13304 Fri, 12/14/2007 - 2:07pm
CORTE MADERA, Calif.--Restoration Hardware has entered into a confidentiality agreement with Sears Holdings Corp. that will give Sears access to non-public information as it considers an acquisition of the retailer, according to a filing today to the Securities and Exchange Commission.
Sears last month made a tender offer to buy out Restoration Hardware for $6.75 per share in cash, topping an offer of $6.70 per share, or $267 million, made earlier in the month by private-equity firm Catterton Partners in a definitive merger agreement.
Restoration Hardware will continue to solicit competing offers until Dec. 13.
In other news, Restoration Hardware widened its loss for the third quarter ended Nov. 3, despite a sales gain.
The retailer recorded a net loss of roughly $15.2 million, or 39 cents per share, compared with a loss of about $5.7 million, or 15 cents per share for the year-ago period.
Sales ticked up 10.6 percent to $173.7 million primarily driven by the growth in Restoration Hardware's direct-to-customer segment. Direct revenues accounted for 56 percent of total sales compared with 36 percent for the prior-year quarter.
"The increase reflects growth in catalog and page circulation, and a continuing shift in revenues from the stores segment to the direct-to-customer segment resulting from management's multichannel merchandising and marketing strategies and operational changes implemented in the second quarter of 2007," the company stated.
The uptick in direct sales led to an increase in selling, general and administrative expenses, which put a squeeze on the company's margins, the company said. Margins also fell on a higher mix of promotional sales and increased supply-chain costs.