Restoration Hardware 2012 Annual Report Download - page 94

Risks Related to Ownership of Our Common Stock
Our common stock price may be volatile or may decline regardless of our operating performance.
The market price for our common stock may be volatile. As a retailer, our results are significantly affected by
factors outside our control, particularly consumer spending and consumer confidence, which can significantly affect
our stock price. In addition, the market price of our common stock may fluctuate significantly in response to a
number of other factors, including those described elsewhere in this “Risk Factors” section, as well as the following:
• quarterly variations in our operating results compared to market expectations;
• changes in preferences of our customers;
• announcements of new products or significant price reductions by us or our competitors;
• size of the public float;
• stock price performance of our competitors;
• fluctuations in stock market prices and volumes;
• default on our indebtedness;
• actions by competitors or other shopping center tenants;
• changes in senior management or key personnel;
• changes in financial estimates by securities analysts or failure to meet their expectations;
• actual or anticipated negative earnings or other announcements by us or other retail companies;
• downgrades in our credit ratings or the credit ratings of our competitors;
• natural disasters or other similar events;
• issuances or expected issuances of capital stock; and
• global economic, legal and regulatory changes unrelated to our performance.
In addition, stock markets have experienced extreme price and volume fluctuations that have affected and continue
to affect the market prices of equity securities of many retail companies. In the past, stockholders have instituted
securities class action litigation following periods of market volatility. If we were involved in securities litigation, we
could incur substantial costs and our resources and the attention of management could be diverted from our business.
Our filings and public disclosures have attracted the attention of a hedge fund manager whose investment
strategies we believe include making investments that increase in value when stock prices decline. The fund
manager has informed us of the fund’s negative view of our Company and business and has threatened to
publicize those views. There can be no assurance that this fund manager will not attempt to influence the broader
investment community or otherwise attempt to disparage our Company or our brand, which could negatively
affect our stock price.
Substantial future sales of our common stock, or the perception in the public markets that these sales may
occur, may depress our stock price.
Sales of substantial amounts of our common stock in the public market, or the perception that these sales
could occur, could adversely affect the price of our common stock and could impair our ability to raise capital
through the sale of additional shares. As of the completion of our initial public offering, we had 36,971,500
shares of common stock issued. These shares of common stock are freely tradable without restriction under the
Securities Act of 1933, as amended (the “Securities Act”), except for any shares of our common stock that are
held or acquired by our directors, executive officers and other affiliates, as that term is defined in the Securities
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