Restoration Hardware CEO issues urgent memo

Restoration Hardware (NYSE:RH) CEO Gary Friedman is planning to launch a membership program even as he issued an irate memo to employees calling for a "massive" culture shift.

Friedman's memo, obtained by Bloomberg Business, was a dire warning that the retailer was failing to "delight" customers to such a degree that he was ringing the alarm—a fire alarm, specifically.

"We were sitting there discussing how the building caught on fire, why the building caught on fire, how long we expected the building to continue burning," he said in the memo. "NO ONE WAS FOCUSED ON THE PEOPLE IN THE BUILDING WHO WERE ON FIRE. THEIR CLOTHES BURNING, AND MANY OF THEM DYING. WE HAVE LET CUSTOMERS DIE."

Restoration Hardware offered preliminary fourth quarter and fiscal year results last week, indicating that earnings would be roughly $.40 per share less than previous guidance. The company promptly lost more than 20 percent of its value.

The problem, according to Friedman's memo, is an inability to delight shoppers.

"We need a MASSIVE CHANGE IN OUR CULTURE AND ATTITUDE RIGHT NOW," Friedman said, using all capital letters. "THE GOAL IS DELIGHT."

To that end, the retailer will continue to expand its RH design galleries, spacious showrooms in historic and restored buildings. It's the home furnishing chain's play to develop experiential retail.

There will also be a membership program that shoppers can join for an annual fee to receive discounts on purchases, design services, early access to sales and some preferred financing, according to the Chicago Tribune.

For more:
-See this Bloomberg Business article
-See this Chicago Tribune story

Related stories:
RH to open at Historic Pier in San Francisco
Restoration Hardware opens lifestyle shop in Chicago's Three Arts Club
Restoration Hardware opens store in the historic Flatiron district
Walgreens opens flagship in Chicago's Wrigley Building
CB2 and the apartment that Pinterest built