The Container Store Shares Tumble To Record Low As Same Store Sales Slide

Samantha Sharf

Forbes Staff

Shares of The Container Store skid around 11% to $19.50 following the closing bell Monday. If losses are maintained through Tuesday’s open the stock will clock in its lowest level since its November 2013 public offering. Prior to the latest dip shares were down 37% from the IPO price.

The company reported $193.2 million in second quarter revenue, up 5.2% from the same period last year but around $6 million short of Wall Street analysts’ consensus estimate. Adjusted net income gained 38.7% reaching $5.1 million, or 11 cents per share, both in line with expectations.

Same store sales, however, were down 0.4%. At same time that current stores are undergoing a slowdown the company is touting new stores. In a statement CEO Kip Tindell ignored the same store sales decline but said, “We are very excited about our new store growth, with three more openings ahead of us this year.” With a 12% minimum annual growth target, said Tindell, The Container Store is among the fastest growers by square footage in the retail industry.

Tindell added, ”We are encouraged by the prospects of our three major initiatives to help drive deeper engagement with our omni-channel customer and to increase traffic and average ticket — POP!, Contained Home and TCS Closets. TCS Closets is without a doubt the most significant merchandising initiative in our history, leveraging our core competency of high service sales of exclusive, solutions-based products and systems.”

TCS Closets will sell custom cabinetry to hold clothing and accessories. The line will launch in seven Dallas/Fort Worth stores starting in November. The company expects the average TCS Closets ticket to total more than $2,000, while the company wide average sale is currently $60. “Therefore,” says the earnings release, “the Company believes TCS Closets will contribute meaningfully to comparable store sales increases in the longer term.”

5 Reasons Why The Container Store Is Killing It

 

ASHLEY LUTZ

The Container Store is poised for incredible growth. 

According to a recent report by Credit Suisse, the retailer, which went public earlier this year, could more than double in worth to $4 billion. 

The specialty home organization store currently has 63 locations, but will soon expand to 300. 

Credit Suisse analysts Gary Balter, Simeon Gutman, and Andrew Kinder cite a few reasons why The Container Store is killing it. 

1. Awesome customer service. "Over our close to 30 years covering retailers, there have been a small group that emerged above the fray, companies that put the customer on a pedestal and appreciated that they exist because of the customer and not vice versa," the analysts write. "We place The Container Store in that group."

2. Experience can't be replicated online. "Only (in stores) can one appreciate the level of knowledge that each associate has, the distinct treasure hunt presentation in the stores, the uniqueness of the product offering, and most important, the excitement one feels when shopping in the stores," according to Credit Suisse. This makes The Container Store nearly immune to online competition. 

3. No direct competitors. The company is a unique concept that shoppers can't find anywhere else, the analysts write. More than 50% of its merchandise is exclusive, "making it a unique retailer in the space." 

4. Associates are valued—and the impact on stores is obvious. Workers receive better pay and benefits than the retail average. "The company is proud of the longevity of its associates, the very low turnover rates compared with other retailers, and the very few employees above store manager ever lost to competitors," the analysts write. 

5. Celebrities love it. "It receives lots of free publicity from Oprah and others, including President Obama, for the uniqueness of its store and more importantly, the way it treats its associates," Balter, Gutman, and Kinder write. 

SEE ALSO:  18 Photos That Show Why Forever 21 Is Winning Teen Retail 

Read more: http://www.businessinsider.com/container-stores-business-will-explode-2013-11#ixzz2lwtyuCDI