Restoration Hardware Slashes Loss on 23.4% Revenue Gain

June 2, 2017  by Larry Thomas in Economic News, Industry   

The company said the improvements were the result of a new business model it began implementing last year that transformed the company from a promotional business into a membership business. In addition, RH scaled back its product offerings to focus on higher-margin items, and reorganized its supply chain.

Revenue for the quarter ended April 29 totaled $562.1 million, up from $455.5 million in the same quarter last year. Comparable-brand revenue growth stood at 9%.

RH said about 56% of revenues came from its brick-and-mortar stores, and 44% was from its catalogs and e-commerce site.

The net loss came to $3.37 million or 9 cents per share. That compares with a net loss of $13.5 million or 33 cents per share in the same quarter last year.

“While 2016 was a year of transformation and transition, 2017 will be a year of execution, architecture, and cash,” said Gary Friedman, chairman and CEO. “Our efforts will be focused on executing our new business model, architecting a new operating platform, and maximizing cash flow by increasing revenues and earnings, and reducing inventory and capital investments.”

Among the 2017 initiatives will be a substantial investment in RH Hospitality, which involves the rollout of an “integrated food and beverage experience” similar to one being tested in its Chicago store.

“We've been successful blurring the lines between residential and retail, creating spaces that are more home than store. The next logical step is to further blur the lines between home and hospitality by integrating cafes, wine vaults, and coffee bars into our Galleries,” said Friedman. “These multi-dimensional experiences activate all of the senses: sight, sound, taste, touch, and smell, and generate significant customer traffic. What RH President of Hospitality Brendan Sodikoff and his team have created in Chicago is nothing short of extraordinary, and we believe our new Galleries opening this year in Toronto, Palm Beach, and New York will redefine the retail experience in our industry.”

For the fiscal year, RH is projecting revenues of $2.4 billion to $2.45 billion, but the company slightly lowered its adjust net income projection from a range of $65 million to $80 million to a range of $60 million to $70 million. Friedman said the adjustment reflects a more aggressive approach to reducing inventories and trimming its product offerings.