Container Store Misses Q4 Expectations, Shares Tumble

Shares of

dipped over 24 percent in after-hours trading after the company reported weaker-than-expected results for the fourth quarter and issued a downbeat forecast. The Coppell, Texas-based company posted a quarterly profit of $13 million, or $0.27 per share, versus a year-ago profit of $18.3 million, or $0.38 per share. Its adjusted net income rose to $0.24 per share from $0.22 per share. Its net sales gained 3.4 percent year-over-year to $224.3 million. However, analysts were expecting earnings of $0.31 per share on revenue of $233.6 million. Net sales in Container Store retail business rose 5.6 percent to $204.7 million. Its comparable store sales slipped 0.8 percent year-over-year in the quarter. Adjusted EBITDA climbed to $31.3 million for the fourth quarter, up from $29.3 million, in the year-ago quarter. Gross margin shrank 40 basis points to 57.8 percent. In fiscal 2014, Container Store opened 7 new stores and relocated 1 store. As of February 28, 2015, the company had $25.0 million in cash and $334.9 million in total debt. The average estimate among 6 Estimize users was for earnings of $0.29 per share and revenue of $240.10 million. "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." For fiscal 2015, Container Store expects net income of $0.30 to $0.38 per share, including one-time items, and consolidated net sales of $800 to $815 million. Analysts had projected earnings of $0.56 per share. For the first quarter, it projects a loss of $0.12 to $0.14 per share, including items, and comparable store sales to drop 3 percent to 4 percent. Analysts had expected a loss of $0.06 per share. Container Store shares tumbled 24.39 percent to $16.40 in the after-hours trading session.