The Container Store Group Q1 2017 results: Consolidated net sales were $183.1 million, up by 3.2% from previous year

  • Net Sales up 3.2%; Comparable Store Sales down 1.2%
    0.7% of Comparable Store Sales Decline Attributable to Easter Shift
  • Comparable Store Sales Slightly Positive in June; Continuing Positive in July
  • SG&A Savings and Efficiency Program and Custom Closets
    Continue to Drive Financial Results
  • Reiterates Fiscal 2017 Earnings Per Share Outlook of $0.25 to $0.35

COPPELL, Texas, 2017-Aug-07 — /EPR Retail News/ — The Container Store Group, Inc. (NYSE: TCS) (the “Company”), today (08/02/2017) announced financial results for the first quarter of fiscal 2017 ended July 1, 2017.

  • Consolidated net sales were $183.1 million, up 3.2%. Net sales in The Container Store retail business (“TCS”) were $167.1 million, up 3.6%. Elfa International AB (“Elfa”) third-party net sales were $16.0 million, down 1.2%, primarily due to the negative impact of foreign currency translation of 7.2%.
  • Comparable store sales were down 1.2%. The Easter timing shift negatively impacted the quarter’s comparable store sales by approximately 0.7%.
  • Consolidated net loss per share was ($0.16) compared with ($0.04) in the first quarter of fiscal 2016. Adjusted net loss per share was ($0.11) compared with ($0.09) in the first quarter of fiscal 2016 (see Reconciliation of GAAP to Non-GAAP Financial Measures table). Net loss per share and adjusted net loss per share in the first quarter of fiscal 2017 include a $0.01 negative impact related to the Easter timing shift.

“We are pleased with our first quarter fiscal 2017 financial performance and the progress we have made on many fronts. The quarter’s results were largely as we expected from both a top and bottom line perspective. Our Custom Closets business continues to positively contribute to our sales and profitability, and we’ve seen sustained sales trend improvement in our other product categories. In first quarter 2017, our comparable store sales improved as the quarter progressed, moving into slightly positive territory by June. This improvement continued into July, the first month of our second quarter. Our results reflect some benefits from the key sales revitalizing initiatives we are working on, as well as the savings and efficiency efforts we launched last year, and have been building upon this year,” said Melissa Reiff, Chief Executive Officer.

Reiff continued, “Based on our first quarter performance, we are reiterating our previously provided outlook for fiscal 2017. Looking ahead to the remainder of the year, we intend to remain focused on executing our previously announced Optimization Plan to drive improvement in sales and profitability. Additionally, we plan to continue our efforts with the key strategic priorities of the Company, which include customer experience and store formats and design, product and merchandising, customer acquisition and retention, and investments in our employees.”

New and Existing Stores

During the first quarter of fiscal 2017 the Company opened one new store in Cleveland, Ohio. In addition, the Company opened a new store in Albuquerque, New Mexico on July 8, 2017. As previously announced, the Company plans to open the following additional locations during the remainder of fiscal 2017: Livingston, New Jersey; Staten Island, New York; and the relocation of its Chestnut Hill, Massachusetts store.

First Quarter Fiscal 2017 Results

For the first quarter (thirteen weeks) ended July 1, 2017:

  • Consolidated net sales were $183.1 million, up 3.2% as compared to the first quarter of fiscal 2016. Net sales at TCS were $167.1 million, up 3.6%, with the increase driven by new store net sales, partially offset by a 1.2% decrease in net sales from comparable stores. Elfa third-party net sales were $16.0 million, down 1.2% compared to the first quarter ended July 2, 2016, primarily due to the negative impact of foreign currency translation during the quarter which reduced third-party net sales by 7.2%, partially offset by higher sales in Russia.
  • Consolidated gross margin was 56.6%, a decrease of 240 basis points compared to the first quarter of fiscal 2016. TCS gross margin declined 210 basis points to 56.5% primarily due to a greater portion of sales generated by merchandise campaigns during the quarter, combined with strong sales growth in lower gross margin business-to-business sales and higher costs associated primarily with our installation services business. Elfa gross margin declined 310 basis points primarily due to higher direct materials costs, partially offset by production efficiencies.
  • Consolidated selling, general and administrative expenses (“SG&A”) increased by 4.7% to $96.6 million from $92.3 million in the first quarter of fiscal 2016. SG&A as a percentage of net sales increased 80 basis points. This was primarily due to the reversal of accrued deferred compensation associated with executive employment agreements amended and restated during the first quarter of fiscal 2016, net of costs incurred to execute the agreements, of $3.9 million, or a 220 basis points benefit in the prior year first quarter. This increase as a result of the prior period benefit was partially offset by a 140 basis point improvement in SG&A expense as a percentage of net sales, primarily due to ongoing savings and efficiency efforts, combined with lower self-insurance costs, partially offset by deleveraging of occupancy costs associated with negative comparable store sales growth, as well as other additional SG&A costs.
  • The Company recorded other expenses of $3.5 million in the first quarter of fiscal 2017, which were related to severance costs incurred to implement the previously announced Optimization Plan.
  • Consolidated net interest expense increased slightly to $4.2 million.
  • The effective tax rate was 37.4%, as compared to 33.3% in the first quarter ended July 2, 2016. The increase in the effective tax rate is primarily due to a shift in the mix of projected domestic and foreign earnings.
  • Net loss was $7.7 million, or ($0.16) per share, in the first quarter of fiscal 2017 compared to net loss of $2.1 million, or ($0.04) per share in the first quarter of fiscal 2016. Adjusted net loss was $5.5 million, or ($0.11) per share, in the first quarter of fiscal 2017 compared to adjusted net loss of $4.2 million, or ($0.09) per share in the first quarter of fiscal 2016 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).
  • Adjusted EBITDA was $6.4 million in the first quarter of fiscal 2017 compared to $12.0 million in the first quarter of fiscal 2016 (see Reconciliation of GAAP to Non-GAAP Financial Measures table). The Adjusted EBITDA of $12.0 million in the first quarter of fiscal 2016 includes the aforementioned benefit from the impact of amended and restated employment agreements during the prior year first quarter, net of costs incurred to execute the agreements of $3.9 million.

In May 2017, the Company announced the implementation of a four-part Optimization Plan to drive improved sales and profitability. This plan includes sales initiatives, certain full-time position eliminations at TCS, organizational realignment at Elfa and ongoing savings and efficiency efforts. The Company continues to expect to incur pre-tax charges associated with the Optimization Plan of approximately $9 to $11 million in fiscal 2017, or $0.12 to $0.14 on a per share basis. The expected annualized pre-tax savings associated with the Optimization Plan continue to be approximately $20 million, of which approximately $12 to $15 million, or $0.15 to $0.19 on a per share basis, is expected to be realized in fiscal 2017, for an estimated net benefit of approximately $0.03 to $0.05 on a per share basis.Optimization Plan

Outlook

As previously outlined, for fiscal 2017, consolidated net sales are expected to be $830 to $850 million, based on the Company’s four expected new store openings and a comparable store sales decrease in the low single digit range. Net income is expected to be $0.25* to $0.35* per common share based on estimated common shares outstanding of 49 million, and includes the aforementioned Optimization Plan charges and benefits. This assumes a tax rate of approximately 39% for the full year.

