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TheStreet Open House

Restoration Hardware Holdings, Inc. Reports Third Quarter 2012 Financial Results

Gary Friedman, Chairman Emeritus, Creator and Curator, commented, “We believe our brand is redefining the luxury home furnishings market, and our proven ability to innovate, curate, and integrate new product categories and businesses will position us to continue our industry-leading growth."

Mr. Friedman continued, "Our new and developing businesses, RH Baby & Child, and RH Big Style/small spaces are gaining momentum as we refine the assortments and presentation. We opened our third and largest Baby & Child Gallery in Santa Monica, California last month, and the initial results are very encouraging. We continue to believe this concept can have a retail presence in at least the top 50 markets. We also plan to test a retail footprint of Big Style/small spaces in our next generation full line Design Gallery opening in Atlanta in 2014."

Mr. Friedman concluded, "We are introducing three new businesses this Spring - RH Tableware, RH Objects of Curiosity, and RH Fine Art. RH Tableware and RH Objects of Curiosity will feature their own catalogs, with planned in-home dates in the first quarter of 2013. Many of the products from these new businesses will also be presented in our current galleries and create an opportunity to drive higher productivity in our existing retail square footage. RH Fine Art will launch with an innovative Art Journal, a dynamic new website, and a dramatic art gallery in New York in the first half of 2013. We believe this new venture into the world of fine art will render the RH brand more valuable and reinforce our luxury lifestyle positioning."

Third Quarter Fiscal 2012 Financial Results

Revenue - Net revenues for the third quarter ended October 27, 2012 increased 22% to $284.2 million from $232.5 million in the third quarter ended October 29, 2011. This is on top of 25% year-over-year growth in net revenues for the third quarter of fiscal 2011.

  • Comparable store sales increased 29% for the third quarter of fiscal 2012. This growth compares to an increase of 36% in comparable store sales for the third quarter of fiscal 2011.
  • As of October 27, 2012, the Company operated a total of 73 retail stores, consisting of 71 Galleries and 2 full line Design Galleries, as well as 12 outlet stores throughout the United States and Canada. This compares to a total of 84 retail stores, consisting of 83 Galleries and 1 full line Design Gallery, and 10 outlet stores operated at the end of the third quarter of fiscal 2011.
  • Direct sales increased 24% to $125.0 million for the third quarter of fiscal 2012. This growth is on top of the 17% year-over-year growth in direct sales for the third quarter of fiscal 2011.

EBITDA* - Adjusted EBITDA for the third quarter of fiscal 2012 increased 17% to $13.0 million compared to adjusted EBITDA of $11.1 million in the third quarter of fiscal 2011. EBITDA for the quarter was $8.6 million compared to EBITDA of $3.3 million for the prior year fiscal quarter.

Net Income (Loss)* - Adjusted net income increased 147% to $2.7 million in the third quarter of fiscal 2012 from $1.1 million in the third quarter of fiscal 2011. GAAP net income increased to $1.7 million from a GAAP net loss of $4.8 million in the third quarter of fiscal 2011.

Earnings Per Share* - Adjusted diluted EPS was $0.07 for the third quarter of fiscal 2012. Shares used to calculate adjusted diluted EPS reflect the Company’s post-initial public offering capital structure. GAAP diluted EPS of $16,850 is not a meaningful number as it is based on a limited number of shares outstanding and does not include the impact of the initial public offering (IPO) or the reorganization of the Company’s capital structure in connection with the IPO.

Nine Month Period Financial Highlights

Revenue - Net revenues for the nine months ended October 27, 2012 increased 22% to $795.0 million from $652.8 million in the nine-month period ended October 29, 2011. This is on top of 26% year-over-year growth in net revenues for the nine-month period ended October 29, 2011.

  • Comparable store sales grew 29% during the first nine months of fiscal 2012. This is on top of 25% growth in comparable store sales for the first nine months of fiscal 2011.
  • Direct sales increased 25% to $361.9 million for first nine months of fiscal 2012. This growth is on top of the 29% year-over-year growth in direct sales for the first nine months of fiscal 2011.

EBITDA* - Adjusted EBITDA for the nine-month period increased 23% to $47.9 million compared to adjusted EBITDA of $38.8 million in the same period last year. Including the impact of unusual and non-recurring items, year-to-date EBITDA was $39.0 million compared to EBITDA of $22.3 million for the prior year period.

Net Income (Loss)* - Adjusted net income for the nine-month period increased over 95% to $13.6 million from $7.0 million in the prior year period. GAAP net income for the nine-month period increased to $15.6 million from a GAAP net loss of $3.5 million for the first nine months of fiscal 2011.

Earnings Per Share* - Year-to-date adjusted diluted EPS was $0.37. Shares used to calculate adjusted diluted EPS reflect the Company’s post-initial public offering capital structure. GAAP diluted EPS of $155,730 for the nine months of fiscal 2012 is not a meaningful number as it is based on a limited number of shares outstanding and does not include the impact of the IPO or the reorganization of the Company’s capital structure in connection with the IPO.

Conference Call and Webcast Information

Restoration Hardware will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss the third quarter results. Interested parties may access the call by dialing (800) 591-6942 (United States/Canada) or (617) 614-4909 (International), passcode 60161827. A live broadcast of Restoration Hardware’s quarterly conference call and an accompanying slide presentation will also be available online at the Company's website www.restorationhardware.com under Investor Relations. A replay of the conference call will be available through December 26, 2012, by dialing (888) 286-8010 and entering passcode 97385222 and on the Company’s investor relations website.

About Restoration Hardware

Restoration Hardware is a luxury brand in the home furnishings marketplace, offering product assortments across a number of categories, including furniture, lighting, textiles, bathware, décor, outdoor and garden, as well as Baby & Child products. Restoration Hardware operates an integrated business across multiple channels of distribution including galleries, catalogs and websites.

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