Restoration Hardware (RSTO)

TO MERGER AGREEMENT WITH CATTERTON PARTNERS

Corte Madera, Calif., January 24, 2008 – Restoration Hardware, Inc. (Nasdaq: RSTO) today announced that it has entered into an amendment to its previously announced merger agreement with certain affiliates of Catterton Partners.

Under the terms of the amended merger agreement, all of the outstanding shares of Restoration Hardware, other than those exchanged by certain stockholders participating with Catterton Partners in the transaction, will be acquired for a price per share equal to $4.50 in cash. The $4.50 per share cash consideration represents a 68% premium to the closing price of Restoration Hardware common stock on November 7, 2007, the last trading day prior to the initial announcement of the original merger agreement. The total equity value of the transaction is approximately $179 million. The amendment also extends the outside termination date for the merger agreement from April 30, 2008 to June 30, 2008 and changes the definition of material adverse effect to increase the likelihood that the transaction will close if the Company experiences weakness in its operating results.

Additionally, in connection with the execution of the amendment, Catterton Partners, through its affiliates, has provided a $25 million subordinated loan to Restoration Hardware for working capital purposes. This loan is not contingent on the closing of the acquisition and has been funded.

Restoration Hardware commented: “The amended merger agreement today comes as the Company and the home related retail sector face increased pressure. The subordinated loan provides the Company with substantially enhanced near-term liquidity to operate in the current environment. The amended merger agreement provides our shareholders a substantial premium to both the unaffected stock price on November 7, 2007, and our current stock price while providing greater certainty of closure.”

The amended merger agreement was negotiated on behalf of Restoration Hardware by a committee of the Board of Directors composed entirely of independent directors, with the assistance of independent financial and legal advisors. The Board of Directors of Restoration Hardware, on the unanimous recommendation of the independent committee, has approved the amended merger agreement and recommends that Restoration Hardware’s stockholders adopt the amended merger agreement.

In accordance with the amended merger agreement, the committee of independent directors, with the assistance of its advisors, will solicit proposals from third parties for an additional period of 35 days concluding February 28, 2008. The independent committee, with the assistance of its advisors, intends to actively solicit superior proposals during this period. This additional time period for competing proposals will allow Sears or other third parties that may have an interest to make an offer to acquire the Company. There is no assurance that any third party, including Sears, will pursue a competing proposal to acquire the Company or that the solicitation of superior proposals will result in an alternative transaction.

The transaction is subject to (i) the approval of holders of two-thirds of the outstanding shares of Restoration Hardware common stock pursuant to the certificate of incorporation of Restoration Hardware, (ii) the approval of holders of a majority of the shares voting at the special meeting that are held by stockholders that have not made an acquisition proposal and are not participating in the transaction, and (iii) other closing conditions, including the receipt of regulatory approvals. The transaction is not subject to any financing condition (other than the performance of the investment and share contribution commitments made by the participating institutional stockholders and the Company’s Chief Executive Officer, Mr. Friedman) and is expected to close near the end of the first quarter of 2008.

TO MERGER AGREEMENT WITH CATTERTON PARTNERS

Corte Madera, Calif., January 24, 2008 – Restoration Hardware, Inc. (Nasdaq: RSTO) today announced that it has entered into an amendment to its previously announced merger agreement with certain affiliates of Catterton Partners.

Under the terms of the amended merger agreement, all of the outstanding shares of Restoration Hardware, other than those exchanged by certain stockholders participating with Catterton Partners in the transaction, will be acquired for a price per share equal to $4.50 in cash. The $4.50 per share cash consideration represents a 68% premium to the closing price of Restoration Hardware common stock on November 7, 2007, the last trading day prior to the initial announcement of the original merger agreement. The total equity value of the transaction is approximately $179 million. The amendment also extends the outside termination date for the merger agreement from April 30, 2008 to June 30, 2008 and changes the definition of material adverse effect to increase the likelihood that the transaction will close if the Company experiences weakness in its operating results.

Additionally, in connection with the execution of the amendment, Catterton Partners, through its affiliates, has provided a $25 million subordinated loan to Restoration Hardware for working capital purposes. This loan is not contingent on the closing of the acquisition and has been funded.

Restoration Hardware commented: “The amended merger agreement today comes as the Company and the home related retail sector face increased pressure. The subordinated loan provides the Company with substantially enhanced near-term liquidity to operate in the current environment. The amended merger agreement provides our shareholders a substantial premium to both the unaffected stock price on November 7, 2007, and our current stock price while providing greater certainty of closure.”

The amended merger agreement was negotiated on behalf of Restoration Hardware by a committee of the Board of Directors composed entirely of independent directors, with the assistance of independent financial and legal advisors. The Board of Directors of Restoration Hardware, on the unanimous recommendation of the independent committee, has approved the amended merger agreement and recommends that Restoration Hardware’s stockholders adopt the amended merger agreement.

In accordance with the amended merger agreement, the committee of independent directors, with the assistance of its advisors, will solicit proposals from third parties for an additional period of 35 days concluding February 28, 2008. The independent committee, with the assistance of its advisors, intends to actively solicit superior proposals during this period. This additional time period for competing proposals will allow Sears or other third parties that may have an interest to make an offer to acquire the Company. There is no assurance that any third party, including Sears, will pursue a competing proposal to acquire the Company or that the solicitation of superior proposals will result in an alternative transaction.

The transaction is subject to (i) the approval of holders of two-thirds of the outstanding shares of Restoration Hardware common stock pursuant to the certificate of incorporation of Restoration Hardware, (ii) the approval of holders of a majority of the shares voting at the special meeting that are held by stockholders that have not made an acquisition proposal and are not participating in the transaction, and (iii) other closing conditions, including the receipt of regulatory approvals. The transaction is not subject to any financing condition (other than the performance of the investment and share contribution commitments made by the participating institutional stockholders and the Company’s Chief Executive Officer, Mr. Friedman) and is expected to close near the end of the first quarter of 2008.