Daily News
From Home Furnishing Business
Q4 Profits Tumble at RH as Revenues Drop 9.3%
March 29,
2017 by Larry Thomas in Business Strategy, Economic News, Financial Reports, Industry 
Closing out what its CEO described as a "year of transformation and transition," Restoration Hardware (NYSE: RH) said profits plunged more than 71% in the fiscal fourth quarter, while revenues fell 9.3%.
The retailer said a number of one-time costs -- most notably from the launch of RH Modern -- hurt the bottom line as net income fell to $9.43 million or 23 cents per share for the quarter ended Jan. 28.
Revenues for the quarter totaled $586.7 million, down from $647.2 million in the same quarter the previous year.
The quarterly results mirrored numbers for the fiscal year ended Jan. 28, which saw profits fall more than 90% to $5.4 million or 13 cents per share. In the previous fiscal year, net income was $91.1 million or $2.16 per share.
Full-year revenues edged up 1.2% to $2.13 billion. The company said revenues from its brick-and-mortar stores rose 9%, but e-commerce and catalog revenues were down 7%. Comparable brand revenues also were down 7%.
"We transformed our business from a promotional to a membership model that we believe will enhance our brand, streamline our operations, and vastly improve the customer experience," said Gary Friedman, chairman and CEO. "We also began the redesign of our supply chain network, transitioning inventory into fewer facilities, which enabled us to forgo building a planned distribution center scheduled to open in 2017."
"2016 was also the first full year of many new business initiatives such as RH Modern, RH Teen, RH Hospitality, the redesign of our RH Interiors Source Book, the roll out of Design Ateliers in our retail Galleries, and the addition of Waterworks to our platform. All of these new initiatives are expected to contribute to growth in 2017 and beyond."
By contrast, Friedman said fiscal 2017 will be a year of "execution, architecture and cash flow" for RH.
"Our focus will be on executing our new business model, architecting a new back-end operating platform, and maximizing cash flow," he said, noting that the retailer will scale back new store openings to three to five per year.
For the current fiscal year, which ends Feb. 3, 2018, the company is projecting revenues of $2.3 billion to $2.4 billion and adjusted earnings per share of $1.78 to $2.19.