Restoration Hardware posts flat sales, net losses
By Furniture Today Staff -- Furniture Today, March 24, 2002
CORTE MADERA, Calif. — CORTE MADERA, Calif. — Direct-to-consumer sales bolstered Restoration Hardware's fourth-quarter and annual sales, although total sales for both periods came in virtually flat, and the specialty retailer of home furnishings and hardware posted net losses for the quarter and year.
In the quarter ended Feb. 2, direct-to-consumer sales, which include catalog and Internet sales, increased 46.9% to $14.1 million, and were up 50% to $33.9 million for the year.
Both the fourth quarter and year were one week shorter than the comparable year-earlier periods.
Sales for the quarter were $144.3 million, and $365.8 million for the year. The net loss for the quarter was $12.8 million, following one-time after-tax charges of $17.8 million. For the year, Restoration posted a $36.9 million net loss, compared with a $3.4 million loss a year ago.
Same-store sales were up 0.1% in the quarter and off 6.4% for the year.
Restoration said it would be restating financial results for the first three quarters of fiscal 2001 and the four quarters and fiscal year 2000 to reflect a change in revenue recognition. The company now will account for sales at the time of delivery, not at the time of shipment.
During the past year, Restoration said it focused on eliminating under-performing inventory and on remodeling and refixturing stores. Three under-performing stores were closed.
Gary Friedman, chief executive officer, said the year was one of transition as the company repositioned for long-term profitable growth. He added, "We have significantly improved the company's balance sheet, ending the year with $22.3 million in cash and no bank debt, improving liquidity by $61 million versus a year ago. We accomplished this by eliminating approximately 5,000 under-performing SKUs and editing our assortment by 30%."
| Quarter ended 2/2(a) | 2002 | 2001 | Change |
|---|---|---|---|
| Sales | $144,277,000 | $144,531,000 | (0.2%) |
| Operating income | (6,994,000) | 18,366,000 | — |
| Net income | (b)(12,823,000) | 9,512,000 | — |
| Earnings per share(c) | (0.53) | 0.55 | — |
| Year ended 2/2(a) | 2002 | 2001 | Change |
| Sales | $365,762,000 | $367,260,000 | (0.4%) |
| Operating income | (36,988,000) | 448,000 | — |
| Net income(d) | (36,941,000) | (3,371,000) | — |
| Earnings per share(c) | (1.75) | (0.20) | — |
| (a) The 2002 periods are 13 and 52 weeks; the 2001 periods are 14 and 53 weeks. (b) After a preferred stock charge of $375,000; includes a $2.4 million pretax charge for valuation adjustment and warrants. (c) Based on average shares outstanding of 24.4 million in the 2002 quarter, 17.3 million in the 2001 quarter, 21.1 million in the 2002 year and 17 million in the 2001 year. (d) Includes income tax benefits of $10 million in the 2002 year and $2 million in the 2001 year. The 2002 year is after a preferred stock charge of $2.8 million and also includes a $2.7 million pretax charge for valuation adjustment and warrants. | |||
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