Restoration Hardware continues upward momentum
Restoration Hardware plans to open full line design galleries in Greenwich, Atlanta and Los Angeles in 2014, and is currently in negotiations to open more than 30 locations in other key markets. The next generation full line design galleries will be larger and showcase the company’s assortment and new businesses.
The company believes it can open more than 10 locations a year, beginning in 2015, following second quarter results for the period ended Aug. 3, which saw comparable store sales increase 26% on top of a 31% increase in comparable store sales for the second quarter of fiscal 2012.
The company’s net revenues for the quarter increased 30% to $382.1 million from $292.9 million for the prior-year quarter, on top of a 24% increase in net revenues for the second quarter of fiscal 2012.
"Due to the current strength of our business, the continued evolution of our Source Book model and the enhanced ability to connect with our customers through digital and electronic marketing, we are moving to a once per year mailing of our Source Books,” said Gary Friedman, chairman, creator, curator, and co-CEO. “We believe this decision will result in a step change effect in our earnings and cash flow model, allowing us to reach double-digit operating margins and free cash flow positive significantly ahead of our prior expectations. We are eliminating the mailing of our Fall 2013 Source Books and plan to mail an annual edition each Spring. Concurrently, we are raising our earnings estimates for the remainder of 2013 to reflect our current business trends and the associated cost savings."
Direct revenues increased 33% in the quarter on top of the 29% increase in direct revenues for the second quarter of fiscal 2012.
The company operates a total of 70 retail stores, consisting of 62 galleries, 5 full line design galleries and 3 baby and child galleries as well as 17 outlet stores throughout the United States and Canada.
“Our business momentum remains very strong and provides good visibility into the back half of the year. Our expected top line growth, coupled with a more efficient cost structure, positions us to drive a significant and sustainable expansion in our operating margins, and more than 60% growth in our adjusted EPS for this year. This latest step change to our business gives us even more confidence in the power of our model and in our ability to surpass the long-term financial goals we have set for our company, including adjusted earnings growth in the mid to high twenties annually,” added Carlos Alberini, Co-CEO.