TCS - The Container Store craters after freight and commodity costs whack the bottom line
The Container Store Group (NYSE:TCS) fell 20.66% at the open on Wednesday after higher freight and commodity costs hit the retailer's margins during FQ3. Of note, the Elfa gross margin decreased 1330 basis points during the quarter primarily due to higher direct material costs and unfavorable product and customer mix. The margin pressures are expected to continue and led to Container Store setting FQ4 EPS guidance at $0.24 vs. $0.30 consensus. CEO update: " We are particularly proud of the performance we delivered within Custom Closets and our general merchandise categories, with growth of 19.5% and 15.6%, respectively, when compared to fiscal 2019. Our recent acquisition of Closet Works provides us with the opportunity to meet the growing consumer demand for custom closets, specifically for premium wood-based spaces with an expanded assortment. As we look forward, our financial results combined with the progress we are making against our strategic initiatives
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The Container Store craters after freight and commodity costs whack the bottom line