The Container Store reported strong sales results for the third quarter, with the company’s Custom Closets business driving a solid sales performance although holiday department sales declined.
Consolidated net sales in the third quarter ended December 28 were $228.7 million, up 3.2% as compared to the third quarter of fiscal 2018.
Comparable store sales increased 3%, with Custom Closets up 10.2%, contributing 420 basis points of the increase in comparable store sales, and all other product categories were down 2%, negatively contributing the remaining 120 basis points. The decline in other product categories was more than entirely driven by an expected decrease in holiday departments’ sales, which declined 12.2% and negatively contributed 200 basis points.
Net income was $2.4 million, or $0.05 per share, in the third quarter of fiscal 2019 compared to net income of $9.3 million, or $0.19 per share in the third quarter of fiscal 2018.
Melissa Reiff, CEO, Container Store, said, “We are very pleased to deliver a strong third quarter performance which was largely in line with our expectations, as we continued to successfully execute against our number one strategic priority; to grow our Custom Closets business. As we expected, sales in our holiday departments declined compared to last year, but our focus on our everyday products and solutions during the holiday period more than offset the holiday departments’ sales challenges. We continue to make changes to profitably maximize this portion of our offering going forward.”
Reiff continued, “We are focused on the execution of our strategic priorities and we are making good progress against each of them. We are just beginning to realize the benefits of our investment in our new distribution center including the associated freight savings, as well as significant improvements in customer delivery times, which are expected to ramp up as we move into fiscal 2020. Our marketing investments to expand awareness of our Custom Closets offerings and capabilities are also driving the desired outcomes. We look forward to continuing to capitalize on the opportunities to grow our share of this estimated $6 billion Custom Closets addressable market, and enter the final quarter of our fiscal year in a strong position to deliver against our previously provided outlook.”