Earnings Highlights and Review: Container Store Group’s Net Sales Grew 5.3%; EPS Rocketed 143%

Research Desk Line-up: Michaels Cos. Post Earnings Coverage

LONDON, UK / ACCESSWIRE / June 13, 2017 / Pro-Trader Daily publishes post-earnings coverage on The Container Store Group, Inc. (NYSE: TCS) following the Company’s disclosure of its fourth quarter and fiscal 2016 financial results on May 23, 2017. The storage products retailer’s net sales and earnings outperformed expectations and the Company also announced a restructuring plan. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member’s account at:

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Get more of our free earnings reports coverage from other constituents of the Specialty Retail, Other industry. Pro-TD has currently selected The Michaels Companies, Inc. (NASDAQ: MIK) for due-diligence and potential coverage as the Company announced on June 06, 2017, its financial results for Q1 FY17 which ended on April 29, 2017. Register for a free membership today, and be among the early birds that get access to our report on Michaels Cos. when we publish it.

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Earnings Reviewed

For the thirteen weeks ended April 01, 2017, Container Store’s consolidated net sales were $221.0 million, up 5.3% compared to net sales of $209.88 million for the thirteen weeks ended April 02, 2016. The Company’s net sales surpassed analysts’ consensus estimates of $213 million. For FY16, Container Store’s consolidated net sales were $819.9 million, up 2.9% on a y-o-y basis.

During Q4 FY16, the Company’s net sales in The Container Store retail business (TCS) grew 5.8% on a y-o-y basis to $203.3 million, primarily due to new store sales, partially offset by a 0.2% decrease in comparable store sales. Container Store’s Elfa International AB (Elfa) third party net sales totaled $17.8 million for the reported quarter, up 0.5% on a y-o-y basis, primarily due to improved sales in the Nordic markets, almost completely offset by the impact of foreign currency translation. For FY16, the Company’s net sales at TCS were $752.7 million, up 3.4% on y-o-y basis. Elfa third-party net sales totaled $67.3 million in FY16, down 3.1% on a y-o-y basis, primarily due to the impact of foreign currency translation

For Q4 FY16, Container Store’s consolidated gross margin was 57.6%, a decline of 20 basis points compared to Q4 FY15. TCS gross margin declined 80 basis points to 56.0%, primarily due to an increased mix of lower-margin product and service sales and, to a lesser extent, increased sales associated with promotional activities during the reported quarter. Elfa gross margin increased 360 basis points to 42.8% in Q4 FY16, primarily due to improved production efficiencies during the reported quarter. During FY16, the Company’s consolidated gross margin was 58.1%, a decline of 20 basis points compared to the recast fiscal year ended April 02, 2016. TCS gross margin declined 60 basis points to 57.1%, while Elfa’s FY16 gross margin improved 120 basis points compared to the year ago same period.

Container Store’s consolidated adjusted EBITDA was $26.9 million in Q4 FY16 compared to $20.6 million in Q4 FY15. The Company’s consolidated adjusted EBITDA was $86.6 million in FY16 compared to $68.4 million in FY15. Container Store’s pre-opening costs decreased to $0.3 million in Q4 FY16 compared to $2.0 million in Q4 FY15. The Company did not open any new stores in the reported quarter compared to two new stores in the prior year’s comparable quarter

For Q4 FY16, Container Store’s consolidated net income was $8.4 million, or $0.17 per share, compared with net income of $3.4 million, or $0.07 per share, in Q4 FY16. The Company’s earnings outperformed Wall Street’s expectations of $0.09 per share. Container Store’s consolidated net income was $15.0 million, or $0.31 per share, for FY16 compared to net income of $4.9 million, or $0.10 per share, in FY15.

Optimization Plan

With the earnings press release, Container Store announced the implementation of a four-part optimization plan to drive improved sales and profitability. This plan includes sales initiatives, certain full-time position eliminations at TCS, organizational realignment at Elfa, and ongoing savings and efficiency efforts. The Company expects to incur pre-tax charges associated with the optimization plan of approximately $9 million to $11 million in FY17, or $0.12 to $0.14 on a per share basis. Container Store’s is forecasting annualized pre-tax savings associated with the optimization plan of approximately $20 million, of which approximately $12 million to $15 million, or $0.15 to $0.19 on a per share basis, expected to be realized in FY17 for an estimated net benefit of approximately $0.03 to $0.05 on a per share basis.

Balance Sheet

As on April 01, 2017, Container Store’s cash totaled $10.74 million compared to cash of $13.61 million as on February 27, 2016. The Company’s total debt, net of deferred financing costs was $317.47 million at the end of the reported quarter compared to $322.23 million as on February 27, 2016.

Outlook

For FY17, Container Store’s consolidated net sales are expected to be in the range of $830 million to $850 million, based on the Company’s four expected new store openings and a comparable store sales decrease in the low single digit range. Container Store’s net income is expected to be in the band of $0.25 to $0.35 per common share.

Stock Performance

On Monday, June 12, 2017, the stock closed the trading session at $5.84, slightly rising 0.34% from its previous closing price of $5.82. A total volume of 314.17 thousand shares have exchanged hands. Container Store’s stock price soared 46.73% in the last one month, 47.47% in the past three months, and 15.64% in the previous twelve months. The stock is trading at a PE ratio of 18.78 and currently has a market cap of $273.49 million.

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