our preexisting lease under which we had been the lessee before the May 2026 Aspen LLC Restructuring. These transactions resulted in a non-cash loss of $11 million, which is comprised of (i) the assumption of outstanding debt on the real estate property transferred to us of $31 million, (ii) a decrease in other non-current assets of $22 million to eliminate previously capitalized lease-related initial direct costs and prepaid rent prior to commencement, (iii) a reduction of our equity method investment of $17 million related to the property company distribution, (iv) a decrease in property and equipment of approximately $2 million to eliminate previously capitalized leasehold improvements and (v) an increase to property and equipment of $61 million to recognize the acquisition of land and building assets at fair value. The non-cash loss of $11 million recognized during the three and six months ended August 1, 2026 is included in selling, general and administrative expenses on the condensed consolidated statements of income and reflected within cash flows from operating activities on the condensed consolidated statements of cash flows for the six months ended August 1, 2026.
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The cash distribution of $50 million in connection with the May 2026 Aspen LLC Restructuring represented a return of our contributed capital of $42 million and a return on investment of $8.1 million. The $31 million repayment of the acquired real estate loan is included in repayments under real estate loans within cash flows from financing activities on the condensed consolidated statements of cash flows for the six months ended August 1, 2026.
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We continue to account for the Aspen LLCs as equity method investments since we are not the primary beneficiary of these VIEs.
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Show the other 21
Additionally, Waterworks has membership interests in two European entities that are equity method investments.
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Our maximum exposure to loss as of August 1, 2026 is the carrying value of our equity method investments. Additionally, we are the lessee for one lease arrangement within an Aspen LLC, which commenced as of January 31, 2026. Refer to Note 8 - Leases.
Read in the 10-Q
In fiscal 2022, we formed eight privately-held limited liability companies (each, a “Member LLC” and collectively, the “Member LLCs”) with a third-party real estate development partner (the “development partner”) affiliated with the managing member of the Aspen LLCs (as defined below under “Equity Method Investments”) for real estate development activities related to our Gallery transformation and global expansion strategies.
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In fiscal 2024, one Member LLC became a wholly-owned subsidiary and accordingly is no longer considered a Member LLC.
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Concurrently with the May 2026 Aspen LLC Restructuring, the seven remaining Member LLCs became wholly-owned subsidiaries as the membership interests in the Member LLCs that were previously held by a third-party real estate developer were withdrawn, which had an immaterial effect on the condensed consolidated financial statements for the three and six months ended August 1, 2026. Accordingly, there are no noncontrolling interest holders in any of the Member LLCs as of August 1, 2026 and we continue to consolidate these subsidiaries following the transactions described under “Restructuring.”
Read in the 10-Q
Although we are self-insured or maintain deductibles in the United States for workers’ compensation, general liability and product liability up to predetermined amounts, above which third-party insurance applies, depending on the facts and circumstances of the underlying claims, coverage under these or other of our insurance policies may not be available. We may elect not to renew certain insurance coverage or renewal of coverage may not be available or may be prohibitively expensive. Even if we believe coverage does apply under our insurance programs, our insurance carriers may dispute coverage based on the underlying facts and circumstances.
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The outcome of any contingencies, including lawsuits, claims, investigations and other legal proceedings, could result in unexpected expenses and liability that could adversely affect our operations. In addition, any legal proceedings in which we are involved or claims against us, whether meritorious or not, could be time consuming, result in costly litigation, require significant amounts of our senior leadership team’s time, result in the diversion of significant operational resources, and require changes to our business operations, policies and practices. Legal costs related to such matters are expensed as incurred.
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In February 2026, we entered into a settlement agreement to resolve litigation pertaining to credit card interchange fees in which we received $32 million, net of legal costs, in March 2026. We recognized this settlement as a gain within selling, general and administrative expenses on the condensed consolidated statements of income for the six months ended August 1, 2026.
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In February 2026, the U.S. Supreme Court invalidated certain tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”). Subsequently, new tariffs were imposed pursuant to alternative statutory authority and are scheduled to expire after 150 days absent Congressional authorization. In April 2026, the IEEPA refund process was launched at which time we filed for refunds for tariffs previously paid in an aggregate amount of $69 million.
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During the second quarter of fiscal 2026, we received IEEPA tariff refunds of $67 million, as well as related interest of $2.4 million. Additionally, as of August 1, 2026 we recognized a receivable of $2.1 million for future refund claims that are realizable. As a result, we recognized a $55 million reduction to cost of goods sold on the condensed consolidated statements of income for the three and six months ended August 1, 2026 and a $14 million reduction of merchandise inventories on the condensed consolidated balance sheets as of August 1, 2026. NOTE 15 - SEGMENT REPORTING
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We define reportable and operating segments on the same basis that we use to evaluate our performance internally by the chief operating decision maker (“CODM”), which we have determined is our Chief Executive Officer. We have three operating segments: RH Segment, Waterworks and Real Estate. The RH Segment and Waterworks operating segments (the “retail operating segments”) include all sales channels accessed by our customers, including sales through retail locations and outlets, including hospitality, websites, Sourcebooks, and the Trade and Contract channels. The Real Estate segment represents operations associated with certain of our equity method investments and consolidated VIEs that have operations not directly related to the activities of the retail operating segments.
Read in the 10-Q
The retail operating segments are strategic business units that offer products for the home furnishings customer. While RH Segment and Waterworks have a shared senior leadership team and customer base, we have determined that their results cannot be aggregated as they do not share similar economic characteristics, as well as due to other quantitative factors.