Fiscal 2017 adjusted net income is expected to be $0.37* to $0.49* per share, which compares to adjusted net income of $0.27 per share in fiscal 2016 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).

*Assumes existing debt structure remains in place. As previously disclosed, the Company is currently seeking opportunities to refinance its debt.

Conference Call Information

A conference call to discuss first quarter fiscal 2017 financial results is scheduled for today, August 2, 2017, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-3982 (international callers please dial (201) 493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.containerstore.com.

A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing (844) 512-2921 (international callers please dial (412) 317-6671). The pin number to access the telephone replay is 13666342. The replay will be available until September 2, 2017.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements about our expectations regarding our goals, strategies, priorities and initiatives, including our Optimization Plan and key strategic priorities; expectations regarding new store openings and relocations; anticipated financial performance and tax rate for fiscal 2017; anticipated charges and savings in connection with our Optimization Plan; and seeking opportunities to refinance our debt.

These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our Optimization Plan may not result in improved sales and profitability; our inability to open or relocate new stores, or remodel existing stores, in the timeframe and at the locations we anticipate; overall decline in the health of the economy, consumer spending, and the housing market; our operating and financial performance in a given period may not meet the guidance we provided to the public; our inability to manage costs and risks relating to new store openings; our inability to source and market new products to meet consumer preferences; our failure to achieve or maintain profitability; our dependence on a single distribution center for all of our stores; effects of a security breach or cyber-attack of our website or information technology systems; our vulnerability to natural disasters and other unexpected events; our reliance upon independent third party transportation providers; our inability to protect our brand; our failure to successfully anticipate consumer preferences and demand; our inability to manage our growth; inability to locate available retail store sites on terms acceptable to us; our inability to maintain sufficient levels of cash flow to meet growth expectations; disruptions in the global financial markets leading to difficulty in borrowing sufficient amounts of capital to finance the carrying costs of inventory to pay for capital expenditures and operating costs; fluctuations in currency exchange rates; our inability to effectively manage our online sales; competition from other stores and internet based competition; our inability to obtain merchandise on a timely basis at competitive prices as a result of changes in vendor relationships; vendors may sell similar or identical products to our competitors; our reliance on key executive management, and the transition in our executive leadership; our inability to find, train and retain key personnel; labor relations difficulties; increases in health care costs and labor costs; our dependence on foreign imports for our merchandise; violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti bribery and anti-kickback laws; and our indebtedness may restrict our current and future operations, and we may not be able to refinance our debt on favorable terms, or at all.

These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on June 1, 2017, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

About The Container Store

The Container Store (NYSE: TCS) is the nation’s leading retailer of storage and organization products — a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 11,000 products designed to save space and time, a suite of custom closet systems and an array of digital shopping services. Visit www.containerstore.com for more information about store locations, the product collection and services offered. Visit www.containerstore.com/blog for real solutions from the really organized and www.whatwestandfor.com to learn more about the company’s unique culture.

Note Regarding Non-GAAP Information

This press release includes financial measures that are not calculated in accordance with GAAP, including adjusted net income (loss), adjusted net income (loss) per diluted share, and Adjusted EBITDA. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in a table accompanying this release. These non-GAAP measures should not be considered as alternatives to net income (loss) as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. These non-GAAP measures are key metrics used by management, the Company’s board of directors, and Leonard Green and Partners, L.P., its controlling stockholder, to assess its financial performance. The Company presents these non-GAAP measures because it believes they assist investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance and because the Company believes it is useful for investors to see the measures that management uses to evaluate the Company. These non-GAAP measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry. In evaluating these non-GAAP measures, you should be aware that in the future the Company will incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company’s presentation of these non-GAAP measures should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using non-GAAP measures supplementally. These non-GAAP measures are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The Company defines adjusted net income (loss) as net income (loss) available to common shareholders before distributions accumulated to preferred shareholders, stock-based compensation and other costs in connection with our IPO, restructuring charges, impairment charges related to intangible assets, losses on extinguishment of debt, certain gains on disposal of assets, certain management transition costs incurred and benefits realized, charges incurred as part of the implementation of our Optimization Plan, and the tax impact of these adjustments and other unusual or infrequent tax items. We define adjusted net income (loss) per diluted share as adjusted net income (loss) divided by the diluted weighted average common shares outstanding. We use adjusted net income (loss) and adjusted net income (loss) per diluted share to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. We present adjusted net income (loss) and adjusted net income (loss) per diluted share because we believe they assist investors in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance and because we believe it is useful for investors to see the measures that management uses to evaluate the Company.

We have included a presentation of adjusted net loss for the thirteen weeks ended July 2, 2016 to show the net impact of the amended and restated employment agreements entered into with key executives during the thirteen weeks ended July 2, 2016 (“management transition costs (benefits)”). Although we disclosed the net positive impact of the amended and restated employment agreements in our discussions of earnings per share and SG&A in our earnings press releases in fiscal 2016, we did not include in those press releases a presentation of adjusted net income. However, in the thirteen weeks ended July 1, 2017, our Optimization Plan has caused us to incur similar charges that we believe are not indicative of our core operating performance, and we expect to continue to incur such charges in the remainder of fiscal 2017. As a result, we believe that adjusting net loss in the thirteen weeks ended July 2, 2016 for management transition costs (benefits), in addition to adjusting net loss for the thirteen weeks ended July 1, 2017 for charges incurred as part of the implementation of our Optimization Plan, will assist investors in comparing our core operating performance across reporting periods on a consistent basis. Likewise, we believe that presenting full year fiscal 2017 adjusted net income guidance and fiscal 2016 adjusted net income as a comparative measure, will assist investors in evaluating our anticipated financial performance as it relates to our core operations.

The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is calculated in accordance with its credit facilities and is one of the components for performance evaluation under its executive compensation programs. Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items, including certain non-cash and other items that the Company does not consider in its evaluation of ongoing operating performance from period to period as discussed further below. The Company uses Adjusted EBITDA in connection with covenant compliance and executive performance evaluations, and to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies, to make budgeting decisions and to compare its performance against that of other peer companies using similar measures. The Company believes it is useful for investors to see the measures that management uses to evaluate the Company, its executives and its covenant compliance. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry.

Investor:
ICR, Inc.
203.682.8200
Farah Soi / Shannon Devine
Farah.Soi@icrinc.com / Shannon.Devine@icrinc.com

Media:
The Container Store Group, Inc.
Melanie Graham
972-538-6864
pr@containerstore.com

Source: The Container Store Group, Inc.

The Container Store Group Q4 FY 2016: strong fourth quarter performance that exceeded our expectations

  • Fourth Quarter Earnings Per Share More Than Doubles to $0.17; SG&A Savings and Efficiency Program Continues to Drive Financial Results
  • Improvement in Comparable Store Sales to -0.2%
  • Expects Fiscal 2017 Earnings Per Share of $0.25 to $0.35

COPPELL, Texas, 2017-May-25 — /EPR Retail News/ — The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today (05/23/2017) announced financial results for the fourth quarter and fiscal year 2016 ended April 1, 2017. In light of the Company’s previously announced fiscal year end change, all references to prior fourth quarter and fiscal year results are based on the recast fourth quarter and fiscal year 2015 ended April 2, 2016.

