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Soft Side Soothes Restoration Hardware

Encouraged by success in its bath textiles, bath accessories and decorative accessories, Restoration Hardware sees a solid holiday season ahead.

"Where we've seen the business perform relatively well is in the accessories area, bath towels, bath accessories, things less tied to a housing event," said Gary Friedman, chairman, president and ceo.

The holiday selling season is when, Friedman added, "our product mix will shift dramatically to accessories, gifts and holiday décor, which are less likely to be impacted by the current macro environment."

Shortfalls during the quarter were not minor. Troubles occurred in furniture, which came in "substantially below plan, particularly with outdoor," he said, also citing "increased softness" in hardlines "more directly related to the slowdown in the housing sector." Examples were hardware, bath hardware, lighting, and window treatments.

Restoration reported a second quarter net loss of $7.9 million, vs. income of $0.2 million last year. Sales were up 2.5% to $183.8 million.

The 100-plus unit store, online and catalog retailer is "quite happy" with the initial success of its Bed & Bath catalog, which rolled out this spring.

In development: the Restoration Hardware Baby and Child catalog, set to launch in spring 2008. "We believe it will go positive the first full quarter that it is mailed," Friedman said.

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