-Net revenue increased 14% to $187.9 million for the fourth quarter of fiscal 2004, versus net revenue of $165.0 million for the same period last year.
-Comparable store sales increased 5.7% for the fourth quarter of fiscal 2004, which reflects a holiday comp sales increase of 3.1% and a January comp sales increase of 20.7 %.
-Direct-to-customer revenue increased 51% to $40.1 million for the fourth quarter of 2004, on top of a 51% increase in the same period in the prior year.
-Operating earnings were $17.2 million for the fourth quarter of fiscal 2004, up 23% compared to operating earnings of $13.9 million in last year's fourth quarter.
-Net income for the fourth quarter of fiscal 2004 was $10.6 million, $0.28 per share, as compared to net income of $8.0 million, $0.21 per share, in the fourth quarter of the prior year.
-Full year net income was $1.7 million, $0.04 per share, as compared to a net loss of $2.5 million, ($0.08) per share.
As previously announced, the Company will restate its fiscal 2003 and prior years' financial statements to give effect to a correction in the Company's lease accounting practices. All references to financial results in this press release give effect to the anticipated impact of the restatement which the Company expects to complete as part of the filing of its 10-K for the year ended January 29, 2005. The restatement will also include a reduction in equity in the Company's balance sheet as of January 31, 2004 to correct an error of approximately $650 thousand relating to the Company's tax provision calculation for 2001. In addition, during the fourth quarter of fiscal 2004, the Company completed its annual evaluation of previously established tax valuation allowances and identified necessary income tax contingencies. The effect of that review was to reduce its tax provision for the fourth quarter and the year.
Gary Friedman, the Company's President, CEO, and Acting Chairman stated, "We are pleased to report a comparable store sales increase of 5.7% for the fourth quarter and a 7.8% increase for the full fiscal year despite a difficult retail environment for home retailers. In addition, our Direct-to- Customer business increased 51% for the fourth quarter and 75% for the full year, on top of a 52% increase in fiscal 2003."
Mr. Friedman continued, "We are also pleased to report our first full year of profitability since 1998, the year in which the Company went public. While this is a key milestone, it merely represents the first of many important steps to transform Restoration Hardware into a high performance home furnishings brand that will stand the test of time. As we look forward, we are excited about both the continued initiatives to further evolve the brand, and our investments in operational leadership to enhance the customer experience and drive improved bottom line performance."
For the year ended January 29, 2005, net revenue was $525.8 million, a 20% increase versus a year ago. Comparable store sales for the full year increased 7.8% on top of a 5.2% increase for the last fiscal year. Direct-to-customer sales increased 75% to $119.0 million on top of a 52% increase a year ago.
Operating income for fiscal 2004 was $4.1 million versus a loss from operations in fiscal 2003 of $1.9 million. The Company's net income for the year ended January 29, 2005 was $1.7 million, $0.04 per share, as compared to a net loss of $2.5 million, ($0.08) per share, for fiscal year 2003.
At the end of fiscal 2004, inventory was $144 million as compared to fiscal 2003 ending inventory of $103 million. The higher level of inventory is in support of higher sales levels as well as the earlier timing of inventory purchases to support the Company's outdoor furniture program, including shipments in transit. The Company received the outdoor furniture shipments early to ensure solid in stock positions for the spring selling season. By the end of the first quarter, inventory levels are expected to be 15 to 20 % higher than the prior year's first quarter, which is in line with higher sales levels.
The Company provides the following guidance for fiscal 2005 (which excludes the impact of a change in accounting for stock options in accordance with the provisions of SFAS 123R):
- Increase in comparable store sales in the low to mid single digits for the full year.
-Direct-to-customer net revenue increase of 25% to 35%.
-Operating margins of 2 to 3 percent for the full year.
-Inventory at year end is projected to be relatively flat compared to fiscal 2004 levels.
=First quarter of fiscal 2005 results are expected to be a net loss in the range of $0.10 to $0.11 per share with an expected basic share count of 33.2 million shares.
About Restoration Hardware, Inc.:
Restoration Hardware, Inc. is a specialty retailer of high quality home furnishings, bath fixtures and bath ware, functional and decorative hardware and related merchandise that reflects the Company's classic and authentic American point of view. Restoration Hardware, Inc. sells its merchandise offering through its retail stores, catalog (800-762-1005) and on-line at www.restorationhardware.com. As of March 31, 2005 the Company operated 102 retail stores and two outlet stores in 30 states, the District of Columbia and Canada.
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