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Catalog sales drive 10.6% revenue rise at Restoration Hardware

But 3Q loss mounts at Top 100 chain; no definitive sale/merger announced

By Furniture Today Staff -- Furniture Today, December 10, 2007

CORTE MADERA, Calif. — Restoration Hardware reported revenues rose 10.6% in its third quarter from the comparable period last year because of its booming consumer-direct segment, but the Top 100 chain posted a larger net loss of $15.2 million.

The loss for the quarter ended Nov. 3 compared with a loss of $5.7 million a year earlier.

Restoration said it lost $12.9 million on operations in the quarter, including $1.4 million in expenses related to its agreement to be purchased by Catterton Partners, which was announced Nov. 8.

Since then, Restoration said a committee of its board has been soliciting proposals from third parties. Sears Holdings, parent of Sears and Kmart, subsequently made an offer higher than the initial Catterton bid. No definitive sale or merger has been announced.

“Weakening consumer spending and traffic levels continued to affect our business in the third quarter, particularly higher-ticket durable categories,” said Gary Friedman, Restoration president and CEO. “While we are encouraged by some of the early holiday trends in our business, we remain cautious due to the macroeconomic environment, which has proven highly challenging for the home furnishings sector this year.”

Revenues came to $173.7 million in the latest quarter, with $97.2 million in the direct-to-consumer segment, mainly from catalog sales, and $76.5 million from stores. The direct segment accounted for 56% of revenues, up from 36% a year earlier.

The loss before interest, taxes, depreciation and amortization in the quarter was $7 million, compared with positive EBITDA of $1.8 million a year earlier, the company said. In addition to the merger-related charge, the company took a $400,000 charge in the most recent period for the reduction of headcount.

For the 39 weeks ended Nov. 3, the lifestyle home furnishings retailer had revenues of $499.6 million, up 6.3% from the comparable period a year earlier. The net loss was $36.9 million, compared with a loss of $10.4 million in the previous year.

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Restoration loses $15.2M

Dec 16, 2007

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