Restoration Hardware, Inc. Announces Fourth Quarter Sales and Earnings
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Net sales for the fourth quarter were $155.1 million, an increase of 7% from net sales of $144.4 million for the same period last year. Comparable store sales for the fourth quarter increased 3%. Sales for the direct-to-customer division, which includes catalog and Internet sales, increased 26% for the fourth quarter as compared to the same period a year ago.
For the fiscal year ended February 1, 2003 (fiscal 2002), the Company reported a significantly reduced net loss available to common stockholders of $3.5 million ($0.12 per share), versus a net loss available to common stockholders of $35.8 million ($1.53 per share) for the previous fiscal year ended February 2, 2002 (fiscal 2001).
Net sales for fiscal 2002 were $400.3 million, an increase of 9% from net sales of $366.5 million for fiscal 2001. Comparable store sales for fiscal 2002 increased 6%. Sales for the direct-to-customer division increased 33% in fiscal 2002 as compared to fiscal 2001.
Gary Friedman, the Company's President and CEO, stated, "Despite the difficult retailing environment, our turnaround is on track to return the Company to profitability in 2003. We are focused on refining our new merchandising and marketing strategy unveiled in the spring of last year, and believe we can continue to drive meaningful improvement in both sales and margin for the next several years."
Mr. Friedman continued, "In 2003 we will introduce a new Restoration Hardware prototype store that will be designed to showcase our existing and new core businesses with greater clarity and authority. The new stores will debut this fall in Corte Madera, CA, Richmond, VA, and Cleveland, OH."
In light of the uncertain economic environment, the Company is taking a conservative approach to planning fiscal 2003 and is providing the following guidance with regard to the Company's anticipated financial results:
-- Comparable store sales are planned to increase in the low to mid single digit range for fiscal 2003 as compared to fiscal 2002. -- Direct-to-customer sales are planned to increase in the mid to high teens in fiscal 2003 versus fiscal 2002. -- Operating margins for fiscal 2003 are targeted at 1% to 2% of sales. -- Capital expenditures for fiscal 2003 are expected to be approximately $7 to $8 million, compared to approximately $20 million in the fiscal year just ended. -- For the first quarter of fiscal 2003, the Company expects operating losses to range from $9 to $10 million, versus an operating loss of $16.2 million in the first quarter of fiscal 2002. -- Net loss per share in the first quarter of fiscal 2003 is expected to range from $0.20 to $0.22 on a basic share count of approximately 30 million shares outstanding, versus a loss of $0.25 per share in the first quarter of fiscal 2002. First quarter last year included $4 million ($0.14 per share) of additional income tax benefits, as a consequence of the economic stimulus bill enacted March 9, 2002, which will not repeat in the current year.Year end inventories have increased from the unusually low levels at this time last year, as the Company exited old product in preparation for the receipt of new goods for the launch of our new strategy in April 2002. The Company ended the year with $14 million of debt, and projects adequate availability on its credit facility to fund operations and capital spending requirements through 2003. In fiscal 2003, the Company expects to be cash flow positive, and to finish the year with no debt on the balance sheet. However, the prospect of war in Iraq creates inherent uncertainty in the guidance the Company is able to provide. The Company has not attempted to include in this guidance any potential financial effects of such events.
The Company's fiscal 2002 earnings webcast is scheduled for Wednesday, March 19, 2003 at 5:00 p.m. (Eastern Time). The webcast will be at: http://www.firstcallevents.com/service/ajwz376705128gf12.html
About Restoration Hardware, Inc.:
As of March 19, 2003, the Company operated 105 retail stores in 31 states, the District of Columbia and Canada.
Restoration Hardware, Inc. is a specialty retailer of home furnishings, functional and decorative hardware and related merchandise that reflects the Company's classic and authentic American point of view. Restoration Hardware sells its merchandise offering through its retail stores, catalog (800-762-1005) and on-line at www.restorationhardware.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995:
This release contains forward-looking statements that involve known and unknown risks. Such forward-looking statements include statements regarding financial results for the fiscal quarter and fiscal year ended February 1, 2003, statements regarding the Company's expected profitability, statements regarding expectations about the Company's merchandising and marketing strategy, statements regarding expectations of improvement in the Company's sales and margin results, statements regarding planned introduction of the Company's new prototype store, statements reflective of financial guidance for the Company for the first quarter of fiscal 2003 and for the entire fiscal year of 2003, including without limitation statements regarding expected availabilities under, and year-end status of, the Company's credit facility, and other statements containing words such as "believes," "anticipates," "estimates," "plans", "targets", "expects," "may," "intends" and words of similar import or statements of management's opinion. In particular, all financial information regarding fourth quarter and fiscal year-end 2002 results provided in this press release is unaudited and is subject to adjustment and change following completion of the final accounting for the quarter and fiscal year end and the independent audit of our records by our independent auditors. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, including financial results, market performance or achievements to differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause such differences include, but are not limited to, results of the Company's fiscal year-end audit and other financial adjustments relating thereto, customer reactions to the Company's current programs and strategies, timely introduction and customer acceptance of the Company's merchandise and prototype store, further customer acceptance of the Company's private label credit card, timely and effective sourcing of the Company's merchandise from its foreign and domestic vendors and delivery of merchandise through its supply chain to its stores and customers, effective inventory and catalog management, changes in investor perceptions of the Company, fluctuations in comparable store sales, limitations resulting from restrictive covenants in the Company's credit facility, changes in economic or business conditions in general, changes in political conditions in the United States and abroad in general, changes in product supply, changes in the competitive environment in which the Company operates, changes in the Company's management information needs, changes in customer needs and expectations, governmental actions, including war in Iraq, and other factors detailed in the Company's filings with the Securities and Exchange Commission, including its recent filings on Forms 10-K, 10-Q and 8-K, including, but not limited to, those described in the Company's Form 10-Q for the third quarter of fiscal 2002 in "Management's Discussion and Analysis of Financial Condition and Results of Operations" under the captions "Liquidity and Capital Resources," "Critical Accounting Policies" and "Factors that May Affect our Future Operating Results" and in "Controls and Procedures" under the caption "Controls Evaluation." Guidance offered by the Company represents a point-in-time estimate made by management of the Company. The Company undertakes no obligation to update any guidance or any other forward-looking statements in order to reflect events or circumstances that may arise after the date of this release.
