Restoration Hardware CEO Compares Company To A Burning Building

Shares of Restoration Hardware Holdings Inc RH plunged on Thursday following its fourth quarter earnings miss

Restoration Hardware's CEO Gary Friedman didn't hold back in showing his disappointment and frustration with the company's results. During a discussion with key executives and vendors, Friedman made a "burning-building analogy," according to Bloomberg.

"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 a memo, which was confirmed by Friedman in an interview. "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."

In a memo to all employees, Friedman pointed out that order cancelation rates at the RH Modern segment have surged to 17 percent from around 5 percent. Bloomberg added that Friedman sends memos to employees "pretty frequently" and "I want to make sure I'm not communicating through 15 layers of management."

"We need a MASSIVE CHANGE IN OUR CULTURE AND ATTITUDE RIGHT NOW," Friedman also said in the message, "THE GOAL IS DELIGHT."

Here are two other excerpts from the letter that Bloomberg noted:

"ANY LEADER OR TEAM MEMBER WHO STIFLES THIS EFFORT SHOULD BE REMOVED. IF YOU CAN'T CHANGE THE PEOPLE, CHANGE THE PEOPLE. THIS IS NOT HARD."

"WE CANNOT AFFORD TO LOSE ONE SINGLE CUSTOMER. NOT ONE. YOU WILL NEVER GET IN TROUBLE FOR MAKING A DECISION TO DELIGHT OUR CUSTOMERS. YOU WILL, HOWEVER, LOSE YOUR JOB IF YOU DON'T"