Restoration Hardware swings to Q4 profit; plans seven new stores

Cortre Madera, Calif. – Restoration Hardware Holdings Inc. (RH) swung to a profit in the fourth quarter of fiscal 2013 amid ongoing sales growth. The retailer posted net earnings of $26.64 million, compared to a net loss of $28.36 in the year-ago period.



Net revenues grew 18.5% to $471.69 million, from $398.05 million. Same-store sales grew 17%.



RH also announced the appointment of Doug Diemoz as chief development officer. He joins the company after 20 years at brands such as MEXX, Williams-Sonoma, and Gap, and will be responsible for guiding the company’s future international growth and global expansion efforts.



“In 2013, RH continued to outperform the home furnishings industry by a wide margin,” said Gary Friedman, chairman and CEO. “We increased net revenues 33% on a comparable week basis, and comparable brand revenue increased 31% on top of 28% last year, delivering our fourth consecutive year of more than 25% comparable brand revenue growth. As we enter 2014, we remain focused on our two largest value-driving strategies--the expansion of our offer and the transformation of our retail stores."



The company said it will open new stores in Greenwich, Conn., Los Angeles, and its first next-generation “Full Line Design Gallery” in Atlanta. The company is significantly expanding the size of its New York store, adding two additional floors.



“We now have signed leases for five next generation Full Line Design Galleries and are in negotiations for an additional 25 locations. Once our real estate transformation is complete in North America, we believe we will deliver $4 billion to $5 billion in annual sales, achieve mid-teens operating margins, and generate significant free cash flow,” Friedman added.



As of Feb. 1, RH operated a total of 70 stores, consisting of 62 Galleries, five Full Line Design Galleries and three Baby & Child Galleries, as well as 17 outlet stores throughout the United States and Canada.



During the full fiscal year, net income was $18.19 million, compared to a net loss $12.79 million the prior fiscal year. Net revenues increased 30% to $1.55 billion, from $1.19 billion. Same-store sales rose 27%.