For the fourth quarter of fiscal 2016:

  • Consolidated net sales were $221.0 million, up 5.3%. Net sales in The Container Store retail business were $203.3 million, up 5.8%. Elfa International AB third-party net sales were $17.8 million, up 0.5%.
  • Comparable store sales were down 0.2%. The Easter timing shift benefited the quarter’s comparable store sales by approximately 0.6%.
  • Consolidated net income per share (EPS) was $0.17 compared with $0.07, an increase of 143%.

“We are very pleased to have completed fiscal 2016 with strong fourth quarter performance that exceeded our expectations across all financial metrics. Our Custom Closets business continues to positively contribute to comparable store sales and we’ve seen sales trends improve in our other product categories driven by new and more targeted marketing campaigns, as well as merchandising improvements,” said Melissa Reiff, Chief Executive Officer.

Reiff continued, “In fiscal 2016 we implemented our SG&A savings and efficiency program, which drove a substantial improvement in profitability with a full year operating income increase of 67% compared to fiscal 2015 and a three-fold increase in earnings per share to $0.31.”

“As we begin fiscal 2017, we remain committed to consistently driving top and bottom line performance that we believe The Container Store is capable of delivering. We have initiatives in progress to drive sales productivity improvements, including a complete re-design of our flagship store in Dallas, which we believe will provide us insight for the development of new store formats and the evolution of our existing stores’ layout and customer experience. In addition, today we are announcing a four-part plan to optimize our consolidated business and drive improved sales and profitability,” Reiff concluded.

As previously announced, the Company plans to open the following locations in fiscal 2017:

  • Cleveland, Ohio (First Quarter)
  • Albuquerque, New Mexico (Second Quarter)
  • Livingston, New Jersey (Third Quarter)
  • Staten Island, New York (Third Quarter)
  • Relocation of its Chestnut Hill, Massachusetts store (Third Quarter)

Fourth Quarter and Full Fiscal Year 2016 Results

For the fourth quarter (thirteen weeks) ended April 1, 2017:

  • Consolidated net sales were $221.0 million, up 5.3% as compared to the fourth quarter ended April 2, 2016. Net sales in The Container Store retail business (“TCS”) were $203.3 million, up 5.8% as compared to the fourth quarter ended April 2, 2016, primarily due to new store sales, partially offset by a 0.2% decrease in comparable store sales. Elfa International AB (“Elfa”) third party net sales were $17.8 million, up 0.5% compared to the fourth quarter ended April 2, 2016, primarily due to improved sales in the Nordic markets during the quarter, almost completely offset by the impact of foreign currency translation during the quarter, which reduced third party net sales by 5.2%.
  • Consolidated gross margin was 57.6%, a decline of 20 basis points compared to the fourth quarter ended April 2, 2016. TCS gross margin declined 80 basis points to 56.0%, primarily due to an increased mix of lower-margin product and service sales and, to a lesser extent, increased sales associated with promotional activities during the fourth quarter of fiscal 2016. Elfa gross margin increased 360 basis points to 42.8% primarily due to improved production efficiencies during the quarter. On a consolidated basis, gross margin declined 20 basis points, as the improvement in Elfa gross margin was more than offset by the decline in TCS gross margin.
  • Consolidated selling, general and administrative expenses (“SG&A”) decreased by 0.5% to $99.9 million from $100.4 million in the fourth quarter ended April 2, 2016. SG&A as a percentage of net sales decreased 260 basis points, primarily due to decreased costs as a result of the Company’s SG&A savings program, as well as lower healthcare costs.
  • Pre-opening costs decreased to $0.3 million in the fourth quarter of fiscal 2016 compared to $2.0 million in the fourth quarter ended April 2, 2016. The Company did not open any new stores in the fourth quarter of fiscal 2016 as compared to two new stores in the fourth quarter ended April 2, 2016.
  • Consolidated net interest expense increased slightly to $4.3 million.
  • The consolidated effective tax rate for the fourth quarter of fiscal 2016 was 35.2%, as compared to 36.2% in the fourth quarter ended April 2, 2016. The decrease in the effective tax rate is primarily due to changes in the mix of domestic and foreign earnings.
  • Consolidated net income was $8.4 million, or $0.17 per share, in the fourth quarter of fiscal 2016 compared to net income of $3.4 million, or $0.07 per share, in the fourth quarter ended April 2, 2016.
  • Consolidated Adjusted EBITDA was $26.9 million compared to $20.6 million in the fourth quarter ended April 2, 2016, (see GAAP/Non-GAAP reconciliation table).

For the year (fifty-two weeks) ended April 1, 2017:

  • Consolidated net sales were $819.9 million, up 2.9% as compared to the recast fiscal year ended April 2, 2016. Net sales at TCS were $752.7 million, up 3.4% as compared to the recast fiscal year ended April 2, 2016, primarily due to new store sales, partially offset by a 2.4% decrease in comparable store sales. Elfa third-party net sales were $67.3 million, down 3.1% compared to the recast fiscal year ended April 2, 2016, primarily due to the impact of foreign currency translation during the fiscal year, which reduced third party net sales by 2.4%, as well as lower sales in Russia.
  • Consolidated gross margin was 58.1%, a decline of 20 basis points compared to the recast fiscal year ended April 2, 2016. TCS gross margin declined 60 basis points to 57.1%, as an increased mix of lower margin products and services combined with increased sales associated with promotional activities was partially offset by the impact of a stronger U.S. dollar. Elfa gross margin improved 120 basis points primarily due to improved production efficiencies. On a consolidated basis, gross margin declined 20 basis points, as the improvement in Elfa gross margin was more than offset by the decline in TCS gross margin.
  • Consolidated selling, general and administrative expenses (“SG&A”) decreased by 1.7% to $387.9 million from $394.6 million in the recast fiscal year ended April 2, 2016. SG&A as a percentage of net sales decreased 220 basis points. This was primarily due to decreased costs as a result of the Company’s SG&A savings program, as well as the reversal of accrued deferred compensation of $3.9 million, which occurred in the first quarter of fiscal 2016. The Company also experienced lower healthcare costs and a positive impact from foreign currency exchange rates during fiscal 2016. The positive impact of these items was partially offset by deleveraging of occupancy costs associated with negative comparable store sales growth.
  • Pre-opening costs decreased to $6.9 million in fiscal 2016 compared to $9.0 million in the recast fiscal year ended April 2, 2016. The Company opened seven new stores in fiscal 2016 as compared to ten new stores (inclusive of one relocation) in the recast fiscal year ended April 2, 2016.
  • Consolidated net interest expense decreased slightly to $16.7 million.
  • The consolidated effective tax rate was 38.6%, as compared to 37.4% in the recast fiscal year ended April 2, 2016. The increase in the effective tax rate is primarily due to changes in the mix of domestic and foreign earnings, combined with the expensing of certain deferred tax assets due to the expiration of certain stock based compensation awards.
  • Consolidated net income was $15.0 million, or $0.31 per share, compared to net income of $4.9 million, or $0.10per share, in the recast fiscal year ended April 2, 2016. Net income of $15.0 million in fiscal 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key executives, net of costs incurred related to management transition and income taxes, of approximately $1.8 million, or $0.04 per share.
  • Consolidated Adjusted EBITDA was $86.6 million compared to $68.4 million in the recast fiscal year ended April 2, 2016, (see GAAP/Non-GAAP reconciliation table). The Adjusted EBITDA of $86.6 million in fiscal 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key executives during the first quarter of 2016, net of costs incurred to execute the agreements, of $3.9 million.

