Restoration Hardware, Inc. Reports Third Quarter 2002 Results
Results Reflect 72% Year-Over-Year Improvement
CORTE MADERA, Calif., Nov. 20 /PRNewswire-FirstCall/ -- Restoration Hardware, Inc. (Nasdaq: RSTO) today reported a net loss of $0.08 per share, or $2.4 million for the third quarter, a 72% improvement versus the net loss of $0.36 per share or $8.7 million a year ago.
(Photo: http://www.newscom.com/cgi-bin/prnh/19990902/RSTOLOGO )
Net sales in the third quarter of fiscal 2002 were $90.7 million, a 20% increase versus net sales of $75.5 million for the same period a year ago. Comparable store sales for the third quarter increased 14.8%. Direct-to- customer sales, which include catalog and Internet, increased 66% to $10.9 million in the third quarter.
Gary Friedman, the Company's President and CEO stated, "Clearly the numbers this quarter demonstrate that our strategy to reposition the Restoration Hardware brand and return the company to profitability is working. Our comparable store sales increase of 14.8% and direct-to-customer sales increase of 66% are among the best in the industry despite a difficult economic environment."
Mr. Friedman continued, "We are encouraged by the early response to our holiday offer. Our stores, catalogs and web site are merchandised with compelling products reflecting Restoration Hardware's authentic American point of view. We've centered our assortment around family traditions such as tree decorating, game night, stocking stuffers and unique gift ideas with a touch of nostalgia; which we believe reflect the current trends in our country.
"Whether it's decorating your tree with Rock and Roll, Jazz or Vintage Tin Toy ornaments, gathering friends and family for a night of Bingo, Backgammon, Craps, or Roulette, spinning your old favorites on our Crosley Turntable, filling holiday stockings with the stuff you always wanted but never got, snuggling up with Blankie (the original adult pacifier), or watching the kids perform with our Family Band set, if you can't get into the holiday spirit after visiting Restoration Hardware, you're probably spending too much time at the office."
Kevin Shahan, the Company's Chief Financial Officer commented, "On the basis of third quarter, and current trends, we are forecasting net sales for the fourth quarter to increase approximately 12% to 14% over the same period a year ago. Comparable store sales for the 9-week November-December holiday period are forecasted to be in the mid to high single digit range, with comparable store sales for the quarter in the high single to low double digits. Finally, we are forecasting that we will meet our previous earnings per share guidance for the quarter of approximately $0.41 to $0.42, versus a loss of $0.45 in last year's fourth quarter."
For the first nine months ended November 2, 2002, the Company's net loss to common stockholders was $13.2 million, or $0.45 per share, versus a net loss to common stockholders of $24.0 million, or $1.10 per share, reported for the same period a year ago.
Net sales for the first nine months of fiscal 2002 were $245.1 million, a 10% increase from $222.1 million for the same period a year ago. Comparable store sales for the first nine months increased 8.3%. Direct-to-customer sales increased 38% to $27.1 million.
As of November 2, 2002 the Company operated 105 retail stores in 31 states, the District of Columbia and Canada.
The Company's third quarter earnings conference call is scheduled for Wednesday, November 20, 2002 at 2:00 p.m. (Pacific Standard Time). The dial- in number is: 1-800-540-0559. A webcast of the call is available at: http://www.firstcallevents.com/service/ajwz370223254gf12.html
About Restoration Hardware, Inc.
