Restoration Hardware retooling its strategy

Restoration Hardware is in the middle of a strategy overhaul that may slow down revenue growth, but the retailer did post better-than-expected profits in the fourth quarter.

Restoration Hardware Holdings Inc. reported that its profit for the fourth quarter increased a better-than-expected 25% to $42.5 million from $34 million in the year-ago period. Restoration Hardware’s total sales in the fourth quarter grew 23.5% to $582.7 million. For the year, the company reported profit of $91 million. Revenue was reported as $1.87 billion.

The retailer said it that for fiscal 2015, it plans to change some product lines, retool its catalogs and launch new concept stores.

“RH continues to outperform the home furnishings industry by a wide margin,” said Friedman. “Fiscal 2014 marks RH’s fifth consecutive year of net revenue growth in excess of 20% -- averaging approximately 25% net revenue growth during that period. After four years of at least 25% comparable brand revenue growth, RH achieved 20% comparable brand revenue growth in fiscal 2014, a milestone unseen amongst our home furnishings peers.”

The company said it expects revenue in the range of $415 million to $420 million for the fiscal first quarter, less than what had been forecast.

“Fiscal 2015 is a bridge year for RH - with revenue growth targeted in the mid-teens, and then reaccelerating to our long term goal of 20% as our real estate transformation steps up in fiscal 2016. While we are guiding 2015 revenues below our long term target, we are guiding adjusted net income growth to be in the range of 28% to 34% - above our long term target of mid to high twenties annually,” said CEO Gary Friedman. “I would like to thank all of our people and partners from around the world for their passion and commitment to our cause, as we continue on our path of building one of the most innovative and admired brands in the world."

Restoration Hardware operates nearly 100 stores.