Investors:
ICR, Inc.
Farah Soi/Shannon Devine
203-682-8200
Farah.Soi@icrinc.com/Shannon.Devine@icrinc.com

Source: The Container Store Group, Inc.

The Container Store® announces its #49 ranking on Fortune’s annual list of 100 Best Companies to Work For

The Container Store Honored for 18th Consecutive Year on Fortune’s List of 100 Best Companies to Work For (Photo: Business Wire)

Retailer Sustains Position on Employer of Choice List for 18 Years in a Row

DALLAS, 2017-Mar-13 — /EPR Retail News/ — The Container Store® (NYSE:TCS), the nation’s originator and leading retailer of storage and organization products, announces its #49 ranking on Fortune’s annual list of 100 Best Companies to Work For. The announcement marks 18 consecutive years that the retailer has been included on the employer of choice list, which is based on employee ratings of their workplace culture, including the level of trust they feel towards leaders, the pride they take in their jobs and the camaraderie they experience amongst co-workers.

“Being included on this prestigious list is an honor and a tribute to our incredible employees who make our workplace special and productive,” said Melissa Reiff, CEO, The Container Store. “Taking excellent care of our customers – and all of our stakeholders – begins with taking care of our employees and providing an environment of inspiration, innovation and agility. I am very appreciative of the creative work our employees do every day to make our company progressive and customer centric. As we strive to create an even better place to work and to shop, we will continue to operate our business through the lens of our Foundation Principles and our commitment to conscious leadership in everything we do.”

As part of today’s announcement, Fortune also recognized the retailer for its 1 Great Person = 3 Good People Foundation Principle, which contributes to creating a culture that brings out the best in employees and makes them feel that everyone matters. They also mentioned that The Container Store offers health insurance for part-time employees, paid sabbaticals and 263 hours of training for full-time employees in their first year. Over the past year, Great Place to Work® and Fortunehave released additional top workplace lists in which the retailer was honored, including the Best Workplaces in Texasand Best Workplaces for Women. To find out more about the company’s unique employee first culture, approach to business and career opportunities, visit www.whatwestandfor.com or www.containerstore.com/careers.

List Methodology

To identify the 100 Best Companies to Work For®, each year Fortune partners with Great Place to Work to conduct the most extensive employee survey in corporate America. The ranking is based on feedback from more than 232,000 employees at Great Place to Work–Certified™ companies with more than 1,000 employees. Winning a spot on this list indicates the company has distinguished itself from peers by creating a great place to work for employees – measured and ranked through analysis of the results of Great Place to Work’s Trust Index© survey and Culture Audit© questionnaire.

Through the Trust Index©, employees anonymously assess their workplace, including the honesty and quality of communication by managers, degree of support for employees’ personal and professional lives and the authenticity of relationships with colleagues. Results from the survey are highly reliable, having a 95% confidence level and a margin of error of 5% or less. Companies’ results on the Trust Index© survey are compared to peer organizations of like size and complexity. The Culture Audit© includes detailed questions about benefits, programs and practices.

To be considered for the Best Workplaces lists, companies must become Great Place to Work-Certified™. Details are available at https://www.greatplacetowork.com/certification.

About The Container Store

The Container Store (NYSE: TCS) is the nation’s leading retailer of storage and organization products – a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 11,000 products designed to save space and time, a suite of custom closet systems and an array of digital shopping services. Visit www.containerstore.com for more information about store locations, the product collection and services offered. Visit www.containerstore.com/blog for real solutions from the really organized and www.whatwestandfor.com to learn more about the company’s unique culture.

About Great Place to Work:

Great Place to Work® is the global authority on high-trust, high-performance workplace cultures. Through proprietary assessment tools, advisory services, and certification programs, including Best Workplaces lists and workplace reviews, Great Place to Work provides the benchmarks, framework, and expertise needed to create, sustain, and recognize outstanding workplace cultures. In the United States, Great Place to Work produces the annual Fortune “100 Best Companies to Work For®” list and a series of Great Place to Work Best Workplaces lists including lists for Millennials, Women, Diversity, Small and Medium Companies and over a half dozen different industry lists. Great Place to Work provides executive advisory and culture consulting services to businesses, non-profits, and government agencies in over 50 countries across six continents.

Follow Great Place to Work online at www.greatplacetowork.com and on Twitter at @GPTW_US.

Source: The Container Store

The Container Store
Melanie Graham, 972-538-6864
publicrelations@containerstore.com

The Container Store Group, Inc. announces financial results for 3Q of fiscal 2016 ended December 31, 2016

  • Earnings Per Share Up 38% over Prior Year Period
  • SG&A Savings and Efficiency Program Drives Financial Results

COPPELL, Texas, 2017-Feb-08 — /EPR Retail News/ — The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today(02/07/2017) announced financial results for the third quarter of fiscal 2016 ended December 31, 2016. In light of the Company’s previously announced fiscal year end change, all references to prior year results are based on the recast third quarter of fiscal 2015 ended January 2, 2016.

  • Consolidated net sales were $216.4 million, up 1.7%. Net sales in The Container Store retail business were $199.1 million, up 2.3%. Elfa International AB third-party net sales were $17.3 million, down 5.2%, due to the negative impact of foreign currency translation of 5.8%.
  • Comparable store sales for the third quarter of fiscal 2016 were down 3.9% with holiday department sales contributing notably to the decline. TCS Closets® positively contributed 1.3% to third quarter comparable store sales.
  • Consolidated net income per diluted share (EPS) was $0.11 compared with $0.08, an increase of 38% from the third quarter ended January 2, 2016.
  • The Company opened four new stores in the third quarter of fiscal 2016 ending the quarter with 86 stores, as compared to 77 as of January 2, 2016.

Melissa Reiff, Chief Executive Officer, stated, “We’re pleased that our ongoing discipline on the expense side enabled us to deliver a 38% increase in earnings per share versus the prior year period. Our custom closets business, specifically elfa® and TCS Closets®, drove incremental sales and profit; however, holiday department sales were disappointing during the quarter and, as we expected, Our Annual elfa® Sale was impacted by fewer selling days combined with Christmas and New Year’s Eve holidays falling on weekends.”

Reiff continued, “We’re nearing completion of our new long-term strategic plan that outlines our goals and priorities and our roadmap to achieving them. We look forward to sharing its central elements by June. Fundamental to this plan is leveraging our key differentiators and implementing new strategies to achieve top-line sales growth and maximizing the productivity of our stores by aligning our marketing, merchandising, in-store and online experience with the evolving expectations of today’s consumer.”

“Given our top and bottom-line performance for the first nine months of fiscal 2016, we now expect to deliver results at the lower end of our previously provided annual comparable store sales and earnings outlook ranges, and consolidated sales modestly below our previously provided annual outlook range,” Reiff concluded.

New and Existing Stores

In fiscal 2017, the Company plans to open locations in Cleveland, OH, Albuquerque, NM, Livingston, NJ, and Staten Island, NY, as well as relocate its Chestnut Hill, MA store. The Albuquerque store will be the first of the Company’s new mid-size store format as part of its test-and-learn effort to optimize its stores and improve efficiency and productivity.

