Editor's note: This story has been updated to correct the figure reported for last years's operating margins at Restoration Hardware. The Fool regrets the error.

 These are mortal times for Restoration Hardware (NASDAQ:RSTO).

Afterf lapping market expectations during its second and third quarters, the rustic home decor specialist proved ordinary during the seasonally significant fiscal fourth quarter. Wafer-thin operating margins will also sting the company in the new fiscal year.

Restoration's fourth-quarter showing was still impressive. Net revenue soared 27% higher, powered by a 59% spike in customer-direct sales and a scintillating 9.1% uptick in store-level comps. There was an extra week in the mix, but why nitpick? The company reversed a charge-laden loss last year by earning $0.34 a share for the quarter, or $0.36 per share before stock-based compensation.

The problem is that analysts were already there, expecting $0.36 a share in profitability on $239.2 million in revenue. More importantly, those same Wall Street pros are also well ahead of where the company will be. Restoration Hardware is looking to earn between $0.10 and $0.15 per share for the year, while analysts had been targeting $0.27 per share in earnings.

The culprit here is the low operating margins. Even though the company is looking for sales to grow by 11% to 14% this year, operating margins won't improve dramatically from the lackluster 1.5% showing the company produced last year.

The company points to 4% to 5% in operating margins on $1 billion in sales by 2009, but that $50 million in operating profit seems so far away with shareholders dwelling on the 2.0% to 2.3% operating margins expected this year.

I'll cut Restoration some slack here, eyeing a pronounced dip as a possible buying opportunity. The company is working on some pretty impressive things that could dramatically expand its reach, and investors shouldn't expect expanding margins to go along with Restoration's expanding mind. It launched an outdoor catalog a few months ago, and a bed and bath catalog will debut later this month. Restoration Hardware Kids is also being developed for a springtime launch next year.

But it may not be the new namesake-branded catalogs that help the company the most. It introduced the Brocade Home catalog back in the fall. Selling Victorian-style furnishings with a modern twist, the concept is the handiwork of Lisa Versacio, who had earlier created West Elm for Williams-Sonoma (NYSE:WSM).

Just Google the concept and you will find raves galore in the blogosphere. We're talking a few layers classier than Pier 1 Imports (NYSE:PIR), Bombay (NYSE:BBA), or even Williams-Sonoma's Pottery Barn. It's got the hipness of the furnishings department of your local Urban Outfitters' (NASDAQ:URBN) Anthropologie, but with a higher elegance factor. It's almost like what Restoration Hardware wanted to be before it grew up.

So let the lower prices come. As a careful shopper, you'll know just what to do when the price is right.

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Longtime Fool contributor Rick Munarriz has been burned by Restoration Hardware before, but he hasn't been an investor in the stock for years. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.