The Container Store is going smaller

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The Container Store is going smaller

By Gina Acosta - 05/24/2018
During a fourth quarter conference call with analysts, CEO Melissa Reiff said the company has been opening smaller stores, which are performing well.

The Container Store is overhauling its store format and focusing on private label and digital as it looks to improve productivity and profitability.

During a fourth quarter conference call with analysts, CEO Melissa Reiff said the company has been opening smaller stores, which are performing well.

"Our reduced 18,000 square foot Albuquerque store continues to deliver solid performance, validating the potential opportunity we see for future stores that are smaller in size than our historical 25,000 square foot prototype. In fact, in fiscal 2018, the Oklahoma City store as well as two relocations, our Tysons, Virginia, store and our Cherry Creek, Colorado, store, will all be under 20,000 square feet," Reiff said.

The retailer detailed several initiatives designed to deliver sales growth, including the introduction of proprietary new products throughout the store that leverage the strength of The Container Store brand. The retailer has also launched a new influencer program that allows it to tap into content creators who have a strong affinity with the brand and who, in turn, introduce The Container Store to their engaged audiences. 

"We're developing digital content to support our brand position online and in-store to drive more traffic to the website and optimize for conversion. And pillar No.4, to close the gap on value for the more -- for the money. The extensive customer and customer insight work performed in fiscal 2017 showed us that we have work to do to convey the reality of our price and value proposition versus the perception of it. We must close the gap on perceived value for the money," Reiff said.

During the fourth quarter, same store sales increased 2.7% at the Container Store. Consolidated net sales were $232.8 million, up 5.3%. Net sales in The Container Store retail business were $214.1 million, up 5.3%. Elfa International AB third-party net sales were $18.7 million, up 4.8%, primarily due to the positive impact of foreign currency translation.

“We are very pleased to have concluded our fiscal 2017 with our strongest quarter of comparable store sales performance of the year, driven by an acceleration in our important Custom Closets business as well as in our other product categories. This improvement is primarily the result of our sales revitalization and optimization initiatives, and was accompanied by gross margin expansion of 100 basis points and 20 basis points of SG&A leverage, despite some timing factors that impacted profitability in the fourth quarter and are expected to benefit fiscal 2018,” said Reiff.

“In fiscal 2018 we remain committed to driving improved performance on both the top and the bottom line as we build on the progress we have made across each of our key strategic priorities, particularly our Optimization Plan executed in fiscal 2017 that is expected to generate substantial benefits in fiscal 2018. We plan to continue our disciplined approach to expense management and capital allocation, and expect to open two new stores and relocate two existing stores this year. In addition, we have begun to invest in a second distribution center which is anticipated to become operational in late fiscal 2019, as well as continued technology and marketing investments that are designed to further enhance the customer experience and improve efficiency."

Consolidated net loss was $0.4 million, or ($0.01) per share (inclusive of $0.18 per share net provisional expense from the Tax Act), in the fourth quarter of fiscal 2017 compared to consolidated net income of $8.4 million, or $0.17per share, in the fourth quarter of fiscal 2016. 

Consolidated adjusted net income was $8.4 million, or 18 cents per share, in the fourth quarter of fiscal 2017 compared to adjusted net income of $8.7 million, or $0.18 per share in the fourth quarter of fiscal 2016 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).

Consolidated Adjusted EBITDA was $31.1 million compared to $26.9 million in the fourth quarter of fiscal 2016 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).
For the year (fifty-two weeks) ended March 31, 2018:

 

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