Restoration to restate earnings

By Don Hogsett -- Home Textiles Today, 3/25/2002 12:00:00 AM

CORTE MADERA, CA —

Weighed down by a fistful of one-time charges totaling $24.5 million as it pursues a repositioning strategy, specialty retailer Restoration Hardware recorded a fourth-quarter loss of $12.8 million, compared with a year-before profit of $9.5 million.

And raising the hackles of Wall Street and investors in an environment clouded by accounting issues at Enron and elsewhere, the retailer said it's restating sales for the past seven fiscal quarters, back to the beginning of 2000, because of the way it had improperly recorded furniture sales in the past. The company said it had been posting furniture revenue at the time of shipment, rather than the time of delivery to the customer.

Dismayed by the accounting issues, investors hammered the stock, driving the share price down by 6.6 percent, or $0.79 a share, to $11.21 in unusually heavy trading.

The restatement of revenues, the retailer said, "will result in a transfer of revenues and income from one period to the next for furniture that is in transit to the customer's home at the end of any period." The company emphasized that the restatement will have no effect on cash, receivables, accounts payable or debt. The company said it expects the anticipated effect of the change in revenues from amounts previously reported to be "no more than $5.0 million in any fiscal quarter and no more than $3.5 million for the recently closed 2002 fiscal year."

Restoration Hardware