The Container Store Group, Inc. (TCS) Down on 4th Quarter Earnings Miss

Shares of Coppell, Texas, based The Container Store Group, Inc. (TCS) fell sharply against the backdrop of a generally down day for stocks overall. The Container Store's stock was down 14.20%, falling $3.08 to close at $18.61, on volume of 3,105,602 shares. Net sales for the company's fourth quarter came in lower than what analysts had forecast.

Founded in 2007, The Container Store Group, Inc. is a holding company engaged in the retail of storage products for home and office.
It provides creative, multifunctional, customizable storage, and organization solutions that helps its customers to save time and space. The Container Store segment operates as a subsidiary company consisting of retail stores, a website and call center. The Elfa segment designs and manufactures component-based shelving and drawer systems that are customizable for any area of the home, including closets, kitchens, offices and garages. The company's stock trades on the NYSE.

Though both net income and net sales were up for the fourth quarter of the 2014 fiscal year ended February 28, 2015, over the same quarter one year earlier, they came in below analysts expectations, sparking the sell-off.

Net income for the quarter was reported at $11.8 million, or $0.24 per adjusted diluted common share, compared to $10.7 million, or $0.22 per adjusted diluted common share for the fourth fiscal quarter of 2013. Analysts had been expecting net income to come in at $233.6 million, or $0.31 per share for the quarter.

For the full fiscal year, net income came in at $16.5 million, or $0.34 per share, compared to $16.4 million, or $0.33 per share for all of fiscal 2014.

Net sales for the fourth quarter of fiscal 2014 came in at $224.3 million, up 3% compared to $216.8 million for the fourth quarter of fiscal 2013. For the full year, net sales were reported at $781.9 million, compare to $748.5 million for all of fiscal 2013.

The company also reported that comparable store sales for the fourth quarter were down by 0.8% compared to the same period a year earlier. For the full year, same store sales were down 1.4% from fiscal 2013. At the same time, the company achieved it's target of 12% square footage growth, with the opening of seven new stores, and one store relocation.

"Our fourth quarter did not conclude according to early-in-the-quarter trends, said Kip Tindell, Chairman and Chief Executive Officer. "Weather was a contributing factor, as we experienced winter storms in February during the vitally important last 4 days of our 50-day Annual elfa® Sale and during the last week of our 19-day Sale's extension. Historically, approximately 20% of our elfa Sale sales occur during those last 4 days and approximately 60% of the Sale extension sales occur in the final week. Additionally, a stronger U.S. dollar had a significant impact on the conversion of our Elfa subsidiary sales, Tindell said, "Weather and foreign exchange headwinds aside, our sales performance fell short of our expectations in fourth quarter and in fiscal 2014. We can and will do better.

Looking ahead, the company is projecting net income of $0.30 to $0.38 per share, and net sales of $800 million to $815 million, for all of its fiscal 2015 year. Analysts at Thomson Reuters had a recent consensus of $0.56 per share on sales of $873.1 million.

Meanwhile, the price of the company stock has fallen by nearly 40% over the past 12 months.

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Published on Apr 29, 2015
By Kevin Mercadante

Copyrighted 2016. Content published with author's permission.

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