Restoration Hardware will go private
Specialty home decor and home furnishings retailer Restoration Hardware has been sold to private equity firm Catterton Partners for $267 million, in a move that will take the retailer private.
Restoration Hardware has seen several quarters of weakness due to an ultra-competitive home decor and furnishings environment. Strong competition from similar retailers, including Pottery Barn, Williams-Sonoma Home, West Elm, Pier 1 and Design Within Reach, combined with a downturn in the housing sector, led to losses in the company’s most recent fiscal quarter.
“We are excited about the opportunity to work with Catterton Partners, which has a successful track record and significant experience in the consumer and retail industries,” said Gary Friedman, Restoration Hardware chairman, president and CEO, in a statement. “We believe this partnership will provide us with important resources to execute our operating and growth strategies over the long term.”
J. Michael Chu, managing partner of Catterton Partners, said, “By combining our respective expertise, we believe we can continue to evolve and grow the brand and become a dynamic force in the marketplace.”
Under the terms of the agreement, in which Restoration Hardware will merge with a subsidiary of Catterton Partners, all of the company’s outstanding shares will be acquired for a price-per-share of $6.70.
The agreement still is subject to the approval of shareholders, as well as regulatory approval, but is expected to close in the first quarter of 2008.
In August, Restoration Hardware announced it would cut 100 jobs at the company’s Corte Madera, Calif.-based headquarters in order to save $9 million annually. In its second quarter, the company swung to a $5.5 million loss from $2.2 million in earnings last year.
Sales rose 2.2 percent to $183.8 million compared with $179.3 million last year.
Restoration Hardware has approximately 100 retail stores and eight outlet stores in 30 states, Washington, D.C., and Canada.
BBB, Sherwin-Williams reach ad agreement
Sherwin-Williams will continue to offer a “lifetime guarantee” on its Duration Exterior Latex Paint after an inquiry by the National Advertising Division of the Council of Better Business Bureaus. The council determined that Sherwin-William’s advertising claim is valid because the paint company will provide replacement coatings if paint peels or blisters during the lifetime of a purchaser while the individual owns a home painted with the product.
The council took exception, however, with the advertising claim that “You won’t have to paint again. Ever.”
“[This claim] offers a specific level of performance and a promise to consumers,” the council said. Sherwin-Williams has agreed to discontinue using that statement in its advertising materials, according to a press release issued by the Better Business Bureaus Council.
Unseasonably warm weather hurts October chain store sales
October sales at U.S. chain stores grew 1.6 percent compared to the same month in 2006, according to the International Council of Shopping Centers (ICSC) tally of same-store sales.
October held relatively steady with September (1.7 percent), both adversely affected by the unseasonably warm weather patterns across the United States, which impacted apparel sales and kept the overall industry performance down.
“Over the last two months, retailers have struggled with the warm weather’s negative impact on retail spending,” said Michael P. Niemira, ICSC’s chief economist and director of research. “However, for the November-December period, we are expecting a marked improvement from the very sluggish September-October performance.”
Wal-Mart reported a same-store sales increase of 0.4 percent for October, which was lower than the 1.1 percent increase expected by analysts. Further, the retailer said it also expects moderate sales in November, which marks the beginning of the holiday shopping season — which can account for 25 percent to 40 percent of annual sales.
Wal-Mart shares fell almost 2 percent to $43.10 in early afternoon New York Stock Exchange trading following the announcement.
ICSC expects a 2.5 percent year-over-year sales increase industry-wide for November.
ICSC Chain Store Sales Trends is a monthly report on U.S. retail sales performance based on a preliminary compilation of reported sales for 44 chain stores. Industry sales aggregates are compiled for comparable-store or same-store sales and for total store sales.