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Restoration Hardware Holdings, Inc. Reports Record First Quarter Fiscal 2013 Financial Results

Gary Friedman, Chairman Emeritus, Creator and Curator commented, "Our continued industry leading performance is a reflection of our demonstrated ability to innovate, curate and integrate new products, businesses and experiences. Our Spring Collection, inclusive of our new catalogs, RH Tableware and RH Objects of Curiosity, is performing ahead of our plans. This Fall, we plan to launch two new catalogs, RH Leather and RH Rugs. The new catalogs will include expanded and dominant collections presented in a dramatic and innovative context. As previously announced, this Fall we will also launch RH Contemporary Art, post the Rain Room exhibition at the Museum of Modern Art in New York, with our inaugural exhibition ‘Autonomy’ with existing and newly commissioned artworks by the Rain Room creators, rAndom International, in our new art gallery in the Meatpacking-Chelsea Arts District. We will also launch our immersive new online Contemporary Art platform, as well as an Art Journal."

Mr. Friedman continued, "Also announced today, is our intent to launch two new businesses, RH Kitchen and Tableware and RH Antiquities. RH Kitchen and Tableware provides another logical opportunity for growth as we expand beyond our initial tableware offering and create a curated collection of kitchen furniture, appliances, lighting, cookware, tools, and food. RH Antiquities will provide an opportunity to fill current customer demand with a curated collection of antiques as we enter this $25 billion highly fragmented market. These new businesses will further enhance our brand position and provide meaningful long-term growth opportunities."

First Quarter Fiscal 2013 Financial Results

Revenue - Net revenues for the first quarter of fiscal 2013 increased 38% to $301.3 million from $217.9 million for the first quarter of fiscal 2012. This is on top of an 18% increase in net revenues for the first quarter of fiscal 2012.

  • Comparable store sales increased 41% for the first quarter of fiscal 2013. This growth compares to an increase of 26% in comparable store sales for the first quarter of fiscal 2012.
  • As of May 4, 2013, the Company operated a total of 70 retail stores, consisting of 62 Galleries, 5 Full Line Design Galleries and 3 Baby & Child Galleries, as well as 14 outlet stores throughout the United States and Canada. This compares to a total of 74 retail stores, consisting of 70 Galleries, 2 Full Line Design Galleries and 2 Baby & Child Galleries, as well as 10 outlet stores open at the end of the first quarter of fiscal 2012.
  • Direct revenues increased 38% to $142.0 million for the first quarter of fiscal 2013. This growth is on top of the 20% increase in direct revenues for the first quarter of fiscal 2012.

Operating Income (Loss)* - Adjusted operating income for the first quarter of fiscal 2013 increased to $4.6 million compared to an operating loss of $0.6 million for the first quarter of fiscal 2012. Including the impact of variable non-cash stock-based compensation charges and costs related to the Company’s follow-on offering, operating income was $0.5 million compared to an operating loss of $2.1 million for the prior year fiscal quarter.

EBITDA* - Adjusted EBITDA for the first quarter of fiscal 2013 increased 82% to $11.2 million compared to adjusted EBITDA of $6.2 million for the first quarter of fiscal 2012. Including the impact of variable non-cash stock-based compensation charges and costs related to the Company’s follow-on offering, EBITDA for the quarter was $7.1 million compared to EBITDA of $4.3 million for the prior year fiscal quarter.

Net Income (Loss)* - Adjusted net income increased to $2.3 million for the first quarter of fiscal 2013 from an adjusted net loss of $1.3 million for the first quarter of fiscal 2012. GAAP net loss during the first quarter 2013 was $0.2 million compared to a GAAP net loss of $3.7 million for the first quarter of fiscal 2012.

Earnings Per Share* - Adjusted diluted EPS increased to $0.06 for the first quarter of fiscal 2013 from a loss of $0.04 for the first quarter of fiscal 2012. GAAP diluted EPS during the first quarter of fiscal 2013 was $0.00.

Outlook

The Company is providing the following guidance for the second quarter of fiscal 2013:

  • Net revenues in the range of $375 million to $380 million
  • Adjusted net income in the range of $15.7 million to $16.5 million
  • Adjusted diluted EPS in the range of $0.40 to $0.42

The Company is increasing its guidance for the fiscal year ending February 1, 2014 as follows:

  • Net revenues in the range of $1.47 billion to $1.51 billion
  • Adjusted net income in the range of $55.8 million to $58.2 million
  • Adjusted diluted EPS in the range of $1.41 to $1.47

The Company’s adjusted net income and adjusted diluted earnings per share guidance does not include (i) non-cash stock-based compensation charges, which for the second quarter are estimated to be $26.1 million or (ii) follow-on offering distribution costs relating to our common stock. The Company’s fiscal year 2013 will include 52 weeks compared to fiscal year 2012 which included 53 weeks.

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