One-Time Charges Bring Restoration Hardware to Losses for Q4, Fiscal Year
April 19, 2013,
CORTE MADERA, Calif.-Charges related to the company's initial public offering and other one-time deductions resulted in net losses of $28.4 million and $12.8 million for Restoration Hardware's fourth quarter and fiscal year, respectively.
These added costs were included in the retailer's selling, general and administrative expenses. When adjusted for these charges, Restoration Hardware posted net income for the fourth quarter of $52.5 million, up 117.4 percent from the fourth quarter of last year, and $19.5 million for the fiscal year, an increase of 23.4 percent.
In the end of what CEO Carlos Alberini described as Restoration Hardware's "best year ever," the retailer posted a 30.4 percent gain in net sales, to $398.1 million, including a pickup of 26 percent in same-store sales. The company reported a 23.9 percent increase in net sales, to $1.2 billion, including a same-store sales gain of 28 percent, for the fiscal year which ended on Feb. 2.
In a conference call to retail analysts yesterday, Alberini said the sales increases over the past three years (24 percent on average per year) have essentially doubled the size of the company. He added that the furniture category led the way in Restoration Hardware's sales and market-share gains this year.
Due to the one-time items, SG&A in the quarter jumped 158 percent in dollars and 2,900 basis points as a percentage of sales, to 58.7 percent. Gross margin in the quarter fell 200 basis points to 36.5 percent.
Also during yesterday's conference call, Gary Friedman, Restoration Hardware's chairman emeritus, said the retailer will launch two new businesses this spring: RH Tableware and RH Objects of Curiosity, the latter of which includes various home decor items. Each will have its own catalog, Friedman said, and each will be tested, directed and rolled out at retail over the next few quarters.
"We believe we are building not only an innovative and proprietary product offering, but also a completely new platform or ecosystem to experience our collections," Friedman said. "Both these factors are producing industry-leading sales per square foot in our galleries, and with continued refinement, we'll also produce what we believe will be one of the most compelling and productive multichannel experience in the retail."