Restoration Hardware will concentrate on driving direct sales from its catalogs and Web site and expects to get more than half its sales from those centers within three years.
To aid that focus, the company will damp down store expansion for the next two years at least. It has no plans to open new stores in 2007 and says it will stop reporting came-store sales because that figure will be a poor indicator of progress as it integrates its various channels.
Gary Friedman, president and CEO of the Corte Madera CA-based home furnishings supplier, made the company’s strategic direction clear during an analyst conference following announcement of Restoration’s fourth-quarter and fiscal 2006 financials.
“Our business is primarily about selling more to our best customers, not necessarily exponentially growing the customer base — though we’d like to grow that too,” he said.
Restoration Hardware reported that Q4 sales rose 27% year over year to $243 million. Direct sales to consumers, through the catalogs and Web site, grew 59% from the same quarter in 2005, while comparable store sales increased 9.1%.
The company reported a profit of $3.2 million on sales of $712.8 million in fiscal 2006, which ended Feb. 3. Last year, Restoration Hardware lost $29.3 million on sales of %581.7 million.
The company launched a category extension to its catalog business last year with an outdoor catalog and a second with a catalog and interactive Website Brocade Home, centering on interior furnishings. Restoration will roll out another catalog extension in April with a bed and bath catalog. The company also plans to launch Restoration Hardware Kids, for juvenile home furnishings, and a division serving the hotel and home development industry.