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Restoration Hardware Loss Narrows on Housing Boom

November 21, 2002|From Times Staff and Wires

Restoration Hardware Inc., an upscale home furnishings retailer, on Wednesday said that its third-quarter loss narrowed sharply from a year ago, as sales at stores open at least a year climbed amid booming housing and domestic goods markets.

The Corte Madera, Calif.-based chain of 105 stores said its net loss was $2.4 million, or 8 cents a share, compared with a loss of $8.7 million, or 36 cents a year earlier.

Direct-to-customer sales, which include catalog and Internet, rose 66% to $10.9 million in the third quarter.

Net sales in the third quarter were $90.7 million, a 20% increase versus net sales of $75.5 million a year earlier. Comparable store sales for the third quarter increased 14.8%.

"Clearly the numbers this quarter demonstrate that our strategy to reposition the Restoration Hardware brand and return the company to profitability is working," said Gary Friedman, the company's president and chief executive.

On Nov. 7, the company warned of a loss of about 8 cents a share -- wider than its prior projection of a loss of between 5 cents and 6 cents, due to lower-than-expected merchandise margins.

Restoration Hardware's chief financial officer, Kevin Shahan, said he expects a profit of 41 cents to 42 cents a share in the fourth quarter, contrasted with a loss of 45 cents a year ago, when results were hurt by one-time write-offs.

He also said that on the basis of third-quarter results and current trends, he expects fourth-quarter sales to increase 12% to 14% over the same period a year ago.

Comparable store sales for the holiday period are forecast to be in the mid- to high-single digit range, with comparable store sales for the quarter in the high-single to low-double digits, Shahan added.

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