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FOIA
Confidential Treatment Requested By

Restoration Hardware, Inc. Pursuant to 17 C.F.R § 200.83

August 8, 2005

By EDGAR Transmission and

Overnight
Delivery

Mr. Will Choi

Branch Chief

United States Securities and
Exchange Commission

100 F St. NE

Washington, D.C. 20549

  RE:

  Restoration
  Hardware, Inc.

  Form
  10-K for Fiscal Year Ended January 29, 2005

  Filed
  April 14, 2005

  Form
  10-Q for Fiscal Quarter Ended April 30, 2005

  File
  No. 0-24261

Dear Mr. Choi:

This letter is in response to
your letter dated July 18, 2005 (the “Comment Letter”) regarding the review by
the staff (the “Staff”) of the Securities and Exchange Commission of the
financial statements and related disclosures of Restoration Hardware, Inc.
(referred to herein as the “Company,” “we,” “our” or “us”) in its Form 10-K for
the fiscal year ended January 29, 2005 (the “Form 10-K”) and Form 10-Q for
fiscal quarter ended April 30, 2005 (the “Form 10-Q”). The relevant text of the
Comment Letter has been included in this letter, and the numbering of the
Company’s responses set forth below corresponds to the numbered comments in the
Comment Letter.

Pursuant to Rule 83 under the Freedom of Information Act, the Company is requesting that the Securities and Exchange Commission treat confidentially the Company’s response below to the Staff’s comment no. 9 and notify Patricia McKay, the Chief Financial Officer of Restoration Hardware, Inc., 15 Koch Road, Suite J, Corte Madera, CA 94925 (telephone: 1-415-945-3578; facsimile: 1-415-927-7264), of any FOIA request of this correspondence and allow the Company the opportunity to oppose such disclosure.

 General

1.                                      Where
a comment below requests additional disclosures or other revisions to be made,
these revisions should be included in your future filings, as applicable.

Response: We will incorporate the additional
disclosures and other revisions noted below in future filings, as applicable.

Form
10-K for Fiscal Year Ended January 29, 2005

Selected Financial
Data, page 17

2.                                      Please
mark the applicable columns of the Selected Financial Data table “as restated.”

Response:  The
Company will mark applicable columnar headings “as restated” in future filings.

Management’s
Discussion and Analysis of Financial Condition and Results of Operation, page 18

3.                                      Where
you identify intermediate causes of changes in your operating results, also
describe the reasons underlying the intermediate causes.  For example, you indicate that the favorable
change in cost of revenue and occupancy expense as a percentage of revenue from
fiscal year 2003 to 2004 was partially due to improved product margins.  Please provide a discussion of the relevant
factors and trends that led to the improved product margins.  See SEC Release No. 33-8350.

Response: We will more clearly describe the
reasons underlying the intermediate causes of changes in operating results in
future filings. In the example noted by the Staff regarding improved product
margins, there were holistic changes in our product mix and sourcing strategies
that drove improvements in product margins in both segments. Such changes were
described in certain paragraphs of “Management’s Discussion and Analysis of
Financial Condition and Results of Operation—Overview” on pages 18 and 19 of
Form 10-K. In future filings we will also discuss the intermediate causes of
changes in operating results in segment discussions where applicable.

We have set
forth below an example of the type of additional disclosure the Company will
provide in future filings regarding the intermediate causes of changes in
operating results.

“The cost of revenue and occupancy increased
by $54.5 million in fiscal 2004 as compared to fiscal 2003, or 18%, primarily
in support of our revenue growth. These costs rose at a lower rate than revenue
as the expansion of product margins by 130 basis points and the leverage of our
store occupancy costs of 220 basis points more than offset the higher costs
that we continued to experience throughout most of fiscal 2004 in our
distribution and supply chain activities of 230 basis points. Product margins
expanded in 2004 due to continued shifts in our product mix to higher margin
core businesses such as premium textiles, as well as cost improvements realized
from the expansion of our international sourcing programs.”

Management’s
Discussion and Analysis of Financial Condition and Results of Operation, page
18

4.                                      Where
you describe two or more business reasons that contributed to a material change
in a financial statement line item between periods, please quantify, where
possible, the extent to which each change contributed to the overall change in
that line item.  For example, with
respect to the overall change in selling, general and administrative

2

                                                expenses from fiscal year 2003 to 2004 and fiscal year 2002
to 2003, please quantify the extent to which the changes are attributable to
the various contributing factors, such as advertising, payroll, and
professional fees expenses.  See Item
303(a) of Regulation S-K and SEC Release No. 33-8350.

