Corte Madera, CA–After a Securities and Exchange Commission review, gifts and home decor cataloger/retailer Restoration Hardware (Nasdaq: RSTO)said it would rework its results for the first three quarters of fiscal 2001 and for all of fiscal 2000 to reflect how it recorded furniture sales.
Restoration Hardware said it had been recording revenue at the time of that furniture orders were shipped but will restate results to reflect the revenue received when they were delivered. (Many catalogers record revenue as soon as the merchandise is shipped to the customer, but large items such as sofas are typically dropshipped from the manufacturer and in transit for longer periods of time.) The restatement will not have any effect on cash, receivables, accounts payable, or debt.
The company expects the anticipated effect of the change in revenues from amounts previously reported to be no more than $5.0 million in any fiscal quarter and no more than $3.5 million for the fiscal year ended Feb. 3, 2001. Restoration Hardware expects effects of the restatement on net income to range from $50,000 to $450,000 in any fiscal quarter, not to exceed $400,000 for the fiscal year ended Feb. 3, 2001, while it anticipates effects of the restatement on earnings per share to range from $0.01 to $0.03 per share in any fiscal quarter and not to exceed $0.03 per share for the fiscal year.
For the most recent quarter ended Feb. 2, Restoration Hardware said net sales were flat at $144.3 million, compared with $144.5 million last year. Direct to customer sales, which include catalog and Internet, increased 47%, to $14.1 million, compared with the $9.6 million last year. Restoration Hardware incurred a net loss of $12.8 million for the quarter, compared with a net income gain of $9.5 million last year.
Net sales for the year ended Feb. 2 decreased 4%, to $365.8 million, compared to sales of $367.3 million last year. Direct sales for the year increased 50%, to $33.9 million, compared with $22.6 million last year. For the year, the company incurred a net loss to common shareholders of $36.9 million, compared to a net loss of $3.4 million last year.
After the restatement analysis, results just released for the quarter ended Feb. 2 are not expected to vary by more than $800,000 for sales, $250,000 for net income, and $0.03 for earnings per share. For the year ended Feb. 2, results are not expected to vary by more than $3.5 million for sales, $700,000 for net income, and $0.05 for earnings per share. In April, Restoration Hardware will announce a new strategy that includes a retail overhaul, a redesigned catalog and Website, and the launch of a premium home textiles collection.