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In this Issue

Company Financials

Why Restoration Hardware Lavishes Millions on Luxury Stores & Catalogs

Agio Names Barb Hunter Vice-President of National Accounts

Brown Jordan Showcases Latest Collections in New Booth at HD Expo

TUUCI Introduces Largest Shade Product To-Date



Company Financials

HNI Corporation
MUSCATINE, IA — HNI Corp. announced first quarter net sales of $452.2 million for the quarter ending March 29, 2014, an increase of $9.9 million, or 2.2 percent, compared to the same quarter last year. The change was driven by an increase in hearth product sales as well as an increase in office furniture sales in the contract channel.

First quarter 2014 new sales for the hearth products segment increased 22.7 percent or $17.4 million to $93.8 million from $76.5 million for the same quarter last year. The increase was driven by an increase in both the new construction channel due to housing market recovery and the remodel-retrofit channel due to strong remodeling activity and demand for alternative fuel products.

Operating profit prior to unallocated corporate expenses increased $8.1 million to $11.7 million compared to $3.6 million in the prior year quarter due to increased volume and higher price realization offset partially by higher incentive-based compensation.
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Restoration Hardware
CORTE MADERA, CA — Restoration Hardware Holdings, Inc. (RH) announced that for fiscal year 2013 ending Feb. 1, 2014, net revenues increased $357.9 million, or 30.0 percent, to $1,551.0 million compared to $1,193.0 million for fiscal year 2012. The company had 70 and 71 retail stores open at Feb. 1, 2014 and February 2, 2013, respectively. Store sales increased $175.1 million, or 27.2 percent, to $818.4 million in fiscal 2013 compared to $643.3 million in fiscal 2012 due in large part to comparable store sales increase of 27.0 percent in fiscal 2013 compared to fiscal 2012.

Direct sales increased $182.8 million, or 33.3 percent, to $732.6 million in fiscal 2013 compared to $549.7 million in fiscal 2012. Comparable brand revenue growth increased by 31.0 percent in fiscal 2013 compared to fiscal 2012. The company believes the increase in comparable brand revenue, comparable store sales and direct sales was due primarily to customers’ favorable reaction to merchandise assortment, including the expansion of existing product categories, and the introduction of new product categories.
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Photos courtesy Restoration Hardware.

Why Restoration Hardware
Lavishes Millions on Luxury Stores & Catalogs

CORTE MADERA, CALIFORNIA

By Racked National

While most brick-and-mortar retailers are battening down against the advance of e-commerce competition – closing locations, scaling back costs – luxury furniture chain Restoration Hardware (RH) is doing quite the opposite.

Shortly, the company will debut 13 giant source books (encyclopedia-sized catalogs) for its 2014 products, but the 3,300 pages of distressed farm tables, patinaed wood headboards, and brass lamps will be nothing compared to the brand's storefront plans.

So far, the retailer has built five posh storefronts, or “galleries,” in RH parlance. Unlike standard furnishings stores, these galleries have cafes, art installations, fountains and wine bars. The Boston location, which opened last year, is a 40,000 sq. ft. museum of home décor, and is actually located in Boston's former New England Museum of Natural History. The company plans to open 60 to 70 more opulent galleries, including one in Greenwich, Connecticut (it opened last Friday) inside a beautiful ancient post office building, and the plan is to give the New York gallery in the Flatiron neighborhood a 21,448 sq. ft. expansion.

“RH is really like a $1.6 billion start-up with all that's about to come,” Gary Friedman, RH's CEO, said in a recent phone interview. “What's coming next will be transformative and disruptive to the furniture market.”

Friedman believes that by pumping enough money into Restoration Hardware’s catalogs, the company will triumph over every other retailer. His vision for RH is expensive and, some might say, extravagant, but the man has proven himself to be a tenacious businessman. This focus on luxury is how Friedman pulled RH out of near-bankruptcy nearly a decade ago and he’s using that same strategy to crush the furniture market.

A life-long retail veteran, Friedman started his career at Gap watching Mickey Drexler transform the brand before taking a key leadership position at Williams-Sonoma for 13 years. When Friedman became CEO of Restoration Hardware in 2001, the company was practically bankrupt. Things only got worse as the recession hit a few years later. But instead of lowering inventory prices, a move many retailers made in response to the economic crisis, Restoration Hardware raised its prices and offered a better quality product, and business did a complete 180.

Everyone thought I was crazy, coming from Williams-Sonoma to try to (save the company). But we had a clear vision of filling a void in the furniture market – high quality at a good price – and so I said, ‘If we're going to go down, let's go down with style. Let them remember us,’” Friedman said.