Response:
The Company will quantify in future filings where possible those factors
contributing to a material change in a financial statement line item between
periods. Using the Staff’s example, we have set forth below the type of
additional quantitative disclosure the Company will provide regarding such
factors.

“Selling, general and
administrative expense increased $26.8 million, to $161.9 million for fiscal
2004 from $135.1 million in fiscal 2003.
Approximately half of the increase was related to catalog production and
mailing costs, with one fourth of the increase attributable to higher payroll
costs. Both of these increases were largely incurred in support of higher
sales. The remaining increase is primarily attributable to various selling
related expenses such as credit card
fees and to a lesser extent administrative expenses including
professional fees as well as brand advertising costs.

Selling, general and
administrative expense expressed as a percentage of net revenue was consistent
at 30.8% for fiscal 2004 and 2003.  We did
generate savings in store payroll costs which declined by approximately 90
basis points, reflecting continued management focus and the implementation of
tools to manage payroll expense, as well as reductions in other store
expenses.  However, due to rapid growth
in our direct to customer segment, higher levels of catalog production and
mailing had the effect of deleveraging selling, general and administrative costs
by 150 basis points and offset the improvements in payroll and expense leverage
realized in other cost areas.”

Liquidity and
Capital Resources, page 25

5.                                      Please
revise your tabular disclosure of contractual commitments to include estimated
interest payments on your line of credit.
A footnote to the table should provide appropriate disclosure regarding
how you computed the payments.  Since the
table is aimed at increasing transparency of cash flow, we believe these
payments should be included in the table.
If you choose not to include these payments, a footnote to the table
should clearly identify the excluded items and provide any additional
information that is material to an understanding of your cash
requirements.  If material, also include
a note to the table to specify that the lease obligation figures do not include
insurance, real estate taxes, and repair and maintenance expenses to which the
company is obligated.  Provide a context
for the reader to understand the impact of these charges on your total lease
obligations.  See Item 303(a)(5) of Regulation S-K.

Response: We will add to such table disclosure
in future filings regarding interest payments on the Company’s line of credit
and include a footnote to the table regarding how we computed those payments.  With regard to the Company’s lease
obligations, we will expand our disclosure within the contractual commitments
table in future filings to include a footnote to that table explaining that the
amounts scheduled for lease obligations do not include insurance, real estate
taxes, and repair and

3

maintenance
expenses.  As an example, we have set
forth below the type of additional disclosure we would provide within the contractual
commitments table, including footnotes thereto, on page 27 of the Form 10-K.

  Payments Due By Period

  Total

  Fiscal 2005

  Fiscal 2006 through 2007

  Fiscal 2008 through 2009

  Thereafter

  (Dollars in thousands)

  Operating
  leases(1)

  $

  265,446

  $

  40,295

  $

  74,535

  $

  66,328

  $

  84,288

  Capital
  leases

  342

  204

  137

  1

  —

  Line of
  credit(2)

  34,500

  34,500

  —

  —

  —

  Interest(3)

  2,800

  2,000

  800

  —

  —

  Standby
  letters of credit

  7,937

  7,937

  —

  —

  —

  Trade
  letters of credit

  4,078

  4,078

  —

  —

  —

  Purchase
  obligations for inventory

  76,518

  76,518

  —

  —

  —

  Total

  $

  391,621

  $

  165,532

  $

  75,472

  $

  66,329

  $

  84,288

(1)          Operating lease contractual commitments exclude insurance, real estate
taxes, and repair and maintenance expenses related to those locations under
operating leases. In fiscal 2004, the Company incurred $16.2 million for these costs.

(2)          Gross of debt issuance costs of $0.7 million.  We do not expect to be required to repay,
within one year, the revolving credit facility that is classified as a current
liability.

(3)          Interest payments in the future periods have been reflected based on
fiscal 2004 debt and interest levels and reflects the June 2006 maturity date
of the line of credit.

