Strong DM Sales Fail to Offset Loss for Restoration Hardware

Restoration Hardware reported a 50% increase in direct marketing sales during fiscal 2001, and a 46% increase for the fourth quarter.

However, the firm also posted losses of $36.9 million for the year and $12.8 million for the quarter.

And it has to restate its financial results for the first three quarters of last year, and all of fiscal 2000 as a result of a review by the Securities and Exchange Commission. The firm must report furniture revenue at the time of actual delivery–not shipment, as it had been doing.

CEO Gary Friedman said in a statement that “Fiscal 2001 was a year of transition for Restoration Hardware, as we focused on repositioning the company for long-term profitable growth.”

The revenue moved in the restatement should total no more than $5 million for any fiscal quarter, and no more than $3.5 million for the year, the company said. Net income should vary by $400,000 or less for the year.

Meanwhile, the Corte Madera, CA-based firm’s sales were flat.

Total net sales came in at $365.8 million for fiscal 2001, compared with compared with $367.3 million during 2000. Overall fourth-quarter sales hit $144.3 million, versus $144.5 million the year before.

This downturn may be attributed, in part, to the fact that fiscal 2000 was a 53-week year for the firm. Both year and quarter ended Feb. 3.

Direct sales totaled $14.1 million for the quarter, and $33.9 million for the year.

Restoration Hardware is about to unveil a new strategy that includes the remodeling of its stores and catalog, said Friedman. The firm hopes to turn its redesigned catalog into the main vehicle for driving sales in all three channels–catalog, Web and retail. (DIRECT, March 15, 2002).

To accomplish that, the company has doubled the circulation of its spring/summer catalog to roughly 4 million. It mails on April 9. A second drop on May 7 will go out to just under 2 million.

The firm’s catalog has been “growing about “50% a year as a percentage of total sales,” said Marta Benson, vice president of RH Direct, in a recent interview with DIRECT’s Kris Oser.