Advertisement

California

Furnishings Store's Stock Tumbles 32%

Warning by Restoration Hardware that its profit will fall significantly short of expectations comes after major change in product line.

January 03, 2003|From Bloomberg News

Shares of Restoration Hardware Inc. fell 32% Thursday, their biggest decline in almost four years, after the home furnishings retailer said its fourth-quarter profit will be less than expected.

Profit in the period ending Feb. 1 will be 25 cents to 30 cents a share, Restoration Hardware had said Tuesday after regular trading ended. The seller of upscale furniture and housewares had expected profit of as much as 42 cents a share after posting a loss of $11.6 million, or 42 cents, in the year-earlier period.

Sales growth will be less than forecast because of lower store traffic, poor weather and fewer holiday shopping days, according to the company, which restated results three times in 2002. It is struggling to increase business after Chief Executive Gary Friedman added more higher-price linen products last year, analysts said.

"It certainly puts into question Gary Friedman's credibility," said analyst Rob Wilson of Tiburon Research Group, who rates the shares "sell" and is the company's former treasury director. "He goes out and professes we're going to see X in earnings and Y in sales and it doesn't happen."

Chief Financial Officer Kevin Shahan didn't return phone calls seeking comment.

Shares of the Corte Madera, Calif.-based company fell $1.59 to $3.41 on Nasdaq, their largest drop since April 1999. The stock has declined about 87% since it began trading in June 1998.

The shares were cut to "market underperform" from "market perform" by analyst David Rose at JMP Securities.

Restoration Hardware changed 60% of its products in April to try to attract more affluent customers, said Wilson, who left the company in 2001.

"It's going to take longer than people anticipated," he said. "That's why people are dumping the stock."

Advertisement
Los Angeles Times Articles
|
|
|