Restoration Hardware 2015 Annual Report Download - page 13

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10
Numerous other factors affect period-to-period comparisons in our revenue and comparable brand revenue growth, including:
• the overall economic and general retail sales environment;
• the number, size and location of stores we open, close, remodel or expand in any period;
• consumer preferences and demand;
• our ability to efficiently source and distribute products;
• changes in our product offerings and the introduction and timing of introduction of new products and new product
categories;
• promotional events;
• our competitors introducing similar products or merchandise formats;
• current local and global economic conditions;
• the timing of various holidays, including holidays with potentially heavy retail impact;
• changes in Source Book circulation, and the number of pages in our Source Books and timing of mailing; and
• the success of our marketing programs.
Other future developments in our business could also result in material changes in our operating costs, including increased
merchandise inventory costs and costs for paper and postage associated with the mailing and shipping of Source Books and products.
We cannot assure you that we will succeed in offsetting any such expenses with increased efficiency or that cost increases associated
with our business will not have an adverse effect on our financial results.
We are undertaking a large number of business initiatives at the same time, including exploring opportunities to expand into new
categories and complementary businesses, through either organic growth or strategic acquisitions. If these initiatives are not
successful, they may have a negative impact on our results of operations.
We have experienced rapid growth and are continuing to undertake a large number of new business initiatives in order to
support our future growth. For example, we have developed and continue to refine and enhance our Gallery format, which involves
larger store square footage. We plan to continue to open larger format Design Galleries in select major metropolitan markets and we
expect to close a number of legacy Galleries and replace them with our next generation Design Gallery format. We also continue to
add new product categories and to expand product assortments. For example, last year we introduced our new RH Modern and RH
Teen categories. We also continue to add new brand-enhancing offerings, such as the recent introduction of our food and beverage
operations at the 3 Arts Club Café in the RH Gallery in Chicago and at Ma(i)sonry in Yountville, California, and we plan to include
food and beverage offerings in other stores in the future. We are currently contemplating other new product lines and extensions and
complementary brand-enhancing businesses, such as the expansion of our product sales to international markets and providing brand-
enhancing offerings in hospitality. In addition, we are continuing a number of new initiatives to improve the operations of our
business, including by enhancing and optimizing our product sourcing capabilities, improving our distribution and delivery of
products to our customers and adding new management information systems. Further, our Source Book strategy continues to evolve.
We often have in the past, and may in the future, incur significant costs for any new initiative before we realize any corresponding
revenue with respect to such initiative.
As part of exploring growth opportunities, we may acquire from time to time value-creating, add-on businesses that broaden our
existing position and market reach. However, there can be no assurance that we will be able to find suitable businesses to purchase,
that we will be able to acquire such businesses on acceptable terms, or that all closing conditions will be satisfied with respect to any
pending acquisition. If we are unsuccessful in our acquisition efforts, then our ability to continue to grow at rates we anticipate could
be adversely affected. In addition, we face the risk that a completed acquisition may underperform relative to expectations. We may be
unable to achieve synergies originally anticipated, exposed to unexpected liabilities or unable to sufficiently integrate completed
acquisitions into our current business and growth model. Further, if we fail to allocate our capital appropriately, in respect of either our
acquisitions or organic growth in our operations, we could be overexposed in certain markets and geographies and unable to expand
into adjacent products or markets.