Restoration Hardware 2015 Annual Report Download - page 99

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Hernandez v. Restoration Hardware
On October 21, 2008, Mike Hernandez, individually and on behalf of others similarly situated, filed a class action in the
Superior Court of the State of California for the County of San Diego against Restoration Hardware, Inc. alleging principally that the
Company violated California’s Song-Beverly Credit Card Act of 1971 by requesting and recording ZIP codes from customers paying
with credit cards. On May 23, 2014, in response to a directive from the Court, the parties filed a joint statement as to the parties’
agreed-upon claims process for the class members as well as to other matters related to this proceeding. On September 5, 2014, the
Court granted plaintiffs’ motion for attorneys’ fees, costs, and awards, and awarded $9.5 million in fees and costs to plaintiffs’
attorneys. The Court entered judgment on September 29, 2014 and, on November 21, 2014, a class member filed a notice of appeal
from the judgment. As a result of the appeal, the judgment was stayed until January 10, 2015. The appeal remains pending but the
judgment is enforceable. As a result of these developments, during fiscal 2014, the Company recorded a $9.5 million charge related to
this matter that was subsequently decreased to approximately $8 million. The decrease of approximately $1.5 million was based on a
revision of estimated class member response. On March 16, 2015, the Company, through the third party claims administrator, began
mailing the class action award to class members. The Company, through the third party claims administrator, paid approximately $2.4
million in cash awards to the class members and mailed 33% discount coupons, good for one year, on purchases up to $10,000, to
class members that did not request the cash award. During a hearing on April 16, 2015, the Court provided additional guidance
regarding the manner in which class members can use the 33% merchandise discount coupon. Specifically, the court ordered that the
33% coupons may be combined with the Company’s other promotional offers.
NOTE 19—SEGMENT REPORTING
The Company defines an operating segment on the same basis that it uses to evaluate performance internally by the Chief
Operating Decision Maker (the “CODM”). The Company has determined that the Chief Executive Officer is its CODM and there is
one operating segment. Therefore, the Company reports as a single segment. This includes all sales channels accessed by the
Company’s customers, including sales through catalogs, sales through the Company’s website and sales through the Company’s
stores.
The Company classifies its sales into furniture and non-furniture product lines. Furniture includes both indoor and outdoor
furniture. Non-furniture includes lighting, textiles, accessories and home décor. During the first quarter of fiscal 2015, the Company
recategorized as furniture certain products within its Bath and Contract categories, which were previously included in the non-
furniture category. The Company has determined that such recategorization provides a more meaningful disclosure and is better
aligned with the Company’s internal reporting. Such recategorizations are reflected in the table below.
Net revenues in each category were as follows (in thousands):
Year Ended
January 30, January 31, February 1,
2016 2015 2014
Furniture ................................................................................... $ 1,295,486 $ 1,116,351 $ 909,390
N
o
n
-furniture ............................................................................ 813,520 751,071 641,571
Total net revenues ............................................................... $ 2,109,006 $ 1,867,422 $ 1,550,961
The Company is domiciled in the United States and operates stores in the United States and Canada. Revenues from Canadian
operations, and the long-lived assets in Canada, are not material to the Company. Geographic revenues are determined based upon
where service is rendered.
No single customer accounted for more than 10% of the Company’s revenues in fiscal 2015, fiscal 2014, or fiscal 2013.