Popular Furniture Sale Hits Restoration Hardware

Specialty home furnishings retailer Restoration Hardware Inc. posted a first-quarter loss Wednesday as its results were hurt by a furniture sale that proved to be too popular.

The Corte Madera, Calif.-based company, which warned earlier this month it would post a greater-than-expected loss for the quarter, posted a net loss of $2.7 million, or 16 cents a share, for the quarter ended May 1, compared with a net loss of $1.7 million, or 42 cents a share, a year ago on a smaller number of shares outstanding.

Restoration Hardware said earlier this month it expected a loss between 14 cents and 18 cents a share, due to costs associated with the sale of Mission-style furniture.

The store’s popular Mission furniture sale bolstered overall sales growth, but discounts of 10% to 25% cut into profit margins. The sale also generated high warehouse, procurement and delivery costs.

The company said Wednesday that its net sales for the first quarter rose about 84% to $60 million, from $32.6 million a year ago.

Sales from stores open at least a year, or same-store sales, rose 18.4% versus the year-ago level.

During the first quarter, the company opened stores in Tampa, Fla., and Norfolk, Va. It now operates 67 stores in the U.S. and Canada.

The earnings were announced after the stock market closed. The company’s stock fell $1.06 to close at $11.94 on Nasdaq. That compares with its June 1998 initial public offering price of $19 a share and its peak price of $37.

At a Glance

* Wet Seal Inc., a Foothill Ranch, Calif.-based women’s apparel retailer, reported first-quarter earnings of $4.4 million, or 34 cents per share, for the period ended May 1, compared with $3.5 million, or 25 cents, in the year-ago period. Sales rose to $122.8 million from $104.8 million a year ago. Same-store sales rose 3%.