Missing earnings and sales expectation for the fourth quarter of 2014, storage company The Container Store (TCS, Financial) posted net sales worth $224.3 million and net incomes of $11.8 million or $0.24 per adjusted common diluted share in Q4 of 2014. Sales for the whole fiscal 2014 were down by 1.4% at $781.9 million. Comparable stores sales were down by 0.8% from the same period in the previous year.
Analysts’ expectations predicted adjusted earnings of $0.31 per share and net sales of $234 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 four 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 four 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. 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.”
Outlook
While the Texas-based company’s common stock climbed by a modest 1.02% to $21.69, during trading hours on Monday, after-hours trading saw shares fall by 25.54% to $16.15, post the earnings announcement.
TCS is said to have re-forecast earnings estimates for fiscal 2015 down to $800 million in net income, or 30 cents per share, from $815 million, or 38 cents per share. Analysts had pegged TCS’s earnings for 2015 at 56 cents per share on $870.7 million in net income.
CEO Tindell is confident, nevertheless, that three major strategic initiatives, to be rolled out over this year, will bring better earnings luck to the company. “We are focused on strengthening our business as we build for the future in order to create long-term value for all of our stakeholders. We remain very confident of, and excited about, the potential of our three major strategic initiatives – TCS Closets, Contained Home and POP! – With fiscal 2015 serving as an investment year for these programs in order to bolster their longer-term success. We’re also working on shorter-term opportunities to drive the core business, innovate and differentiate,” he said in the statement released with the earnings report.
Investor information
Shares of TCS have tumbled about 50% over the year with a 52-week high/low of $ 30.68 / $ 15.49. The earnings per share stands currently at 58 cents per share with a P/E Ratio of 37.4. Six of nine analysts, such as Morgan Stanley (MS, Financial), Stifel Nicolaus (SF, Financial) and Wells Fargo (WFC, Financial) Sec, polled by Zacks Investment Research, give the stock a "Hold" Rating. The Street Ratings team has pegged the stock with a "C" Rating, saying. “The primary factors that have impacted our rating are mixed –Â some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and revenue growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and generally higher debt management risk."