“Overall, for the seven stores we opened in fiscal 2016, sales results have exceeded our expectations and moving forward we will continue to seek strategic store expansion opportunities,” added Reiff. “While we believe that new stores are important to our future and that our runway for growth remains strong with only 86 stores, for fiscal 2017, we plan to point a significant portion of our capital allocation toward our existing store remodels and enhancements. This will allow us to properly support the expansion of our custom closets business, as well as explore new store formats.”

Third Quarter 2016 Results

For the third quarter (thirteen weeks) ended December 31, 2016:

  • Consolidated net sales were $216.4 million, up 1.7% as compared to the third quarter ended January 2, 2016. Net sales in The Container Store retail business (“TCS”) were $199.1 million, up 2.3% as compared to the third quarter ended January 2, 2016, primarily due to new store sales, partially offset by a 3.9% decrease in comparable store sales. Elfa International AB (“Elfa”) third party net sales were $17.3 million, down 5.2% compared to the third quarter ended January 2, 2016, due to the impact of foreign currency translation during the quarter, which reduced third party net sales by 5.8 percentage points.
  • Consolidated gross margin was 58.1%, a decline of 80 basis points compared to the third quarter ended January 2, 2016. TCS gross margin declined 110 basis points to 57.0%, primarily due to an increased mix of lower-margin product and service sales and, to a lesser extent, increased promotional activities during the third quarter of fiscal 2016. Elfa gross margin declined 90 basis points to 37.8% primarily due to increased direct materials costs and higher freight costs associated with changes in customer sales mix, partially offset by improved production efficiencies.
  • Consolidated selling, general and administrative expenses (“SG&A”) decreased by 3.5% to $100.2 million from $103.9 million in the third quarter ended January 2, 2016. SG&A as a percentage of net sales decreased 250 basis points, primarily due to decreased costs as a result of the Company’s SG&A savings program, as well as lower healthcare costs and a positive impact from foreign currency exchange rates. Additionally, the decrease was a result of the impact of one-time storage costs incurred in connection with a distribution center automation project in the thirteen weeks ended January 2, 2016 that were not incurred in the current fiscal year period. These positive impacts were partially offset by deleveraging of occupancy costs associated with negative comparable store sales growth.
  • Pre-opening costs increased to $2.9 million in the third quarter of fiscal 2016 compared to $1.8 million in the third quarter ended January 2, 2016. The Company opened four new stores in the third quarter of fiscal 2016 as compared to two new stores in the third quarter ended January 2, 2016.
  • Consolidated net interest expense decreased slightly to $4.1 million.
  • The effective tax rate for the third quarter of fiscal 2016 was 39.7%, as compared to 34.0% in the third quarter ended January 2, 2016. The increase in the effective tax rate is primarily due to changes in the mix of projected domestic and foreign earnings, combined with the expensing of certain deferred tax assets due to the expiration of certain stock based compensation awards.
  • Net income was $5.1 million, or $0.11 per share, in the third quarter of fiscal 2016 compared to net income of $3.9 million, or $0.08 per share, in the third quarter ended January 2, 2016.–
  • Consolidated Adjusted EBITDA was $25.3 million compared to $21.2 million in the third quarter ended January 2, 2016, (see GAAP/Non-GAAP reconciliation table).

For the year-to-date (thirty-nine weeks) ended December 31, 2016:

  • Consolidated net sales were $598.9 million, up 2.0% as compared to the year-to-date ended January 2, 2016. Net sales at TCS were $549.4 million, up 2.6% as compared to the year-to-date ended January 2, 2016, primarily due to new store sales, partially offset by a 3.3% decrease in comparable store sales. Elfa third-party net sales were$49.5 million, down 4.4% compared to the year-to-date ended January 2, 2016, primarily due to lower sales in Russia.
  • Consolidated gross margin was 58.2%, a decline of 20 basis points compared to the year-to-date ended January 2, 2016. TCS gross margin declined 40 basis points to 57.6%, as an increased mix of lower margin products and services was partially offset by the impact of a stronger U.S. dollar. Elfa gross margin improved 60 basis points primarily due to improved production efficiencies, partially offset by higher freight costs associated with changes in customer sales mix. On a consolidated basis, gross margin declined 20 basis points, as the improvement in Elfa gross margin was more than offset by the decline in TCS gross margin.
  • Consolidated selling, general and administrative expenses (“SG&A”) decreased by 2.1% to $288.0 million from $294.2 million in the year-to-date ended January 2, 2016. SG&A as a percentage of net sales decreased 200 basis points. This was primarily due to decreased costs as a result of the Company’s SG&A savings program, as well as the reversal of accrued deferred compensation of $3.9 million, which occurred in the first quarter of 2016. The Company also experienced lower healthcare costs and a positive impact from foreign currency exchange rates during the year-to-date ended December 31, 2016. The positive impact of these items was partially offset by deleveraging of occupancy costs associated with negative comparable store sales growth.
  • Consolidated net interest expense decreased to $12.4 million from $12.6 million in the year-to-date ended January 2, 2016.
  • The effective tax rate was 42.5%, as compared to 40.2% in the year-to-date ended January 2, 2016. The increase in the effective tax rate is primarily due to the expensing of certain deferred tax assets due to the expiration of certain stock based compensation awards, partially offset by changes in the mix of projected domestic and foreign earnings.
  • Net income was $6.6 million, or $0.14 per share, compared to net income of $1.5 million, or $0.03 per share, in the year-to-date ended January 2, 2016. Net income of $6.6 million in the year-to-date ended December 31, 2016includes a benefit from the impact of amended and restated employment agreements entered into with key executives, net of costs incurred related to management transition and income taxes, of approximately $1.8 million, or $0.04 per share.
  • Consolidated Adjusted EBITDA was $59.7 million compared to $47.8 million in the year-to-date ended January 2, 2016, (see GAAP/Non-GAAP reconciliation table). The Adjusted EBITDA of $59.7 million in the thirty-nine weeks ended December 31, 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key executives during the first quarter of 2016, net of costs incurred to execute the agreements, of $3.9 million.

Outlook

For fiscal 2016, the Company expects consolidated net sales to be modestly below the previously provided range of $820 to $830 million. Comparable store sales are expected to be at the low end of the previously provided range of -3.0% to -1.5%. Net income for fiscal 2016 is expected to be at the low end of the previously provided range of $0.20 to $0.30 per diluted common share based on estimated diluted common shares outstanding of 49 million. This assumes a tax rate of approximately 39% for the full fiscal year.

Conference Call Information

A conference call to discuss third quarter fiscal 2016 financial results is scheduled for today, February 7, 2017, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial 877-407-3982 (international callers please dial 201-493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.containerstore.com.

A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing 844-512-2921 (international callers please dial 412-317-6671). The pin number to access the telephone replay is 13654006. The replay will be available until March 7, 2017.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements about our expectations regarding our long-term strategic plan for increased sales and productivity; expectations regarding the contribution of our closet business in driving sales and profit growth; expectations regarding our goals, strategies, priorities and initiatives, including the expansion of our Custom Closets section and exploration of new store formats; ; expectations regarding new store openings and relocations and remodeling of existing stores; and statements regarding our anticipated financial performance.

