Restoration Hardware ups textiles
October 8, 2001,
New York — Restoration Hardware is undergoing its own restoration, and a new strategy has already been implemented, Gary Friedman, ceo, told analysts at the Robertson Stephens conference held at The Pierre Hotel last week. It will become a more focused retailer, he added, with expanded assortments in home textiles and other categories.
In 2000, Restoration faced problems, he said. It lost $3 million on $369 million in sales. It was undercapitalized. It had seven to 10 under-performing stores, out of a total of 104 locations. And the average store sales versus square foot was low.
But the retailer does have valuable real estate and brand recognition, he added, and he outlined the company's five key initiatives to restoring the company to profitability.
Friedman admitted that Restoration's "current strategy lacks focus...The store was filled with too many disconnected items."
First, Restoration will be adding new core businesses, and one of those will be home textiles. Currently 3 percent to 4 percent of the store's assortment, the home textiles area, including flooring, window, bed and bath, will aggressively increase to become 15 percent to 20 percent of the mix, he said, balancing the low-margin furniture with the high-margin textiles.
There will be "immersion" in the floor coverings and window treatment businesses, he said. The bedding line will be a new core business, with sheets, top-of-the-bed and such, including its own line of duvets and pillows. Its number one category request on its web site is window treatments, a category it doesn't offer, he said — yet. The staff in the home area has also increased with the addition of Danielle Pratt — a Pottery Barn alumna — as director, merchandising, home textiles.
Its current core business will be redefined, and skus will be cut back 15 percent to 20 percent. Refixturing will reflect the new businesses as well as increase store density by 10 percent to 20 percent.
The company will also looking to allocate the appropriate amount of space to items. For example, cabinet and door hardware take up 17 percent of the perimeter space, but only eight percent of the sales volume.
Restoration will still sell the same amount of furniture, he said, but just more of other areas. And it will still have "discovery items" — "you wouldn't believe the unit sales we have in road-side bingo," he said.
Restoration will focus on its catalog, shifting from a print catalog to a direct mail model, focusing on high-performing classifications.
Restoration has also upgraded its management team, starting with Tom Bazzone, evp and coo — two individuals with years of experience in the home specialty market. Friedman also expects to name a new cfo by the end of third quarter. Other hires include Hilary Carroll as director, store operations.
The company has also begun closing underperforming stores: three to date, with plans for six to 10 more over the next two years.