“At the time, we needed to do something to inspire people to buy in a marketplace where no one would shop. Every retailer was crying value, value, value, and so they were taking down prices to give customers better value, but they were decreasing their quality. We went the other way because sales were down 30, 40 percent anyway. We took quality up, the level of design and taste up, and our price point. We went down like everyone else but then our business responded.”

 Thanks to Friedman's business gamble, the company was able to turn itself completely around. RH reported a net loss of over $35 million for the fiscal year of 2001, but since the beginning of the recession, business has skyrocketed. In 2009, the company reported $18.5 million of adjusted income and only three years later, its income doubled to $37.7 million. 2013 proved to be a record year, as RH reported over $69 million in adjusted net profit, up 52 percent from the prior year, according to SEC filings.

Friedman said the business idea of raising prices and quality came from wanting to target “the Neiman Marcus, Saks shopper” who wanted luxury but not to hire an interior designer.

“Restoration Hardware's focus (on luxury) is the secret of how they've been able to pull themselves off the brink of disappearing and back into growth mode,” said Pam Danziger, a retail analyst at Unity Marketing. “I don't know if luxury is the right term, but they are aiming for quality and timeless, classic style at a reasonable price. They really know what their customer is looking for. They've found a real niche in hitting the popular conception of how more affluent Americans want to decorate their homes. They understand people who are house-proud.”

Wooing customers with its luxury appeal, Restoration Hardware now believes pumping cash into extravagances like textbooks featuring inspiring product vignettes as well as storefronts with sculpture gardens and impressive architecture will prove effective in the long run. Friedman believes the next struggle retailers will face will be how to transform their shopping spaces and experience; hipster retail giant Urban Outfitters has already begun to do this with its lifestyle shopping spots.

“There's the thought that everything is moving online, that retail stores are dying and people should shrink or close their stores. I actually think that's not true. I think we're going through natural evolution and shift with a new channel and platform,” Friedman said.

“Retail now has to change the way its been done for the last 50 years. The majority of business is controlled by shopping centers, which are boxes with a couple of entrances and no windows. If you stick a plant in a department store, it will die because living things aren't supposed to exist (in that type of setting.)

“We're going to create the next-generation (of retail experience) – a place that is reflective and harmonious, with cafes and fountains and rooftops. It will be transformative to how people will shop because it'll be a place you'll love.”

Many retailers still use catalogs as part of their marketing strategy because of their capabilities to double as look-books and fashion magazines, the Wall Street Journal reported last month. Companies like British retailer Boden found that shoppers spend 15 to 20 minutes on their catalog but only eight seconds on their emails.

Friedman believes that by putting enough money into Restoration Hardware's catalog, the company will triumph over every other retailer. (Interestingly, Williams-Sonoma, a major competitor of RH, admitted to spending half of its marketing budget on its catalog production and mailing.)

Friedman is less interested in the Internet; quoting Steve Jobs, he said websites are the ultimate customer platform because even the smallest of retailers can have an amazing website because “everyone is limited to the size of the screen.”

“It's important to have the physical manifestation of the product so the customer can know what we have. When you see their book, and its six pages, and then you see ours, which is 300 pages, you think, ‘Wow, these guys have a lot!’ and that's the difference,” Friedman said. “There's also a way to integrate the way you shop, how you organize your selection to the customer. We do it in two ways, by offering a category-dominance approach or lifestyle books where you can find inspiring ideas. They are both necessary to shopping.”


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Agio Names Barb Hunter Vice-President of National Accounts

VIRGINIA BEACH VIRGINIA

Agio-USA has promoted Barb Hunter to vice president, national accounts. The announcement was made by Bob Gaylord, president, who said, “Barb has successfully worked with countless retailers and her accomplishments have truly been outstanding. In recent years Barb has headed our company’s efforts with some of our largest national accounts.”        

“Throughout my career, I’ve admired Agio-USA for being a leader in outdoor furniture. Working with Agio for the past 10 years in various retail channels – specialty, mass and clubs – has been an incredible experience and provided tremendous growth opportunities,” Hunter said.

An industry veteran, Hunter has more than 35 years experience in the outdoor sector working with companies such as Sunbeam Outdoor Products and Wellington Home Products. She will continue to focus on Sam’s Club and Wal-Mart Corporation’s domestic and international divisions.  

Outside of work, Hunter enjoys reading, gardening and spending time with her grandchildren.  She is also passionate about serving on the board of the Kristen Kay Hunter Memorial Scholarship Foundation. This non-profit organization was created in 2009 in memory of Hunter’s eleven-year-old granddaughter Kristen Kay who passed away due to complications of Methicillin-resistant Staphylococcus Aureus (MRSA). The foundation awards scholarships to high school seniors pursuing careers in education.


