Restoration Hardware versus West Elm

Restoration Hardware competes against a company called West Elm, which is owned by the publicly-traded Williams Sonoma (WSM).  SEC 10-K filings disclose metrics for both companies.  Restoration Hardware’s metrics are far superior:

  • Higher “comparable brand revenue growth” overall
  • Roughly three times higher sales per leased square footage (by my calculation)

Yet there are some curious things about Restoration Hardware:

  • According to Google Trends data, West Elm has been trending stronger than the supposedly faster-growing Restoration Hardware.
  • I’ve never seen a hot retailer shrink its store count.  Hot retailers look like West Elm.  They open stores because the rate of return on new stores is likely very high.

Here are the metrics for both companies:


Here is Google Trends data for both companies:


Isn’t that interesting?

*Disclosure:  I own RH puts.  I am not shorting the common stock.  If the shares rally, it is likely that I will be short the common.


My previous post on RH (“Restoration Hardware: Their numbers don’t make a lot of sense”)

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