Restoration shifts from furniture to bedroom

CORTE MADERA, CALIF. — As part of its "merchandising overhaul" plan scheduled to be completed by this fall, Restoration Hardware Inc. is modifying its annual furniture event to include more bedroom-related textiles at the expense of furniture pieces; adding two divisional vice president posts to enhance its core category offerings, including one devoted strictly to textiles.

In contrast to last year's furniture event — one of three annual events for the retailer, the other two being bath and lighting — this year's event will not strictly comprise furniture pieces. In fact, Restoration Hardware is reducing the amount of furniture in the event by at least 40 percent to accommodate bedroom textiles, "which is a cash-and-carry business with a much higher margin," said Gary Friedman, president and chief operating officer, during the company's fourth-quarter and year-end conference call.

"This will reduce the furniture penetration, which will reduce margin impact and pressures on the back-end supply chain," he continued. "And it will raise our overall margin because the cash-and-carry components and margins inherent in the textiles business are greater and will not create additional back-end expenses for us."

Enhancing its corporate team to improve on its core categories' performances and improve its accessories and seasonal assortments — the latter of which suffered poor sales during the fourth quarter — Restoration Hardware is also growing its staff to four vice presidents from two, with divisional merchandise managers handling specific core product categories.

Where two divisional vice presidents split the tasks —one handled kitchenware, bathwares, accessories and seasonal goods and the other handled furniture, lighting and textiles — now four will divide the work more evenly: textiles; kitchenware, bathwares and lighting; accessories and seasonal; and furniture.

Friedman said Restoration Hardware calls this restructuring its "core business excellence approach."

"This structure is supported with a team of members in product development, design, sourcing and inventory management; creating vertical teams focused on the major core businesses, allowing us to build expertise and improve execution in each (product) category," he explained.

Also as part of its restructuring plan, the company will yet again redesign its catalog, which is part of the direct-to-consumer division that grew by 51 percent in the fourth quarter, for launch in the fall.

Without offering further details, Friedman said the new catalog "will be better" than the current model, which was redesigned last year.

Also in the works, two new stores are expected this year — one in Costa Mesa, Calif. The other location has not yet been announced. Also, one existing unit — the location not yet announced — will be revamped and expanded.

And two to three underperforming stores will be closed. Those locations, too, have not been announced.