Restoration Hardware Holdings, Inc.

Robbins Arroyo LLP: Restoration Hardware Holdings, Inc. (RH) Misled Shareholders According to a Recently Filed Class Action

Robbins Arroyo LLP announces that a class action complaint was filed against Restoration Hardware Holdings, Inc. (“RH”) (NYSE: RH) in the U.S. District Court for the Northern District of California, San Francisco Division. The complaint is brought on behalf of all purchasers of RH securities between March 26, 2015 and June 8, 2016, for alleged violations of the Securities Exchange Act of 1934 by the company’s officers and directors. RH, together with its subsidiaries, engages in the retail of home furnishings.

Restoration Hardware Accused of Unjustifiably Touting Its RH Modern Product Line

According to the complaint, on March 26, 2015, RH reported its results for the fourth quarter and fiscal year 2014 and publicly touted its new product line, RH Modern, as its “finest work ever” and a “game-changer.” The company further stated that it would have no trouble meeting the inventory needs that the new RH Modern line would require. On September 10, 2015, RH’s Chief Executive Officer touted RH Modern as “the most important and significant new home furnishings business to be launched in the last 15 or 20 years.” Based on these optimistic projections, RH repeatedly issued revenue guidance predicting substantial increases in revenue due in significant part to the expected revenue to be generated by RH Modern. However, the complaint alleges that, contrary to RH officials’ promising representations, the company was unprepared for the launch of RH Modern because RH suffered from grossly inadequate inventory levels and implemented unrealistic deadlines for its vendors.

On December 10, 2015, only two months after the official launch of RH Modern, the company announced that it had missed its earnings projections due, in part, to the fact that RH Modern furniture was not fully in-stock. Then, on February 9, 2016, RH announced the surprise resignation of its Chief Operating Officer just one year after he had been put in charge of inventory management. On February 24, 2016, RH disclosed disappointing earnings for the fourth quarter of 2015 due to shipping delays of RH Modern furniture. Then, on June 8, 2016, RH significantly reduced its earnings guidance for fiscal 2016, which the company attributed to “accommodations largely due to RH Modern production delays.” On this news, RH’s stock declined by $7.66 per share to close at $28.41 per share on June 9, 2016.

Restoration Hardware Shareholders Have Legal Options

Concerned shareholders who would like more information about their rights and potential remedies can contact attorney Darnell R. Donahue at (800) 350-6003, or you can complete the form below and we will contact you directly.

 

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