Container Store Stock Soars After Hours On Q4 Earnings Beat, Long-Term Outlook

Container Store Group Inc TCS reported a fourth-quarter net sales decline of 2.9% year-over-year to $305.55 million, beating the consensus of $279.82 million.

The gross margin contracted by 237 bps to 56.9%, and operating income declined by 27.5% Y/Y to $36.96 million, with a margin of 12.1%, down 411 bps.

Adjusted EPS was $0.46, above the consensus of $0.26. Adjusted EBITDA reduced to $45.84 million (-22.1% Y/Y), and margin contracted 374 bps to 15.2%.

Container Store generated cash from operating activities for FY21 of $56.99 million, compared to $136.66 million a year ago. Free cash flow of $23.6 million.

As of April 2, 2022, the Company store base was 94 compared to 93 stores as of April 3, 2021.

“We are excited to return to store growth with a plan to open two new stores in fiscal 2022, and a plan for an additional 74 new stores by fiscal 2027. This growth coupled with our more productive store base, and disciplined expense management is expected to result in low double digit operating margins over time as inflationary headwinds abate,” commented Satish Malhotra, CEO.

Long-term financial targets: The Company expects to achieve $2 billion in consolidated net sales and more than double EPS by the end of fiscal 2027. It expects to drive low double-digit annual sales growth and the expectation to open 76 new stores by the end of fiscal 2027.

1Q22 Outlook: Container Store sees net sales growth and Comparable store sales growth in the Mid-single digits. It expects EPS of $0.15 to $0.20.

FY22 Outlook: The company sees net sales of ~$1.125 billion vs. a consensus of $1.09 billion and Comparable store sales growth in Low-single digits. It expects EPS of $1.20 to $1.30 vs. a consensus of $1.27 and plans to open two stores. Capital expenditures of $60 million to $65 million.

Price Action: TCS shares are trading higher by 10.601% at $7.97 during the post-market session on Tuesday.

• Photo by SoQ via Flickr