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Restoration Hardware Agrees to be Sold for $267M

BY CSA STAFF

San Francisco, Restoration Hardware Inc. said Thursday that it has agreed to sell itself to private-equity firm Catterton Partners for $267 million, according to the San Francisco Chronicle.

Restoration CEO Gary Friedman is participating in the buyout. In addition, several institutional investors are investing in the transaction or exchanging their common stock for equity in Catterton or an affiliate.

Similar to other home-furnishings stores, Restoration Hardware has been struggling in the aftermath of the housing slump, which has caused consumers to rein in spending. Last year, the company earned $3 million on revenue of $713 million; in 2005 it lost $29 million on $582 million in revenue.

In August, Restoration said it would cut 100 jobs at its Corte Madera headquarters to save $9 million a year. Previously, it had 3,800 employees—1,700 of them part time.

Last year, the company took steps into the broader “value” market segment with its new Brocade Home brand. Brocade Home products, which it sells via catalogs and the Web, have lower prices than Restoration and a design aesthetic aimed at women.

In April, Restoration told analysts it would temporarily suspend store expansion while it focuses on increasing direct-to-consumer sales. Friedman said he expects catalogs and the Internet to account for half of the company’s sales within three years, up from a third now.

Restoration said it would solicit competing bids until Dec. 13. If it accepts another offer, it must pay Catterton a $10.68 million termination fee. That deal is expected to close by April.

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Study: Premium food popularity growing

BY CSA STAFF

LYON, France A Reportlinker.com report determined that retail sales of gourmet, specialty and premium foods and beverages are growing at much at a faster pace than those of the overall food and beverage industry in the United States, surging 10.9% to $59 billion in 2007 and maintaing a compound annual growth rate of 11.1% for the 2003 to 2007 period.

Greater availability of gourmet and premium products, growing interest in world cuisines and flavors, the association of high-quality ingredients with health and wellness, overlap of gourmet and natural/organic, the supermarket industry’s focus on upscale “fresh formats,” higher disposable incomes among U.S. consumers, and product positioning as affordable luxuries have enticed the consumer and driven sales. Such factors have helped produce a growing population of willing-to-spend consumers who are looking for foods that are more adventuresome and yet more nutritious.

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Gap Inc. October comps fall

BY CSA STAFF

SAN FRANCISCO Gap Inc. today reported a comparable-store sales decrease of 8% for the four weeks ended Nov. 3, compared to 7% for the period ended Oct. 28, 2006. The company reported net sales of $1.23 billion for the October 2007, which represents a 1% decrease compared with net sales of $1.24 billion for the same period last year.

By segment, comps for Gap North America fell 7% versus a 4% drop last year, Banana Republic North America comps were down 2% versus a 2% growth last year, Old Navy North America comps dropped 11%, same as last year, and international comps were down 6% versus a decrease of 8% last year.

“While comparable-store sales were down in October, merchandise margins were significantly above last year,” said Sabrina Simmons, evp of Gap Inc. finance. “The results reflect our stated strategy of managing inventory tightly to support margin improvements.” 

For the thirteen weeks ended Nov. 3, total company net sales were $3.85 billion, which is flat as compared to net sales of $3.85 billion for the thirteen weeks ended Oct. 28, 2006. The company’s third quarter comparable-store sales decreased 5% compared with a decrease of 5% in the third quarter of the prior year.

For the third quarter of fiscal year 2007, Gap Inc. expects diluted earnings per share to be 28 cents to 30 cents, as the company continues to make progress on its strategies of driving earnings with healthy margins and controlling expenses.

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