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The CODM uses segment adjusted operating income to evaluate segment profitability for the retail operating segments and to allocate resources and analyze variances of actual performance to our forecasts when making decisions. Operating income is defined as net income before interest expense - net, other income - net, income tax expense and our share of equity method investments net (income) loss. Segment adjusted operating income excludes (i) legal settlements - net, (ii) variable interest entities restructuring (refer to Note 6 - Variable Interest Entities), including professional fees associated with the restructuring, (iii) certain asset impairments, (iv) product recall, (v) severance costs associated with a reorganization and (vi) non-cash compensation amortization related to an option grant made to Mr. Friedman in October 2020. These items are excluded from segment adjusted operating income in order to provide better transparency of segment operating results. Accordingly, these items are not presented by segment because they are excluded from the segment profitability measure that the CODM and our senior leadership team review.
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Segment net revenues, which represent our disaggregated net revenues in accordance with ASC 606, significant segment expenses and segment adjusted operating income, by reportable segment, were as follows:
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(3) Other segment expenses primarily include compensation and occupancy costs classified as selling, general and administrative expenses, and other general and administrative expenses.
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(3) Includes an $11 million non-cash loss related to the variable interest entities restructuring as described in Note 6—Variable Interest Entities in our condensed consolidated financial statements, as well as professional fees associated with the transaction.
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(4) Represents inventory impairment of $2.6 million and property and equipment impairment of $1.0 million, primarily related to Galleries under construction.
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(5) Represents costs and inventory charges associated with a product recall initiated in the second quarter of fiscal 2025.
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(6) Represents severance costs and related payroll taxes associated with a reorganization.
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The decrease in our effective tax rate for the six months ended August 1, 2026 compared to the six months ended August 2, 2025 is attributable to reporting lower net income in the current period as compared to the prior period.
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We have also been executing changes in our real estate strategy over a number of years, including transitioning some projects from a leasing model to a development model, where we buy and develop real estate for certain of our locations. As part of this strategy, we previously entered into joint ventures in order to develop real estate for future RH Design Galleries. As described below, in May 2026, we completed a series of transactions to unwind a substantial majority of these joint venture arrangements and as a result of these transactions we became the sole owner of several fully developed Gallery locations as well as other development-stage sites. We may elect to engage in various financing strategies with respect to some of these or other real estate assets in the future, including sales or sale leaseback transactions.
Read in the 10-Q
The 10-Q's risk factors against the 10-K
Item 1A of the 10-Q filed Sep 10, 2026 against Item 1A of the 10-K filed Apr 1, 2026.
A 10-Q repeats only the risks that changed, so a 10-K paragraph that is missing from it is not counted as removed.
Added is a paragraph with nothing like it in the 10-K, Reworded a sentence that is in both with several words changed,
Quiet changes a sentence in both where one to four words changed and one is a hedge or a modal
(cut words struck through, new words highlighted).
Text on the page, not a score; each links to the filing at sec.gov.
What the 10-Q itself says about its risk factors:We operate in a rapidly changing environment that involves a number of risks that could materially and adversely affect our business, financial condition, prospects, operating results or cash flows. For a detailed discussion of certain risks that affect our business, refer to the section entitled “Risk Factors” in our 2025 Form 10-K. There have been no material changes to the risk factors disclosed in our 2025 Form 10-K.
Read in the 10-Q
Reworded10-Q Sep 10, 2026 vs 10-K Apr 1, 2026
Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely affect our business. business, operating results and financial condition.
Phrases used for the first time
Two-word phrases in Risk Factors of the 10-K filed Apr 1, 2026 that are in none of the 1 earlier 10-Ks stored, back to Apr 2, 2025
states united ×3tariff measures ×3geopolitical uncertainty ×2new section ×2section tariffs ×2presidential administration ×2product partners ×2
Where each one is used
- states united: Many of our imported products are subject to existing duties, tariffs and other similar trade restrictions that may limit the quantity or affect the price of some types of goods that we import into the United States, United Kingdom, Canada and Europe. We typically seek to reduce our exposures to any anti-dumping...
- tariff measures: Many of our imported products are subject to existing duties, tariffs and other similar trade restrictions that may limit the quantity or affect the price of some types of goods that we import into the United States, United Kingdom, Canada and Europe. We typically seek to reduce our exposures to any anti-dumping...
- geopolitical uncertainty: We have experienced significant fluctuations in the growth of our business in the past and may continue to experience wide fluctuations in our quarterly performance. We are currently engaged in a number of growth initiatives, including investments to elevate our brand, transform our products, expand our platform...
- new section: Many of our imported products are subject to existing duties, tariffs and other similar trade restrictions that may limit the quantity or affect the price of some types of goods that we import into the United States, United Kingdom, Canada and Europe. We typically seek to reduce our exposures to any anti-dumping...
- section tariffs: Many of our imported products are subject to existing duties, tariffs and other similar trade restrictions that may limit the quantity or affect the price of some types of goods that we import into the United States, United Kingdom, Canada and Europe. We typically seek to reduce our exposures to any anti-dumping...
- presidential administration: Many of our imported products are subject to existing duties, tariffs and other similar trade restrictions that may limit the quantity or affect the price of some types of goods that we import into the United States, United Kingdom, Canada and Europe. We typically seek to reduce our exposures to any anti-dumping...
- product partners: We maintain a product safety and compliance program to help ensure our products are safe, legal and made consistently in compliance with our values. Nevertheless, our products have in the past been, and may in the future be, subject to recall for product safety and compliance reasons. Our efforts to address the...
Used at least twice, small words left out. Counted, not picked: a phrase can be new because the company renamed something.
Sources
Item 1A of each 10-K and 10-Q on EDGAR, quoted exactly. Each paragraph links to the filing at sec.gov.
Also
10-K change: what was reworded or cut, section by section.
Work with it
Excel workbook · CSV. Google Sheet that stays up to date: paste =IMPORTDATA("https://tickdelta.com/company/RH/export.csv") into a cell.