Restoration Hardware, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands) Feb 1, 2003 Feb 2, 2002 ASSETS Current assets: Cash and cash equivalents $1,612 $22,285 Accounts receivable 3,189 3,278 Merchandise inventories 95,198 62,609 Prepaid expense and other 13,586 13,800 Total current assets 113,585 101,972 Property and equipment, net 90,038 87,934 Goodwill 4,560 4,560 Other long-term assets 18,215 12,276 Total assets $226,398 $206,742 LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued expenses $35,958 $34,065 Current portion of deferred lease incentives 4,761 4,507 Deferred revenue 5,930 2,855 Other current liabilities 9,179 9,183 Total current liabilities 55,828 50,610 Long-term line of credit, net of debt issuance costs 13,909 -- Long-term portion of deferred lease incentives 34,348 37,101 Deferred rent 14,163 12,703 Other long-term liabilities 145 3,236 Total liabilities 118,393 103,650 Series A redeemable preferred stock 13,328 14,106 Common stock 150,881 144,162 Stockholder loan -- (2,050) Unearned compensation (659) (1,103) Accumulated other comprehensive loss (150) (159) Accumulated deficit (55,395) (51,864) Total stockholders' equity 94,677 88,986 Total liabilities, redeemable convertible preferred stock and stockholders' equity $226,398 $206,742 Restoration Hardware, Inc. Statements of Consolidated Operations (Unaudited) (in thousands, except per share amounts) 13 weeks ended 13 weeks ended 2/1/03 % of Sales 2/2/02 % of Sales Net sales $155,107 100.0% $144,398 100.0% Cost of sales and occupancy 97,811 63.1% 115,225 79.8% Gross profit 57,296 36.9% 29,173 20.2% Selling, general and administrative expenses 41,742 26.9% 34,715 24.0% Income (loss) from operations 15,554 10.1% (5,542) -3.8% Interest expense, net (720) -0.5% (850) -0.6% Change in fair value of warrants -- 0.0% (2,417) -1.7% Income (loss) before income taxes 14,834 9.6% (8,809) -6.1% Income tax expense (5,145) -3.3% (2,812) -1.9% Net income (loss) 9,689 6.3% (11,621) -8.0% Preferred shareholder return: Dividends -- 0.0% (375) -0.3% Beneficial conversion charges -- 0.0% -- 0.0% Income (loss) available to common stockholders $9,689 6.3% $(11,996) -8.3% Stores open at end of period 105 104 Total selling square footage 688,634 682,936 Earnings/(Loss) per share, basic $0.32 $(0.42) Earnings/(Loss) per share, diluted $0.26 $(0.42) Weighted average shares, basic 30,037 28,377 Weighted average shares, diluted 37,230 28,377 52 weeks ended 52 weeks ended 2/1/03 % of Sales 2/2/02 % of Sales Net sales $400,277 100.0% $366,473 100.0% Cost of sales and occupancy 282,075 70.5% 295,061 80.5% Gross profit 118,202 29.5% 71,412 19.5% Selling, general and administrative expenses 126,617 31.6% 106,500 29.1% Loss from operations (8,415) -2.1% (35,088) -9.6% Interest expense, net (2,818) -0.7% (4,467) -1.2% Change in fair value of warrants (278) -0.1% (2,677) -0.7% Loss before income taxes (11,511) -2.9% (42,232) -11.5% Income tax benefit 8,339 2.1% 9,207 2.5% Net loss (3,172) -0.8% (33,025) -9.0% Preferred shareholder return: Dividends (358) -0.1% (1,411) -0.4% Beneficial conversion charges -- 0.0% (1,406) -0.4% Loss available to common stockholders $(3,530) -0.9% $(35,842) -9.8% Stores open at end of period 105 104 Total selling square footage 688,634 682,936 Loss per share, basic $(0.12) $(1.53) Loss per share, diluted $(0.12) $(1.53) Weighted average shares, basic 29,754 23,396 Weighted average shares, diluted 29,754 23,396SOURCE Restoration Hardware, Inc.
CONTACT: Kevin W. Shahan, Vice President and Chief Financial Officer of Restoration Hardware, Inc., +1-415-924-1005, or fax, +1-415-945-4679 /Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/19990902/RSTOLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, 1-888-776-6555 or +1-212-782-2840 URL: http://www.restorationhardware.com http://www.prnewswire.com
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