Restoration ready to roll

Carole Sloan, April 1, 2002

New York — Restoration Hardware is taking aim on a home textiles business that is designed to boost the category from 4 percent of the company's total sales in 2000 to at least 20 percent this year.

With a dramatically expanded assortment in windows, bedding, bath, pillows/throws and rugs both in-store, online and in the catalog, the home furnishings specialty retailer has focused on what ceo Gary Friedman calls the "premium market," a slot above the lifestyle retailers such as Bed Bath & Beyond, Z Gallerie and Crate & Barrel and below the interior designer world. This area, he contended, "is a big void" that the company is planning to fill across all its merchandise lines.

The new generation Restoration Hardware will be launched April 9 in its three retail channels and will be followed with a two page ad in a number of consumer magazines and the New York Times Sunday magazine

In home textiles, the mantra is focus coordination with an emphasis on perceived quality of materials and construction that better fits with the quality level of its furniture, Friedman said at a press conference here last week as well as at financial analysts meeting.

Both the home textiles expansion and the entire store assortment also will reflect what Friedman called "an important demographic shift — the 45-to-60-year-olds are the biggest emerging group. And they will be more home centered and will want more timeless, classic design."

One important element of the home textiles explosion, Friedman remarked, will be the ability to leverage the high-margin home textiles business with the lower-margin furniture business.

Discussing the new home textiles offerings, Danielle Bridge, vp, dmm, textiles, and Mary Britton-Rose, vp, product development, soft goods, emphasized the coordinated aspects of the product mix across classification lines.

Bridge consistently pointed to materials and constructions "that are only available to the interior design trade" and that won't be at other retailers because of their exclusivity.

Overall in home textiles, 900 skus were developed for this month's launch.

The expansion of window coverings, Friedman noted, came partly in response to the fact that it is customers' most frequently requested item among those not available on its website. "It's a huge, huge opportunity."

In the new window coverings, there are six core fabrics, including three weights of Libeco-Lagae linen, a two-ply, yarn-dyed silk from Thailand and a 21-ounce velvet from J.B. Martin in five colors. Decorative pillows include five of the core fabrics plus the velvet.

Bedding, which had been offered in a limited way, now has six core ensembles, including quilts, in four colors each. A special feature, Britton-Rose said, is that sheets and duvet covers are oversized to accommodate pillow top mattresses and featherbeds.

Bath, which includes towels, shower curtains, rugs, robes and accessories, has been expanded from one color to 10 colors, Britton-Rose said.

Three new bath rugs — a Paradigm reversible that coordinates with the rest of the Paradigm home textiles program, a plush loop, and an Italian woven — mark the beginning of this category. And robes have been expanded to include two sizes and three qualities.

Rugs are being offered in custom sizes and binding options in natural fibers and will be joined in the fall by hand knots and tufted Persians, she added.

Window hardware also is being expanded and will be important in both the catalog and in the stores. In fact, the new catalog features one of the new window hardware designs on the cover.

From a corporate perspective, the new website and catalog are the beginning of what Friedman sees as a $300 million opportunity in five years. Overall goals are a 15-percent-per-year sales increase and a 50 percent increase in profits, he said.

The new catalog is designed for single-item impact, said Marta Benson, vp, Restoration Hardware Direct, who noted, "We edited out low margin items."

The circulation is markedly different, with this month's launch going to 3.8 million homes, up 121 percent over last year. And more importantly, 71 percent of the circulation will be sent to store-trading areas. The May remailing will be to 1.6 million homes, up 440 percent, and 62 percent to store-trading areas.

As the company prepared to launch the new products and marketing, it reduced its sku count by 30 percent. And while it will continue to offer "discovery items" those will be more edited and focused, Friedman said. Unless the buzz over the home textiles introductions seems to put the retailer's core business in the background, Friedman was quick to state, "We will increase our dominance in furniture, lighting hardware and cleaning items."

The company closed three stores last year and sees another six to eight closing over the next two years, Friedman said. No new stores will open — except for Durham, NC, which opened last month — as the company fine-tunes the new formats and merchandise.

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