Container Store turnaround gains traction
The Container Store on Tuesday reported consolidated net sales rose 6.5% to $218.4 million, besting the Thomson Reuters I/B/E/S forecast for $215.6 million cited by Reuters, and that net sales in the quarter rose 7% to $202.3 million despite an estimated $1.4 million in lost sales associated with Hurricanes Harvey and Irma.
Same-store sales in the second quarter rose 1.9%, including a 70-basis point negative impact of the hurricanes, according to a company press release, and both traffic and ticket size have risen in recent quarters, executives said. Q2 adjusted earnings were 12 cents per share, handily beating the Thomson Reuters I/B/E/S expectation for 6 cents per share.
The retailer is increasing its net sales, same-store sales and adjusted net income per common share outlook for fiscal 2017. The company said it expects net sales between $845 million to $865 million, same-store sales to fall between a 1% decrease and a 1% increase and adjusted net income of between 30 cents to 41 cents per common share. That all beats the Thomson Reuters I/B/E/S estimate cited by Reuters of 22 cents per share earnings and revenue of $814.9 million.
The Container Store has struggled somewhat to reverse its falling fortunes, as its brick-and-mortar business started to sink a little deeper amid the rise of e-commerce. The retailer, like many, has been staking its future on its ability to deliver omnichannel shopping experiences and was among the first to offer curbside delivery. Earlier this year the retailer took steps to speed up its website performance in an effort to avoid giving online shoppers a reason to leave the site.
In May, the company announced a four-part Optimization Plan to drive improved sales and profitability, including sales initiatives, the elimination of some full-time positions at TCS, organizational realignment at its Elfa custom shelving unit and other savings and efficiency efforts. That plan is already starting to pay off, although a bigger impact will be felt in the second half of the fiscal year, executives told analysts Tuesday, according to a conference call transcript from Seeking Alpha.
"We cannot point to one or two specific actions that have driven this broad-based improvement in trend," CEO Melissa Reiff told analysts, according to the Seeking Alpha transcript. "Rather, it reflects the collective impact of our sales-revitalization initiatives across merchandising, marketing store operations and customer experience along with the efficiency and optimization work that has been our focus these past few months. These collective efforts we believe will continue to drive the productivity and profitability improvements we know our business is capable of."
The retailer has been working on a new concept store in Dallas, and the results from its changes will determine what elements will be brought into its stores nationwide in coming years, she also said.
The Container Store, which has been among the best-paying retailers in the market, froze its hourly wages last year amid its operational revamp. That was lifted in September, but executives said that won't likely impede its improvements.
- press release via BusinessWire The Container Store Group, Inc. Announces Second Quarter Fiscal 2017 Financial Results
- Seeking Alpha Earnings Call Transcript The Container Store Group's CEO Melissa Reiff on Q2 2017 Results
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