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Of Retail Palaces, Banks, Right Things and Pipe Dreams

Columnist: Bill Meagher
December, 2010 Issue

Bill Meagher
All articles by columnist

Nobody can accuse Corte Madera-based Restoration Hardware of being stale. The retailer, which has plans to go public next year after going private in 2008, has renovated 85 stores and repositioned itself as the purveyor of only the best goods for upper echelon consumers. And it’s done all this in the midst of the worst economic downturn since Hoovervilles were not vacuum stores.

“Resto,” as it’s known in retail circles, would like to raise between $100 million and $300 million in an Initial Public Offering (IPO). According to Bloomberg, the cast of characters ready to lead the offering include Goldman Sachs, Bank of America and Merrill Lynch. But nothing is certain, as Restoration isn’t chatting and the trio of banks have all taken a vow of silence. Moreover, while the market for IPOs has regained some traction with investors, who knows where it will be next year? On the one hand, IPO filings are up 250 percent this year, according to the data gurus at Renaissance Capital. On the other hand, the IPOs have only raised $15.3 billion, which is down about 7 percent. Only $15.3 billion?

When Restoration Hardware went private in 2008, oddly enough, Sears was bidding on it along with private equity firm Catterton Partner and Restoration’s CEO Gary Friedman. Eventually, Catterton and Friedman won after receiving some funding from Tower Three Partners LLC, paying $267 million for the company that started out in an old Victorian in Eureka, Calif. Shareholders approved the deal in 2008.

The remodeled shops are something. At the company’s flagship store in Corte Madera, shoppers are greeted by slate colored walls, hardwood floors and an environment that might be summed up by “Tuscan royalty meets the old boys club—hold the cigars and brandy and add in some über-expensive knick knacks.” The trademark funny nostalgic signs, price tags and games and amusement of yesteryear, the very hook the company hung its hat on for years, are all gone. In fact, the only remaining link to the old identity are the designer drawer pulls stashed by the cash registers.

On the other hand, the company is profitable now, selling outdoor rattan chairs for $1,000 a pop and leather couches ranging from $2500 to a cool $10,000, bringing a whole new meaning to the phrase “Jake, get down! You know you aren’t allowed up there.” Especially when Jake is the neighbor’s kid.

Is That a Bank in Your Pocket?

San Rafael’s ClairMail has had a pretty good year, nailing down a late-stage capital infusion of $13.8 million from a group of investors including Sweden’s Investor Growth Capital, Norwest Venture Partners, JAFCO Ventures and Outlook Ventures. All told, the company has raised about $34 million.

The Mission City company has become a top-notch provider of mobile banking services to the financial industry. CEO Pete Daffern has the company heading in the right direction, having posted a gaudy 300 percent revenue increase for the second quarter, year over year. The company also moved into larger digs and hopes to fill a total of 80 jobs by year end.

Good News…Bad News…Good News

The Marin Workforce Housing Trust picked up a $100,000 donation from Bank of Marin. The check is particularly important, because the trust could end up being short this year since Tamalpais Bank was shut down by the Feds before it had a chance to make good on its $250,000 pledge.

When Union Bank was handed the keys after winning the bid for Tamalpais, it said all the right things about wanting to be a part of the community and keeping Tamalpais’s promises. But the Housing Trust won’t say whether Union Bank has stepped up. It’s easy enough to understand why the Trust wants to keep its privacy and not release information that might not reflect on its benefactors in the best possible way. And if ever a cause is fighting an uphill battle in Marin, it’s workforce housing, the better dressed cousin to affordable housing.

The Marin Community Foundation matches funds to the Trust for every $500,000 it collects from private sources. The County of Marin matches funds as well, which is why every dollar counts three times. Trouble is, Union Bank spokesperson Jane Yedinak says she had no information about what Union’s out of town management planned on doing. Union acquired Tam six months ago, which is plenty of time to write a check, slap a stamp on an envelope and take care of a promise.

Talk is cheap—in this case, about $250,000 cheaper than doing the right thing. The really pathetic part is that banks can actually pick up Community Reinvestment Act credits with the FDIC for posting funds with the Trust.

An example of the right thing? Central Payment contributed $25,000 to the Lucile Packard Children’s Hospital at Stanford to help pay for special events. The San Rafael company is provider of transaction processing on a national scale. Earlier this year, the company moved into a bigger space to accommodate its growth plans, and Inc. magazine recently named CP to its 500 fastest growing companies list.

End on a High Note

Since it’s been an election year, we like to stay on top of union news. So we have to report that United Food and Commercial Workers Union, Local 5 reached out to Medi-Cone, a Marin business, to represent its workers. The Teamsters unit represents 32,000 workers in California and is proud to welcome Medi-Cone to the fold.

Or should I say “roll”? Medi-Cone is part of a budding (pun fully intended, dude) $1.3 billion industry of marijuana dispensaries along with all of the support that goes them. The union is there to negotiate wages and benefits for bud tenders, greenhouse workers, lab techs and packagers.
Bill Meagher is contributing editor at NorthBay biz. In the interest of full disclosure, he has never bought a couch at Resto, has never banked at Bank of Marin or Union Bank, and he did inhale.




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