Restoration Hardware: Needs to shelve its IPO & stock option realisation ambitions to focus on actual 'Hardware'

Recently an article in Reuters indicated the desire of furniture company, Restoration Hardware to seek a stock market listing (IPO) in 2011.

Restoration Hardware seems to have a small problem - namely a lack of inventory of the hardware which it seeks to sell an eager customer base. A second time around customer of Restoration Hardware, I ordered furniture which I was led to believe could expect to have delivered in a couple of weeks back in September 2010, which is now drifting into mid-December 2010 - leaving me decidedly unfulfilled.

The disconnect between the sales & marketing operation and 'customer fulfillment' becomes even more clear when engaging with the curse of the early Twenty-First Century, known as "customer service". Customer service in this instance will not actually inform customers of delivery dates unless you question them like an attorney - and on a repeat basis. Either they are part of a scam to misinform customers or else they are left carrying the can without adequate management information to inform. Bad position.

I think the senior management, who obviously stand to gain from an IPO personally, need to get their operations right. Prospective stock analysts need to think seriously about the inventory disconnect - it may make for a good graph regarding forward orders to sell potential investors in the stock. However, the reality is that the thick glossy catalogue of furniture is not matched by an ability to buy.

Perhaps Restoration Hardware intend to stick it to institutional and smaller investors by creating a fake demand curve, fulfilling it and then cashing out without having concern for the long-term viability of their company ? Another implication of having the corporate headquarters in California could be to inculcate a laid-back culture - precisely when the management needs to be hard-hitting and engaged. Not time for trips to the wine country...

Recently I overheard a restauranteur complaining he had bought and paid for a display piece of furniture for a hot new restaurant and has been left waiting for delivery. Frustrated, he threatened to send his team into the local branch to remove the sample whilst brandishing the paid for receipt. The staff indicated they would call the police - and who would be at fault ?

Whilst the Restoration Hardware idea, product and design is hot, the execution is not. Try harder.