Critical Accounting
Policies, page 28

6.                                      Please
revise the discussion of your critical accounting policies to focus on the
assumptions and uncertainties that underlie your critical accounting estimates,
rather than duplicating the accounting policy disclosures in the financial
statement footnotes.  Discuss the
sensitivity of reported results to changes in your assumptions, judgments, and
estimates, including the likelihood of obtaining materially different results
if different assumptions were applied.
For example, please revise your MD&A in future filings to discuss in
more detail the basis for the changes in your valuation allowance and highlight
the judgments and assumptions involved in evaluating the sufficiency of the
remaining valuation allowance.

Response: We will comply with the Staff’s
comments in future filings.  In
particular, we will provide additional information in future filings as to the
assumptions and uncertainties that underlie our critical accounting estimates
and related sensitivities, including those factors that influence the reserves.
We also will revise our disclosure in our MD&A in future filings by making
reference to the notes to our financial statements for a complete listing of
our accounting policies, and then discuss only those accounting policies within
our MD&A that are subject to judgment, assumptions or uncertainties. For
example, under the caption “Revenue Recognition” on page 28 of the Form 10-K,
we would eliminate in future filings the first two paragraphs and retain only
the discussion of sales returns reserve.

4

We have set
forth below an example of the type of revised disclosure we will provide in
future filings regarding our accounting policies and those related to revenue.

“Our discussion and analysis
of our financial condition and results of operations are based on our
consolidated financial statements, which were prepared in accordance with
accounting principles generally accepted in the United States of America (“GAAP”).
For a complete review of those policies, reference is made to our ‘Notes to our
Consolidated Financial Statements, Summary of Business and Significant
Accounting Policies.’

Sales returns reserve: We
provide an allowance for sales returns based on historical return rates which
generally considers both the level of merchandise returns and the time elapsed
from the date of sale to the date of return. Should actual return levels
increase by 10% in fiscal 2005 or the customer return time lengthen by 10% in
fiscal 2005, our results would be negatively impacted by approximately $0.2
million.”

Financial Statements

 (1) Summary of Business and
Significant Accounting Policies, page 37

7.                                      Please
disclose the types of expenses that you include in the cost of revenue and
occupancy line item and the types of expenses that you include in the selling,
general and administrative expense line item.
In doing so, please disclose specifically whether you include inbound
freight charges, purchasing and receiving costs, inspection costs, warehousing
costs, internal transfer costs, and the other costs of your distribution
network in cost of revenue and occupancy.
If you currently exclude a significant portion of these costs from cost
of revenue and occupancy, please provide cautionary disclosure in MD&A that
your gross margins may not be comparable to others, since some entities include
the costs related to their distribution network in cost of revenue and others
like you exclude all or a portion of them from gross margin, including them
instead in a line item such as selling, general and administrative
expenses.  To the extent it would be
material to an investor’s ability to compare your operating results to others
in your industry, you should quantify in MD&A the amount of these costs
excluded from cost of revenue and occupancy.

Response: The Company will comply with the
Staff’s comment in future filings.

All costs
incurred within the Company’s distribution network are included in costs of
revenue and occupancy. We do not have internal transfer costs and inspection
costs are included within receiving costs. We have set forth below an example
of the disclosure to be included in future filings regarding the types of
expenses included in the cost of revenue and occupancy line item and the types
of expenses included in the selling, general and administrative expense line
item.

5

“Cost of Revenue and Occupancy Expense

Cost
of revenue and occupancy expense includes the invoice cost of products sold,
inbound freight and related importation costs, inventory shrinkage and
valuation costs, merchandise procurement and receiving costs, store occupancy
costs, product distribution network costs, including occupancy and payroll, and
costs of delivery to customers.

Selling, General and Administrative Expense

Selling,
general and administrative expense includes employment costs related to store
and corporate associates, catalog production and mailing costs, other marketing
costs, credit card fees, occupancy costs for corporate associates, professional
fees and other store and administrative costs including costs of insurance.”

  (1) Summary of Business and Significant
Accounting Policies, page 37

8.                                       Please tell us the nature and terms of any incentives
you offer to customers, including discounts coupons, rebates, or free
products.  Please also disclose your
accounting policy for these types of arrangements, including the statement of
operations line item in which each type of arrangement is included.  For each expense line item that includes
these types of arrangements, please disclose the related amounts included in
that line item.  For each type of
arrangement treated as an expense rather than as a reduction of revenues,
please tell us how this type of arrangement meets the requirements in EITF
01-09.

Response: The Company supplementally advises
the Staff that the nature o