EXCLUSIVE: Restoration Hardware Planning Top-Level Layoffs

Posted By Andrew Lennon | Managing Editor | The Daily Anchor | On February 9, 2009 @ 4:13 am | 1 Comment
Corte Madera, CA
Inside sources exclusive to The Daily Anchor are reporting that home furnishings giant Restoration Hardware ^[1] (NASDAQ: RSTO [de-listed]) is planning to consolidate its upper-management in a last-ditch effort to reduce costs by cutting high salaries.
In August of 2007 the Marin Independent Journal reported ^[2] that Restoration Hardware laid off 100+ lower- and mid-level employees at its Corte Madera, CA corporate headquarters in an effort to save about $9 million a year in salaries and benefits, and then in October 2008 Restoration Hardware laid off another 33% ^[3]of its corporate workforce.
Sources say those layoffs of low-level employees shifted the workload to managers, leaving middle-management stretched too thin while not staving off the company’s financial crisis. BNET reports ^[4] that while Restoration Hardware’s fiscal revenue is $722.2M and their Market Cap is $163.6M, their revenue is a striking -$51.9M.
Struggling to regain profitability and yet unable to cut mid-level employees who are already stretched too thin, Restoration Hardware is said to be targeting upper management in the next round of layoffs.  No timeline has been set, but sources report that the layoffs are imminent.
Restoration hardware was a privately held company for the first 18 years, then went public in 1998, only to revert back to private investors - the Catterton Group ^[5] of Greenwich, CT - less than a year ago.

A rough year

1. In December of 2007 Restoration Hardware’s shareholders commenced a class action lawsuit ^[6] in connection with an offer by Sears Holdings Corp. to acquire all of the outstanding shares of RSTO. The lawsuit was ultimately settled in June of 2008 ^[7] when Restoration Hardware agreed to provide the Company’s shareholders with a common fund of $3.7 million, or almost $0.19 a share, to remedy alleged misconduct by the Restoration Hardware Board in precluding Sears Holdings Co. from making a tender offer to shareholders for $0.05 per share more than the current merger agreement ^[8] with Catterton Partners.
2. In July of 2008 BNET reported on Restoration Hardware’s financial struggles in their article Five Signs You Have a Crummy Job. ^[9]

“A mid-level employee at Restoration Hardware says slowed consumer spending has the company in lockdown mode. The staff used to be intense and driven, but motivation has deteriorated as top-level management becomes fixated on saving every penny instead of investing in better tools to manage inventory. “There are people like myself who are capable and willing to create the tools,” she says, “but it’s a combination of not having the financial resources or the desire for change.”

3. In October 2008 the Securities and Exchange Commission (SEC) charged former RH Vice President ^[10] Ciriaco “Eric” Rivor and three of his friends with Insider Trading.
4. On January 27, 2009, Restoration Hardware closed its Grand Rapids ^[11], MI location.
5. On January 29, 2009 RH closed its Eureka, CA landmark store ^[12], its very first location that opened in 1979.

Reputable sources

Though Restoration Hardware has not yet issued an official announcement of the upper-management layoffs, The Daily Anchor has a strong history of accurately scooping layoffs based on sound information from inside sources:

• On January 19, 2009 The Daily Anchor was the first to break the news of the Williams Sonoma layoffs ^[13], 3 days before the layoffs commenced, in which 1,400 full-time employees were let go
  
• On January 26th we accurately predicted that Pfizer would layoff up to 50% ^[14] of its sales force following its merger with Wyeth
  
• On February 2nd we were the first to report on the Rapp Ad Agency ^[15]layoffs in New York and Chicago

The bottom line?

As any William’s Sonoma ^[16] employee will tell you, you better use up that sick time before its gone.
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4. Pfizer Layoffs 2009: New Details Emerge and Rumors Abound
   
5. Google Layoffs: 5,000-10,000 Contract and Temp Jobs Get Cut

Source: The Daily Anchor | Marketing and Advertising Blog - http://www.thedailyanchor.com/2009/02/09/restoration-hardware-layoffs-on-the-way/#ixzz0CBiDFNER