Restoration Hardware’s Loss Widens

Restoration Hardware Inc. said Thursday that it posted a wider second-quarter loss as higher costs offset a sizable revenue increase, and that its third-quarter deficit might be larger than analysts were expecting.

In previewing third-quarter results, the Corte Madera, Calif.-based home furnishings retailer said it expected a loss of 3 cents to 5 cents a share, smaller than its loss of 9 cents a share a year earlier but a wider range than the loss of 3 cents a share that analysts were expecting. Restoration Hardware said sales at stores open at least a year -- a key measure of growth -- should increase by mid-single digits, and Internet and catalog revenue should grow 25% to 30%.

The company’s shares slid 4% to $7 in after-hours trading after falling 35 cents, or 4.6%, to $7.30 in regular trading.

In the second quarter ended June 30, Restoration Hardware posted a loss of $2.5 million, or 7 cents a share, compared with a loss of $1.9 million, or 6 cents, during the year-earlier period. Excluding a charge for store remodeling, the retailer said the second-period loss would have narrowed to 4 cents a share.

Revenue in the second quarter grew 20% to $144.8 million as same-store sales rose 5.6%. Direct-to-consumer sales jumped 50% to $42.9 million. The retailer ended the period with 102 stores, the same as a year earlier.

However, selling, general and administrative expenses ate up 32% of sales during the quarter, compared with 29% of sales in last year’s second quarter.

Analysts surveyed by Thomson Financial expected a loss of 3 cents a share on sales of $142.1 million.

Also on Thursday, Restoration Hardware said Chief Financial Officer Patricia McKay would resign next month to take the same position at Office Depot Inc. Corporate Controller and Vice President Murray Jukes was named interim CFO.