ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

3 Months Ended

May 03, 2025

ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

NOTE 6—ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accounts payable and accrued expenses consisted of the following:


	MAY 3,		FEBRUARY 1,
	2025		2025

	(in thousands)
Accounts payable	$	214,898	$	245,260
Accrued compensation		60,955		50,689
Accrued sales and use tax		31,248		27,685
Accrued occupancy		24,051		24,992
Accrued freight and duty		20,533		18,030
Accrued professional fees		11,459		5,281
Accrued legal contingencies⁽¹⁾		3,390		3,029
Other accrued expenses		31,796		38,440
Total accounts payable and accrued expenses	$	398,330	$	413,406

(1)	Refer to Note 13—Commitments and Contingencies.

Other current liabilities consisted of the following:


	MAY 3,		FEBRUARY 1,
	2025		2025

	(in thousands)
Current portion of term loans	$	25,000	$	25,000
Allowance for sales returns		24,314		23,512
Unredeemed gift card and merchandise credit liability		19,368		19,546
Finance lease liabilities		17,190		21,135
Federal tax payable		3,242		3,242
Foreign tax payable		1,962		1,980
Other current liabilities		5,124		4,546
Total other current liabilities	$	96,200	$	98,961

Contract Liabilities

We defer revenue associated with merchandise delivered via the home-delivery channel. We expect that substantially all of the deferred revenue and customer deposits as of May 3, 2025 will be recognized within the next six months as the performance obligations are satisfied. In addition, we defer revenue when cash payments are received in advance of performance for unsatisfied obligations related to our gift cards. During the three months ended May 3, 2025 and May 4, 2024, we recognized $6.5 million and $6.1 million, respectively, of revenue related to previous deferrals related to our gift cards. We expect that approximately 75 percent of the remaining gift card liabilities will be recognized when the gift cards are redeemed by customers.

Supplier Finance Program

We facilitate a voluntary supply chain financing program (the “Financing Program”) with a third-party financial institution (the “Bank”) to provide participating suppliers with the opportunity to receive early payment on invoices, net of a discount charged to the supplier by the Bank. Liabilities under the Financing Program are included in accounts payable and accrued expenses on the condensed consolidated balance sheets.

Our confirmed obligations and activity under the Financing Program consisted of the following:


	THREE MONTHS ENDED
	MAY 3,
	2025
	(in thousands)
Outstanding at beginning of fiscal period	$	35,113
Invoices confirmed		(92,332)
Invoices paid		87,656
Outstanding at end of fiscal period	$	30,437

Reorganization

We implemented and completed a restructuring in the fourth quarter of fiscal 2024 that included workforce and expense reductions in order to improve and simplify our organizational structure, streamline certain aspects of our business operations and better position us for further growth. The workforce reduction associated with the initiative included the elimination of numerous leadership and other positions throughout the organization. As of May 3, 2025 and February 1, 2025, we had accruals of $2.0 million and $3.4 million, respectively, included within accounts payable and accrued expenses on the condensed consolidated balance sheets related to the reorganization.

RH 10-Q