A good debut for RH:
Restoration Hardware Jumps in Market Debut
By MICHAEL J. DE LA MERCED
DealBook
New York Times
November 2, 2012, 12:46 pm
Hurricane Sandy appears to have done little to dent investor appetite for Restoration Hardware, as the home furnishings retailer’s stock enjoyed a surge in its trading debut.
Shares in Restoration Hardware, which trade under the symbol “RH” on the New York Stock Exchange, opened up at $32.28, more than 35 percent higher than their initial offer price. The company already looked on track for a strong debut, with its shares having priced Thursday night at $24, the top of their range.
With shares at $31.73 as of midday on Friday, the retailer is worth nearly $1.2 billion.
All told, Restoration Hardware raised about $123.8 million in its offering. The company’s cut of the proceeds will be used to pay down debt taken on by its 2008 leveraged buyout. Several existing shareholders will also cash out some of their holdings.
The retailer is the most prominent of the three companies that began trading on Friday after a storm-shortened week. The stocks of all three — Restoration Hardware and the oil industry companies Delek Logistics and Southcross Energy Partners — opened with double-digit gains.
Gary Friedman, the company’s chairman emeritus and a top adviser, recalled how the usual I.P.O. roadshow was shortened by a few days because of the storm. But after talking with investors during the roughly week-and-a-half trip, executives determined that they should still seek to price the stock sale.
“We have had to sail through a storm on this one,” Mr. Friedman said, adding that “our hearts go out to all of those who have been victimized by the storm.”
Other moments during the run-up to Restoration Hardware’s debut on the N.Y.S.E. proved painful as well. Perhaps chief among them was the departure of Mr. Friedman as co-chief executive, following a board inquiry into his relationship with a 26-year-old employee. (“I never knew my personal life would be so popular with the press,” he joked.)
Mr. Friedman, who joined the retailer in 2001 and is credited with saving it from bankruptcy, remains the company’s biggest shareholder. He has formed a new company, Hierarchy, that will offer fashion and apparel, but he said that the “vast majority” of his time was being spent on Restoration Hardware.
He called Friday’s debut the ultimate response to those who thought the company doomed at points during his tenure.
“A lot of people thought that this company would never make it, a lot of naysayers said that we’d go bankrupt,” Mr. Friedman said. “For all the people who fought through the adversity, this is a day of great pride and day of great opportunity.”
The question now is what road Restoration Hardware will take as a public company. Carlos Alberini, who is now the sole chief executive, said that the retailer would shutter what he called duplicative stores in many markets, though it will also embark on international expansion.
Mr. Friedman described a vision of elaborate destination stores that showcase not only the retailer’s signature premium furniture but also art, clothing and furnishings that go well beyond chairs and sofas. The Boston store, as Mr. Friedman described in a pitch reminiscent of the late Steven P. Jobs, features a granite plaza, elevators patterned after the Bradbury Building in Los Angeles, a tea salon and a wine bar.
“It’s an expression of home furnishings that people have yet to see,” he said.
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