Container Store Tanks on Missed Earnings and Guidance

Container Store Group Inc. (NYSE: TCS) reported its fiscal third-quarter financial results after the markets closed on Thursday. The company had a net loss of $0.04 per share on $197.2 million in revenue. That compared to consensus estimates of $0.05 in earnings per share (EPS) on $199.1 million in revenue.

Comparable store sales were up 0.5% compared to the same period from the previous year, barely marking another quarter of comparable store sales improvement.

In terms of the outlook for the fiscal fourth quarter, the company expects to have EPS in the range of $0.19 to $0.22 and net sales in the range of $222 million to $232 million, as well as a comparable store sales decline of 3% to 5%. Consensus estimates call for $0.30 in EPS on $238.93 million in revenue.

On the books, the company had cash and cash equivalents totaling $14.57 million at the end of the fiscal third quarter, compared to $13.97 million in the same period of the previous year.
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Kip Tindell, chairman and CEO, commented:

Our key initiatives are gaining momentum, which is encouraging as we position our company for sustained, long-term growth. However, we are very disappointed with our bottom line results for the third quarter. The shortfall versus our expectations was largely driven by expense items, the majority of which are non-recurring and unusual in nature. We have a history of strong fiscal discipline and expense management, which has always been a core competency, and in response to our third quarter we are increasing our efforts to reduce costs and improve selling, general, and administrative expenses, without harming the momentum of our TCS Closets initiative.

Container Store shares were trading down almost 40% at $4.32 of Friday, with a consensus analyst price target of $16.43 and a 52-week trading range of $4.30 to $23.50.

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