These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our inability to successfully implement our planned fiscal 2016 and 2017 initiatives in the timeframe we expect or at all; our inability to open or relocate new stores, or remodel existing stores, in the timeframe and at the locations we anticipate; overall decline in the health of the economy, consumer spending, and the housing market; our inability to manage costs and risks relating to new store openings; our inability to source and market new products to meet consumer preferences; our failure to achieve or maintain profitability; our dependence on a single distribution center for all of our stores; effects of a security breach or cyber-attack of our website or information technology systems; our vulnerability to natural disasters and other unexpected events; our reliance upon independent third party transportation providers; our inability to protect our brand; our failure to successfully anticipate consumer preferences and demand; our inability to manage our growth; inability to locate available retail store sites on terms acceptable to us; our inability to maintain sufficient levels of cash flow to meet growth expectations; disruptions in the global financial markets leading to difficulty in borrowing sufficient amounts of capital to finance the carrying costs of inventory to pay for capital expenditures and operating costs; fluctuations in currency exchange rates; our inability to effectively manage our online sales; competition from other stores and internet based competition; our inability to obtain merchandise on a timely basis at competitive prices as a result of changes in vendor relationships; vendors may sell similar or identical products to our competitors; our reliance on key executive management, and the transition in our executive leadership; our inability to find, train and retain key personnel; labor relations difficulties; increases in health care costs and labor costs; our dependence on foreign imports for our merchandise; violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti bribery and anti-kickback laws; our indebtedness may restrict our current and future operations; and increased uncertainty with respect to tax and trade policies, tariffs and government regulations affecting trade between the United States and other countries as a result of the recent presidential and congressional elections in the United States.

These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on May 10, 2016, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

About The Container Store

The Container Store (NYSE:TCS) is the nation’s leading retailer of storage and organization products and the only retailer solely devoted to the storage and organization category of retailing. The Company originated the concept of storage and organization retailing when it opened its first store in 1978. Today, the retailer has 86 store locations nationwide that each average 25,000 square feet. The Container Store has over 11,000 products to help customers save space and, ultimately, save them time. As the pace of modern life accelerates and being organized is not a luxury anymore but a necessity, The Container Store is devoted to making customers more productive, relaxed and happier by selling customized, complete solutions. Since its inception, the retailer has nurtured an employee-first culture and couples its one-of-kind product collection with a high level of customer service delivered by its highly trained organization experts. The Company has been named to FORTUNE magazine’s 100 Best Companies To Work For® — 17 years in a row. Visit www.containerstore.com for more information about store locations, the product collection and services offered. To find out more about The Container Store’s unique culture, Foundation Principles® and devotion to Conscious Capitalism®, visit the retailer’s culture blog at www.whatwestandfor.com.

Note Regarding Non-GAAP Information

This press release includes financial measures that are not calculated in accordance with GAAP, including Adjusted EBITDA. The Company has reconciled these non-GAAP financial measures with the most directly comparable GAAP financial measures in a table accompanying this release. These non-GAAP measures should not be considered as alternatives to net income (loss) as a measure of financial performance or cash flows from operations as a measure of liquidity, or any other performance measure derived in accordance with GAAP and they should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. These non-GAAP measures are key metrics used by management, the Company’s board of directors, and Leonard Green and Partners, L.P., its controlling stockholder, to assess its financial performance. The Company presents these non-GAAP measures because it believes they assist investors in comparing the Company’s performance across reporting periods on a consistent basis by excluding items that the Company does not believe are indicative of its core operating performance and because the Company believes it is useful for investors to see the measures that management uses to evaluate the Company. These non-GAAP measures are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry. In evaluating these non-GAAP measures, you should be aware that in the future the Company will incur expenses that are the same as or similar to some of the adjustments in this presentation. The Company’s presentation of these non-GAAP measures should not be construed to imply that its future results will be unaffected by any such adjustments. Management compensates for these limitations by relying on our GAAP results in addition to using non-GAAP measures supplementally. These non-GAAP measures are not necessarily comparable to other similarly titled captions of other companies due to different methods of calculation.

The Company defines EBITDA as net income before interest, taxes, depreciation, and amortization. Adjusted EBITDA is calculated in accordance with its credit facilities and is one of the components for performance evaluation under its executive compensation programs. Adjusted EBITDA reflects further adjustments to EBITDA to eliminate the impact of certain items, including certain non-cash and other items that the Company does not consider in its evaluation of ongoing operating performance from period to period as discussed further below. The Company uses Adjusted EBITDA in connection with covenant compliance and executive performance evaluations, and to supplement GAAP measures of performance to evaluate the effectiveness of its business strategies, to make budgeting decisions and to compare its performance against that of other peer companies using similar measures. The Company believes it is useful for investors to see the measures that management uses to evaluate the Company, its executives and its covenant compliance, as applicable. EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in the Company’s industry.

Contact:
Investors:
ICR, Inc.
Farah Soi
203.682.8200
Farah.Soi@icrinc.com

Media:
The Container Store
Audrey Robertson
972.538.6623
AudreyR@containerstore.com

Source: The Container Store Group, Inc.

The Container Store Group, Inc. announces consolidated net sales up by 0.3% for 2Q FY2016

  • Consolidated Net Sales Up Slightly and Improved Net Income Associated with SG&A Savings Program
  • Continues to See Positive Impact from TCS Closets®, Launches Pilot of elfa® Sliding Doors

COPPELL, Texas, 2016-Nov-11 — /EPR Retail News/ — The Container Store Group, Inc. (NYSE:TCS) (the “Company”), today (11/09/2016) announced financial results for the second quarter of fiscal 2016 ended October 1, 2016. In light of the Company’s previously announced fiscal year end change, all references to prior year results are based on the recast second quarter of fiscal 2015 ended October 3, 2015.

  • Consolidated net sales were $205.1 million, up 0.3%. Net sales in The Container Store retail business were $189.1 million, up 0.9%. Elfa International AB third-party net sales were $16.0 million, down 6.0%.
  • Comparable store sales for the second quarter of fiscal 2016 were down 4.2%.
  • Consolidated net income per diluted share (EPS) was $0.07 compared with $0.07 in the second quarter ended October 3, 2015.
  • The Company opened two new stores in the second quarter of fiscal 2016, has opened two new stores in the third fiscal quarter-to-date and has plans to open two additional locations in the remainder of the third fiscal quarter. The Company had 82 stores at the end of the second quarter of fiscal 2016, as compared to 75 as of October 3, 2015.

Melissa Reiff, Chief Executive Officer, stated, “We are pleased with our earnings performance in the second fiscal quarter of 2016. And while there is still work to be done to drive consistent growth in top line performance, we experienced improving sales trends in September and now in early third fiscal quarter, as we have encountered more comparable cadence of merchandising campaigns and promotional activities. Our 2016 SG&A savings program is gaining traction as evidenced by the leveraging of expenses in a challenging sales environment. This commitment to strong cost discipline drove SG&A efficiencies and contributed to EPS of $0.07.”

Reiff continued, “We believe we are making progress on many fronts to evolve our customer shopping experience in order to improve sales and profitability. Our new customer financing program, while still in its infancy, is driving incremental sales, and our TCS Closets line drove 200 basis points of comparable store sales growth this quarter. We are also working on mid- and long-term goals, strategies and priorities while we simultaneously execute near-term initiatives such as the pilot of elfa® Sliding Doors in our two Manhattan stores.”