Restoration Hardware, Inc. is a specialty retailer of home furnishings, functional and decorative hardware and related merchandise that reflects the Company's classic and authentic American point of view. Restoration Hardware, Inc. sells its merchandise offering through its retail stores, catalog (800-762-1005) and on-line at www.restorationhardware.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act
This release contains forward-looking statements that involve known and unknown risks. Such forward-looking statements include, without limitation, statements concerning or relating to implications of, the Company's financial results for the third quarter ended November 2, 2002 and the period thereafter, statements regarding the expected effects of the Company's repositioning and merchandising strategies, statements relating to expected customer responses to the Company's merchandise, statements regarding the Company's expected return to profitability, statements regarding expectations for the Company's holiday selling season, statements regarding expectations for future comparable store sales growth, statements regarding the Company's expectations of meeting earnings per share guidance and other statements containing words such as "believes," "anticipates," "estimates," "expects," "may," "intends" and words of similar import or statements of management's opinion. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, market performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause such differences include, but are not limited to, customer reactions to the Company's current programs and strategies, timely introduction and customer acceptance of the Company's merchandise, further customer acceptance of the Company's private label credit card, timely and effective sourcing of the Company's merchandise from its foreign and domestic vendors and delivery of merchandise through its supply chain to its stores and customers, effective inventory and catalog management, changes in investor perceptions of the Company, fluctuations in comparable store sales, limitations resulting from restrictive covenants in the Company's credit facility, changes in economic or business conditions in general, changes in product supply, changes in the competitive environment in which the Company operates, changes in the Company's management information needs, changes in customer needs and expectations and governmental actions and other factors detailed in the Company's filings with the Securities and Exchange Commission, including its recent filings on Forms 10-K, 10-Q and 8-K, including, but not limited to, those described in the Company's Form 10-Q for the second quarter of fiscal 2002 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the captions "Liquidity and Capital Resources" and "Factors that May Affect our Future Operating Results." Guidance offered by the Company represents a point-in-time estimate made by management of the Company. The Company undertakes no obligation to update any guidance or any other forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
RESTORATION HARDWARE, INC. STATEMENTS OF CONSOLIDATED OPERATIONS (UNAUDITED) (in thousands except per share and store data)
13 weeks ended 13 weeks ended 11/2/02 % of sales 11/3/01 % of sales Net sales $90,727 100.0% $75,504 100.0% Cost of sales and occupancy 63,663 70.2% 61,826 81.9% Gross profit 27,064 29.8% 13,678 18.1% Selling, general and administrative 30,024 33.1% 26,181 34.7% Loss from operations (2,960) -3.3% (12,503) -16.6% Interest expense 834 0.9% 1,007 1.3% Change in fair value of warrants -- 0.0% (516) -0.7% Loss before income taxes (3,794) -4.2% (12,994) -17.2% Income tax benefit 1,366 1.5% 4,676 6.2% Net loss (2,428) -2.7% (8,318) -11.0% Preferred shareholder return: Dividends -- 0.0% (375) -0.5% Beneficial conversion charges -- 0.0% -- 0.0% Loss available to common stockholders $(2,428) -2.7% $(8,693) -11.5% Stores open at end of period 105 104 Total selling square footage 688,634 682,936 Loss per share, basic and diluted $(0.08) $(0.36) Weighted average shares 29,926 23,844 39 weeks ended 39 weeks ended 11/2/02 % of sales 11/3/01 % of sales Net sales $245,123 100.0% $222,075 100.0% Cost of sales and occupancy 184,257 75.2% 180,030 81.1% Gross profit 60,866 24.8% 42,045 18.9% Selling, general and administrative 84,876 34.6% 71,785 32.3% Loss from operations (24,010) -9.8% (29,740) -13.4% Interest expense 2,098 0.9% 3,621 1.6% Change in fair value of warrants 278 0.1% 257 0.1% Loss before income taxes (26,386) -10.8% (33,618) -15.1% Income tax benefit 13,499 5.5% 12,095 5.4% Net loss (12,887) -5.3% (21,523) -9.7% Preferred shareholder return: Dividends (358) -0.1% (1,035) -0.5% Beneficial conversion charges -- 0.0% (1,406) -0.6% Loss available to common stockholders $(13,245) -5.4% $(23,964) -10.8% Stores open at end of period 105 104 Total selling square footage 688,634 682,936 Loss per share, basic and diluted $(0.45) $(1.10) Weighted average shares 29,660 21,735 RESTORATION HARDWARE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands)
November 2, November 3, 2002 2001 Current assets Cash $2,037 $2,293 Accounts receivable 4,931 4,740 Merchandise inventories 127,460 105,917 Prepaid expense 16,046 12,150 Total current assets 150,474 125,100 Property and equipment, net 93,432 101,849 Goodwill 4,560 4,614 Other long term assets 21,600 20,378 Total assets $270,066 $251,941 Current liabilities Accounts payable and accrued expenses $56,619 $54,720 Current portion of deferred lease incentives 4,740 4,518 Deferred revenue 4,244 3,619 Other current liabilities 9,678 7,324 Total current liabilities 75,281 70,181 Long term line of credit 49,157 33,489 Long-term portion of deferred lease incentives 35,373 38,231 Deferred rent 13,848 12,273 Long term obligations 45 811 Total liabilities 173,704 154,985 Series A redeemable preferred stock 13,529 14,545 Common stock 148,912 124,564 Shareholder loan -- (2,050) Foreign exchange gain/loss (100) (149) Accumulated deficit (65,979) (39,954) Total stockholders' equity 82,833 82,411 Total liabilities, redeemable preferred stock and stockholders' equity $270,066 $251,941 Make Your Opinion Count - Click Here http://tbutton.prnewswire.com/prn/11690X47048443
SOURCE Restoration Hardware, Inc.
/CONTACT: Kevin W. Shahan, Vice President and Chief Financial Officer of Restoration Hardware, Inc., +1-415-924-1005, or fax, +1-415-945-4679/
/Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19990902/RSTOLOGO
AP Archive: http://photoarchive.ap.org PRN Photo Desk, 1-888-776-6555 or +1-212-782-2840/