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Brown Jordan Showcases Latest Collections in New Booth at HD Expo

LAS VEGAS, NEVADA

Brown Jordan, the leading manufacturer of luxury outdoor furnishings, unveiled a striking new booth at this year’s HD Expo, held May 14-16 in Las Vegas. The booth features two eye-catching environmental displays placed at either end of the 20 x 70-ft. space.

“Our new booth design has a very crisp, clean, contemporary look,” said Stephen Elton, chief Brand officer. “It’s both a dynamic space and a backdrop that heightens the impact of the diverse Brown Jordan product offerings. The innovative use of materials and space expresses our corporate culture and approach to design.”

Among the highlights of the display is designer Michael Berman’s chic new Luna lounge collection. The Luna Sofa and Chat Table rest on cheerful, bright green “turf” beneath a simple, yet striking shade structure. Opposite, a second lounge gallery features an array of chaise lounges, including Biarritz, Avalon, Hiro, Swim and Still – accented with colorful bolsters in easy care, UV-resistant Brown Jordan fabrics.

Lumen, from the Brown Jordan Fires collection, demonstrates the beauty and warmth of clean, ethanol-fueled fire. Burning without smoke, soot or a utility connection, the Lumen lantern is perfect for ground lighting or as tabletop décor.

Front and center, an “impact wall” displays the Brown Jordan logo and presents Cloud Nine chairs arranged on a handsome teak floor against a neutral backdrop punctuated by faux garden greenery. Three of the Cloud Nine chairs, finished in a variety of on-trend metallics, face forward while one is turned to the side to draw attention to the chair’s unique curvilinear profile.

On the other side of the wall, two iconic Kantan chairs and a Kantan rocker crafted of natural brass carry the metallic theme forward.

Laid out to facilitate circulation and create attractive lounge and dining vignettes, the booth features designer Richard Frinier’s sleek, hand-woven Elements collection, dining and lounge pieces from the classic Southampton collection, an array of lightweight stacking chairs and an assortment of lounge chairs including Calcutta, Quantum, Savannah, Drift and Escape.

Finally, the distinctive Marin collection, created by Michael Berman, is featured with soft, supple leather cushions that complement the warmth of the premium plantation-grown teak furniture.

From the Brown Jordan Fires collection, the booth presents the pottery-inspired Urth fire pit; Flo, a minimalist design with an elongated flame; and the Equinox fire, combining a sculptural fire pit with a chat height table.

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Shade Pod.

TUUCI Introduces Largest Shade Product To-Date

Miami, Florida

TUUCI, the Miami-based designer of innovative shade products, introduced its largest shade offering to-date during the HD Expo in Las Vegas last week, immediately grabbing industry accolades with a design excellence award in the outdoor category during the IIDA/HD Product Design Competition. This annual competition is sponsored by the International Interior Design Association, a leading global professional organization for interior designers, and Hospitality Design magazine.

“This award is particularly significant for us because it’s awarded by industry professionals who thoroughly understand the needs of their clients throughout the hospitality category,” said Dougan Clarke, founder and CEO of TUUCI. “It’s this type of recognition that re-energizes our design, manufacturing, customer service, sales and marketing teams.”

TUUCI created its largest innovation in shading to-date in response to the growing demand for ever larger shaded areas for hotels, resorts and restaurants. The new TUUCI Shade Pod features from one to four separate canopies supported by a single mast, offering expansive shaded areas totaling more than 250 square feet.

“The movement toward larger shaded areas for hospitality is being driven by several factors,” Clarke said. “Shading represents opportunities for increased revenue and, just as important, increased comfort and accessibility for guests. Properties that adopt the Shade Pod will be making a bold statement about their commitment to the guest experience.”

The new Shade Pod rounds out TUUCI’s offerings of expansive shade products that feature cantilevered shade canopies mounted and controlled from single masts for maximum useable shaded areas. The Shade Pod is customizable using one to four canopies to create distinct shaded areas for multiple uses, including deep seating, dining and shaded pool areas adjacent to seating.

With separate lifting mechanisms, any of the canopies can be deployed at any time in any of four different directions. Through precision engineering, canopies can be opened and closed without disturbing furniture underneath, and counter-weighted lifting mechanisms make opening and closing easy for any hospitality staff member.   

The canopies are each eight-foot squares and fabricated from the TUUCI Tuff-skins collection of UV resistance, long-lasting and easy-to-clean woven fabrics. Masts are available either as satin anodized aluminum or in TUUCI’s proprietary Aluma-TEAK, which offers the authentic look of wood grain in a no-maintenance finish. Portable weighted and in-ground mounting options are available.

“As with all of our products, the Shade Pod is engineered for the most demanding environments on the planet, from ocean side to desert,” Clarke said. “Our modular design, marine grade components and inventory of replaceable parts have been extended to the Shade Pod to assure longer life.”

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