“We are cautiously optimistic about the second half of the fiscal year. However, after factoring in our first half results and our expectations for the remainder of the fiscal year, we are updating our annual sales outlook. We are pleased to reiterate our previously provided annual EPS outlook due in part to the continued positive impact of our SG&A Savings Program,” Reiff concluded.

Second Quarter 2016 Results

For the second quarter (thirteen weeks) ended October 1, 2016:

  • Consolidated net sales were $205.1 million, up 0.3% as compared to the second quarter ended October 3, 2015. Net sales in The Container Store retail business (“TCS”) were $189.1 million, up 0.9% as compared to the second quarter ended October 3, 2015, primarily due to new store sales, partially offset by a 4.2% decrease in comparable store sales. Elfa International AB (“Elfa”) third party net sales were $16.0 million, down 6.0% compared to the second quarter ended October 3, 2015, primarily due to lower sales in Russia and the Nordic markets during the quarter.
  • Consolidated gross margin was 57.7%, a decline of 20 basis points compared to the second quarter ended October 3, 2015. TCS gross margin declined 10 basis points to 57.3%, as an increased mix of lower margin products and services was partially offset by the impact of a stronger U.S. dollar. Elfa gross margin remained consistent at 38.2%. On a consolidated basis, gross margin decreased 20 basis points primarily due to the decline in TCS gross margin.
  • Consolidated selling, general and administrative expenses (“SG&A”) decreased by 0.6% to $95.5 million from $96.1 million in the second quarter ended October 3, 2015. SG&A as a percentage of net sales decreased 40 basis points, primarily due to decreased spending associated with the Company’s SG&A savings program and a positive impact from foreign currency exchange rates, partially offset by deleveraging of occupancy costs associated with negative comparable store sales growth.
  • Consolidated net interest expense remained consistent at $4.2 million.
  • The effective tax rate for the second quarter of fiscal 2016 was 41.6%, as compared to 41.1% in the second quarter ended October 3, 2015. The increase in the effective tax rate is primarily due to a change in mix between projected domestic and foreign earnings.
  • Net income was $3.5 million, or $0.07 per share, in the second quarter of fiscal 2016 compared to net income of $3.3 million, or $0.07 per share, in the second quarter ended October 3, 2015.
  • Consolidated Adjusted EBITDA was $22.3 million compared to $21.9 million in the second quarter ended October 3, 2015, (see GAAP/Non-GAAP reconciliation table).

For the year-to-date (twenty-six weeks) ended October 1, 2016:

  • Consolidated net sales were $382.5 million, up 2.2% as compared to the year-to-date ended October 3, 2015. Net sales at TCS were $350.3 million, up 2.8% as compared to the year-to-date ended October 3, 2015, primarily due to new store sales, partially offset by a 3.0% decrease in comparable store sales. Elfa third-party net sales were$32.2 million, down 3.9% compared to the year-to-date ended October 3, 2015, primarily due to lower sales in Russia.
  • Consolidated gross margin was 58.3%, an increase of 10 basis points compared to the year-to-date ended October 3, 2015. TCS gross margin declined 10 basis points to 57.9%, as an increased mix of lower margin products and services was partially offset by the impact of a stronger U.S. dollar. Elfa gross margin improved 150 basis points primarily due to lower direct materials costs and improved production efficiencies, partially offset by higher freight costs. On a consolidated basis, gross margin improved as the improvement in Elfa gross margin was partially offset by the decline in TCS gross margin.
  • Consolidated selling, general and administrative expenses (“SG&A”) decreased by 1.3% to $187.8 million from $190.4 million in the year-to-date ended October 3, 2015. SG&A as a percentage of net sales decreased 170 basis points. This was primarily due to the impact of the reversal of accrued deferred compensation of $3.9 million, or 100 basis points, which occurred in the first quarter of 2016. Additionally, the Company’s SG&A savings program contributed to decreased spending. The Company also experienced a positive impact from foreign currency exchange rates and lower healthcare costs during the first half of fiscal 2016. The positive impact of these items was partially offset by deleveraging of occupancy costs associated with negative comparable store sales growth during the first half of fiscal 2016.
  • Consolidated net interest expense decreased to $8.3 million from $8.4 million in the year-to-date ended October 3, 2015.
  • The effective tax rate was 50.3%, as compared to 29.6% in the year-to-date ended October 3, 2015. The increase in the effective tax rate was primarily due to a shift in mix between projected domestic and foreign earnings, combined with the impact of a pre-tax income position in the first half of fiscal 2016, as compared to a pre-tax loss position in the first half of fiscal 2015.
  • Net income was $1.5 million, or $0.03 per share, compared to net loss of $2.4 million, or ($0.05) per share, in the year-to-date ended October 3, 2015. Net income of $1.5 million in the first half of fiscal 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key executives, net of costs incurred related to management transition and income taxes, of approximately $1.6 million, or $0.03 per share.
  • Consolidated Adjusted EBITDA was $34.3 million compared to $26.6 million in the year-to-date ended October 3, 2015, (see GAAP/Non-GAAP reconciliation table). The Adjusted EBITDA of $34.3 million in the first half of fiscal 2016 includes a benefit from the impact of amended and restated employment agreements entered into with key executives during the first quarter of 2016, net of costs incurred to execute the agreements, of $3.9 million.

Outlook

The Company is updating its fiscal 2016 sales outlook and now expects consolidated net sales to be $820 to $830 million, based on its planned store openings, and a comparable store sales range of -3.0% to -1.5%. Net income for fiscal 2016 is still expected to be $0.20 to $0.30 per diluted common share based on estimated diluted common shares outstanding of 49 million. This assumes a tax rate of approximately 39% for the full fiscal year.

Conference Call Information

A conference call to discuss second quarter fiscal 2016 financial results is scheduled for today, November 9, 2016, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-3982 (international callers please dial (201) 493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at www.containerstore.com in the investor relations section of the website.

A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing (877) 870-5176 (international replay number is (858) 384-5517). The pin number to access the telephone replay is 13647884. The replay will be available through December 9, 2016 at 11:59 PM Eastern Time.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including expectations regarding driving consistent sales and profit growth, expectations regarding our goals, strategies, priorities and initiatives, including the 2016 SG&A savings program, new customer financing program and elfa® Sliding Doors initiative, expectations for new store openings and relocations, and statements regarding our anticipated financial performance.

These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: our inability to successfully implement our planned fiscal 2016 initiatives in the timeframe we expect or at all; our inability to open or relocate new stores in the timeframe and at the locations we anticipate; overall decline in the health of the economy, consumer spending, and the housing market; our inability to manage costs and risks relating to new store openings; our inability to source and market new products to meet consumer preferences; our failure to achieve or maintain profitability; our dependence on a single distribution center for all of our stores; effects of a security breach or cyber-attack of our website or information technology systems; our vulnerability to natural disasters and other unexpected events; our reliance upon independent third party transportation providers; our inability to protect our brand; our failure to successfully anticipate consumer preferences and demand; our inability to manage our growth; inability to locate available retail store sites on terms acceptable to us; our inability to maintain sufficient levels of cash flow to meet growth expectations; disruptions in the global financial markets leading to difficulty in borrowing sufficient amounts of capital to finance the carrying costs of inventory to pay for capital expenditures and operating costs; fluctuations in currency exchange rates; our inability to effectively manage our online sales; competition from other stores and internet based competition; our inability to obtain merchandise on a timely basis at competitive prices as a result of changes in vendor relationships; vendors may sell similar or identical products to our competitors; our reliance on key executive management, and the transition in our executive leadership; our inability to find, train and retain key personnel; labor relations difficulties; increases in health care costs and labor costs; our dependence on foreign imports for our merchandise; violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti bribery and anti-kickback laws; and our indebtedness may restrict our current and future operations.

