Despite Direct Gains, Restoration Hardware’s Loss Increases

Thanks to a 78% increase in direct sales, Corte Madera, CA-based home decor and gifts cataloger/retailer Restoration Hardware (Nasdaq: RSTO) grew its sales 23% overall. Still, the gains were not enough to help the company’s net loss, which grew to $3.1 million, compared with a net loss of $2.9 million last year.

For the quarter ended Oct. 30, total net revenue increased 23% to $118.2 million, compared with $95.8 million last year. Direct-to-customer net revenue increased 78% to $28.4 million, compared with $16.0 million last year. Retail revenue reached $89.7 million, compared with $79.9 million last year.

Selling, general, and administrative expenses grew 24% from last year and pressured gross margin. Restoration Hardware says that advertising costs as a percentage of net revenue were higher than expected in the quarter because of lower direct sales from prospecting with its September catalog. It also says it had more significant falloff in sales from not repeating last year’s fall furniture sale. Restoration says it has adjusted its mailing plans for the remainder of the year beginning with the October catalog.

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