When the retailer of storage, shelving and other fixtures reported fiscal first-quarter earnings after markets closed on Tuesday, it posted a slightly larger loss than expected and lower net sales. The worse news, though, came in Container Store’s forecast.
The company now sees its full fiscal year earnings per share (EPS) in the range of $0.49 to $0.54, well below the prior consensus estimate for EPS of $0.57. Barclays has cut its price target from $32 to $26, and Credit Suisse slashed its price target from $45 to $32.
Net sales rose 8.6% from the prior year to $173.4 million, but same-store sales fell by 0.8%. The consensus estimate called for sales of $174.2 million. By division, namesake stores’ sales increased 8.9% to $149.7 million, while Elfa third-party sales for modular shelving and drawer systems rose by 7.0% to $23.7 million.
The company said the sluggish sales cannot be entirely attributed to bad weather that kept shoppers home. CEO Kip Tindell said, “Consistent with so many of our fellow retailers, we are experiencing a retail ‘funk.'” Tindell also noted that the first quarter typically contributes nothing to the company’s annual earnings, but even if that is true the next three quarters are not going to be meeting expectations either.
The shares traded down about 12% in the first half hour of trading Wednesday morning to $23.78, after posting a post-IPO low of $22.88 earlier. The stock’s 52-week high is $47.07, and volume was already nearly three times the daily average of around 440,000 shares traded.
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