Restoration Hardware Pushes Direct Approach

Shifting Focus to Web and Catalog Sales

By Staff -- Home Textiles Today, 4/9/2007 12:00:00 AM

Corte Madera, Calif. —

Restoration Hardware plans to focus outside of the box — literally. The retailer told analysts last week that it will put store expansion on hold for at least two years while it drives direct-to-consumer sales and expands its brand portfolio.

By the end of three years, more than half the company's sales should be generated by catalog and internet transactions, according to Gary Friedman, chairman, president and ceo.

The direct approach allows the company to broaden sku offers beyond the merchandise carried by its 103 stores. "Our business is primarily about selling more [goods] to our best customers, not necessarily exponentially growing the customer base, though we'd like to grow that, too," Friedman said.

This month brings the debut of another new Restoration-branded catalog: "bed and bath." Last year, Restoration launched an outdoor catalog and Brocade, a book of interior home furnishings including textiles. Next year, the company said, it will launch a kids' home furnishings book.

Fourth-quarter sales overall rose 27% to $243 million. Direct-to-consumer jumped 59%, while store comp sales climbed by 9.1%

Operating income rose to $15.7 million, up 9%. EBITDA (earnings before interest, taxes, depreciation and amortization) was $21.4 million, up 8.6%. Net income per fully diluted share was 34 cents, compared to a net loss of 53 cents in the previous year's fourth quarter.