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RSTO » Topics » Restoration Hardware, Inc. Reports Third Quarter 2006 Results

This excerpt taken from the RSTO 8-K filed Nov 28, 2006.

Restoration Hardware, Inc. Reports Third Quarter 2006 Results

Tuesday, November 28, 2006, 4:00 pm ET

Corte Madera, Calif., November 28, 2006— Restoration Hardware, Inc. (NASDAQ: RSTO) today announced record financial results for the third quarter ended October 28, 2006. Results include the following:

Third Quarter ended October 28, 2006

 

  •   Net revenue for the third quarter increased 22 percent to $157.1 million.

 

  •   Comparable store sales for the third quarter increased 3.9 percent.

 

  •   Direct-to-customer revenue for the third quarter increased 58 percent.

 

  •   Loss from operations improved to $3.7 million for the third quarter. The loss from operations includes a non-cash charge of $0.9 million associated with the expensing of stock options from the adoption of SFAS 123R. This compares to a loss from operations of $5.9 million for the same period last year.

 

  •   Net loss per share in the period was $0.15. The net loss includes a non-cash charge of $0.02 per share associated with the expensing of stock options required under SFAS 123R. In the same period last year, there was a net loss of $0.11 per share, inclusive of recording a tax benefit of $0.08 per share.

 

  •   Inventory was $217.7 million at the end of the third quarter compared to $164.1 million in the same period last year due to planned growth and acceleration of inventory receipts for the fourth quarter as part of our efforts to improve in-stock positions for the holiday period. We expect to end the fourth quarter with inventories up 15 to 20 percent above last year, in line with our sales growth.

Gary Friedman, the Company’s President, Chief Executive Officer and Chairman stated, “We are pleased to report another quarter of solid progress. Total revenues increased 22 percent, reflecting our ability to gain market share and improve profitability, despite a difficult home furnishings environment.”

Mr. Friedman continued, “During the quarter, comparable store sales increased 3.9%, and Direct-to Customer revenues increased a better than expected 58%, as we continue to execute our Direct-Centric Growth Strategy.”

“We launched two important growth initiatives during the quarter: First, we continued to extend our brand by introducing our second category extension, The Restoration Hardware Gift Catalog. In addition, we launched our new fashion home brand, Brocade Home. While still early, we are pleased with the response to both catalogs.”

Mr. Friedman concluded, “Looking forward, we are encouraged by the early Holiday trends in our business, and are guiding comparable store sales to be up in the high single digits, with direct-to-customer revenues increasing 50 to 60 percent in the fourth quarter. We expect operating earnings to increase significantly over the fourth quarter of last year.”

Third Quarter Year-to-date ended October 28, 2006

 

  •   Net revenue for the third quarter year-to-date increased 20 percent to $469.8 million.

 

  •   Comparable store sales for the third quarter year-to-date increased 4.1 percent.

 

  •   Direct-to-customer revenue for the third quarter year-to-date increased 50 percent.

 

  •   Loss from operations improved to $5.1 million for the third quarter year-to-date. The current year loss from operations included non-cash charges of $2.4 million associated with the expensing of stock options resulting from the adoption of SFAS 123R and $0.6 million related to a stock-based compensation charge recorded in the second quarter. This compares to a loss from operations of $13.4 million for the same period last year.

 

  •   The year-to-date net loss per share was $0.27. The net loss includes a non-cash charge of $0.06 per share associated with the expensing of stock options required under SFAS 123R and a non-cash charge of $0.02 per share associated with the stock-based compensation charge recorded in the second quarter. In the same period last year, there was a net loss of $0.28 per share, inclusive of recording a tax benefit of $0.19 per share.
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