Some things in life are reliable. The sun will set this evening, most likely while I'm home enjoying a nice dinner (provided my schedule doesn't change), and it will rise tomorrow morning.
I'm also beginning to think that Restoration Hardware
As you may have guessed, that's the story this quarter as well. Sales were up a solid 20%, same-store sales were up, and gross margins improved by 3%. Unfortunately, SG&A expenses as a percentage of sales were also up 3%, so at the operating profits line, the company is back at square one. The majority of the SG&A increase was due to increased catalog circulation costs.
Those are the GAAP numbers; there's a $1.5 million non-cash charge baked into them, and if you back that out, the company's operating margins did improve. In addition, the company's margin mix is a bit different from those of your average retailer, since it's focusing more on direct sales than retail stores. While the costs of leasing a store show up above the gross margin line, advertising expenses show up in SG&A. That said, the company still finds itself short of operating profitability.
Restoration Hardware sells wares similar to those of Crate & Barrel and Pottery Barn (which is owned by Williams Sonoma
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