These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on May 10, 2016, and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.

About The Container Store

The Container Store (NYSE: TCS) is the nation’s leading retailer of storage and organization products and the only retailer solely devoted to the storage and organization category of retailing. The Company originated the concept of storage and organization retailing when it opened its first store in 1978. Today, the retailer has 84 store locations nationwide that each average 25,000 square feet. The Container Store has over 11,000 products to help customers save space and, ultimately, save them time. As the pace of modern life accelerates and being organized is not a luxury anymore but a necessity, The Container Store is devoted to making customers more productive, relaxed and happier by selling customized, complete solutions. Since its inception, the retailer has nurtured an employee-first culture and couples its one-of-kind product collection with a high level of customer service delivered by its highly trained organization experts. The Company has been named to FORTUNE magazine’s 100 Best Companies To Work For® — 17 years in a row. Visit www.containerstore.com for more information about store locations, the product collection and services offered. To find out more about The Container Store’s unique culture, Foundation PrinciplesTM and devotion to Conscious Capitalism®, visit the retailer’s culture blog at www.whatwestandfor.com

Investors:
ICR, Inc.
Farah Soi/Anne Rakunas
203.682.8200
Farah.Soi@icrinc.com

Media:
The Container Store
Audrey Robertson
972.538.6623
AudreyR@containerstore.com

Source: The Container Store Group, Inc.

The Container Store rolls out annual giving program Holiday Hugs benefiting children’s hospitals nationwide

COPPELL, Texas, 2016-Nov-08 — /EPR Retail News/ — The Container Store (NYSE:TCS) announces the continuation of its annual, nationwide signature giving program, Holiday Hugs. The retailer is partnering with children’s hospitals across the country to collect and deliver new, unwrapped gifts to young patients who are spending the holidays away from home.

Customers can participate in the Holiday Hugs program by dropping off new, unwrapped books, small toys and games, toiletries, gift cards and kid-friendly stocking stuffers in collection bins at the retailer’s 84 stores nationwide between now and December 18th. Employees from each store will then volunteer their time to package the donated gifts into custom Holiday Hugs Sacks and deliver them to their partner hospital the week of December 19th. The retailer will also host a collection drive at their Home Office and Distribution Center in Coppell, Texas.

“Every holiday season, The Container Store embraces the spirit of giving by helping those in need in our local communities,” said Melissa Reiff, Chief Executive Officer of The Container Store. “Imagine how difficult it would be if your child, or a child in your life, had to spend the holiday season in the hospital. Our Holiday Hugs program is an easy way to bring joy to these young patients and their families through this gesture of love from everyone associated with The Container Store.”

For more information about the Holiday Hugs program, please visit standfor.containerstore.com/holidayhugs.

Children’s hospitals nationwide receiving gifts from the Holiday Hugs program include:

  • Ann & Robert H. Lurie Children’s Hospital of Chicago
  • Arkansas Children’s Hospital
  • Arnold Palmer Hospital for Children (Orlando)
  • Banner Diamond Children’s Medical Center (Tucson)
  • Blank Children’s Hospital (Des Moines)
  • Blythedale Children’s Hospital (Yonkers and White Plains, NY)
  • Children’s Healthcare of Atlanta
  • Children’s Hospital & Medical Center (Omaha)
  • Children’s Hospital Colorado (Denver)
  • Children’s Hospital Los Angeles
  • Children’s Hospital of Michigan
  • Children’s Hospital of Pittsburgh of UPMC
  • Children’s Hospital of Wisconsin
  • Children’s Medical Center Dallas
  • Children’s Medical Center Plano
  • Children’s Mercy (Kansas City, MO)
  • Children’s Minnesota
  • Children’s Hospital of Philadelphia
  • Children’s National Health System (Washington D.C. Area)
  • CHOC Children’s (Orange County, CA)
  • Cincinnati Children’s Hospital Medical Center
  • Cook Children’s Medical Center (Fort Worth)
  • Dell Children’s Medical Center of Central Texas (Austin)
  • Hasbro Children’s Hospital (Providence)
  • Joe DiMaggio Children’s Hospital (Miami)
  • Johns Hopkins All Children’s Hospital (Tampa)
  • Joseph M. Sanzari Children’s Hospital a member of Hackensack Meridian Health (New Jersey)
  • Kravis Children’s Hospital at Mount Sinai (New York City)
  • Levine Children’s Hospital (Charlotte, NC)
  • Lucile Packard Children’s Hospital Stanford (Palo Alto)
  • Monroe Carell Jr. Children’s Hospital at Vanderbilt (Nashville)
  • Nationwide Children’s Hospital (Columbus, OH)
  • Nemours/Alfred I. duPont Hospital for Children (Delaware)
  • OHSU Doernbecher Children’s Hospital (Portland, OR)
  • Phoenix Children’s Hospital Foundation
  • Rady Children’s Hospital – San Diego
  • Riley Hospital for Children: Riley Cheer Guild (Indianapolis)
  • St. Louis Children’s Hospital
  • Sunrise Children’s Hospital (Las Vegas)
  • Swedish Medical Center Foundation (Seattle)
  • Texas Children’s Hospital (Houston)
  • The Children’s Hospital of San Antonio
  • UC Davis Children’s Hospital (Sacramento)
  • UCSF Benioff Children’s Hospital
  • UNC Children’s Hospital (Raleigh, NC)
  • Winthrop University Hospital (Long Island, NY)

About The Container Store

The Container Store (NYSE: TCS) is the nation’s leading retailer of storage and organization products and the only retailer solely devoted to the category. The company originated the concept of storage and organization of retailing when it opened its first store in 1978. Today, the retailer has 84 store locations nationwide that each average 25,000 square feet. The Container Store has over 11,000 products – many of them multifunctional – to help customers save space and, ultimately, save them time. Since its inception, the retailer has nurtured an employee-first culture and couples its one-of-a-kind product collection with a high level of customer service delivered by its highly trained organization experts. The Company has been named to FORTUNE magazine’s 100 Best Companies To Work For® 17 years in a row. Visit www.containerstore.com for more information about store locations, the product collection and services offered and the retailer’s new lifestyle blog, Container Stories (containerstore.com/blog). To find out more about The Container Store’s unique culture, Foundation Principles and devotion to Conscious Capitalism, visit the retailer’s culture blog at www.whatwestandfor.com or read Chairman & Co-Founder Kip Tindell’s book UNCONTAINABLE: How Passion, Commitment, and Conscious Capitalism Built a Business Where Everyone Thrives (available at The Container Store, www.uncontainable.com and anywhere books are sold).

Contact:

Melanie Graham
972-538-6864
publicrelations@containerstore.com

Source: The Container Store