Container Store Sinks After Forecasting Challenging Quarter

  • Shares now trading at one fourth of 2013 IPO price of $18
  • Chain expects same-stores sales to decline as much as 5%

Container Store Group Inc. suffered its biggest stock decline since its initial public offering more than two years ago after posting disappointing results and warning that the current quarter has been “challenging.”

The company expects earnings of 19 cents to 22 cents a share in the fiscal fourth quarter, according to a statement. on Thursday. That was well below the average analyst estimate of 29 cents. Same-store sales may decline as much as 5 percent in the period, the company said, which would mark its worst performance since going public.

“We are very disappointed with our bottom-line results,” Chief Executive Officer Kip Tindell said in the statement. He blamed weak profit on increased expenses last quarter and vowed to make cost cutting more of a priority.

The shares fell 41 percent to $4.22 in New York. That comes after the stock declined 57 percent last year and 59 percent in 2014. The home-goods retailer debut at $18 in 2013 and reached an all-time high of $46.61 in December of that year.

The company has posted uneven results since going public, losing its cachet among investors. It’s missed earnings estimates five of the past eight quarters, according to data compiled by Bloomberg. The chain’s struggles also attracted interest from activist investor Apex Capital LLC a year after its IPO. That firm pushed the company to keep opening new stores to boost growth.

“The retailer continues to see and frame its own story as one of a growth company, but despite a decent economy and strong housing turns, comparable-store sales are flattish,” David Schick, an analyst at Stifel Financial Corp., said in a research note. Container Store’s effort to add pricier closets to its assortment also hasn’t done enough to boost results, he said.

Despite its struggles, the company continues to expand. It opened four stores in the third quarter, giving it a total of 77. The chain said it will have opened 10 stores in all this fiscal year.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE