The Container Store Comps Slip In Q3

The Container Store saw its net sales rise but comparable store sales slightly decline in its third quarter, pointing to a decrease in its holiday department sales.

For the third quarter ended December 30, 2017, consolidated net sales were $223 million, up 3.1% as compared to the third quarter of fiscal 2016. Net sales were $203.9 million, up 2.4%, with the increase driven by new store net sales. This was partially offset by a 0.2% decrease in net sales from comparable stores with holiday departments’ sales contributing an approximate 1% decline. Elfa third-party net sales were $19.1 million, up 10.5% compared to the third quarter of fiscal 2016, primarily due to the positive impact of foreign currency translation, which increased third-party net sales by 8.3%, as well as higher sales in Russia.

Consolidated net income was $28.4 million, or $0.59 per share, which is inclusive of $0.50 per share provisional benefit from the Tax Act, in the third quarter of fiscal 2017 compared to net income of $5.1 million, or $0.11 per share, in the third quarter of fiscal 2016. Consolidated adjusted net income was $5.1 million, or $0.11 per share, in the third quarter of fiscal 2017 compared to adjusted net income of $5.2 million, or $0.11 per share in the third quarter of fiscal 2016

Melissa Reiff, CEO, Container Store, said, “In the fiscal third quarter we made further progress with our core custom closets offering and delivered continued improvement in all of our non-closet categories, with the exception of our holiday departments, which typically represent a small percentage of our annual sales, but historically have had a notable impact on our fiscal third quarter sales. While the softness in our holiday categories is disappointing, we were prudent in our buying for holiday and disciplined in selling through the related inventory, as evidenced by our strong gross margin performance and healthy ending inventory position. With the holiday season behind us, and with a strong start to our annual Elfa sale that has continued into the fiscal fourth quarter, we expect comparable store sales in the fiscal fourth quarter to improve from the fiscal third quarter, as reflected in our implied fiscal fourth quarter comparable store sales outlook of flat to up low single digits.”