TCS - The Container Store shares slide on trimmed guidance

The Container Store ( NYSE: TCS ) edged past quarterly earnings estimates on Tuesday, but cut full-year forecasts leading the stock to fall in extended trading.

For its fiscal first quarter, the Texas-based storage product provider posted adjusted EPS of $0.21 alongside $262.6M in revenue. Analysts had anticipated a steep decline in EPS of 52.8% from the prior year to $0.17 and only a modest 4.4% increase in revenue from 2021 to $256.13M. Of particular note, same store sales increased 5.1% in the quarter.

“Our first quarter results reflect a solid start to fiscal 2022 as we outperformed our expectations on both the top and bottom line,” CEO Satish Malhotra said. “In particular, we are delighted with the continued growth we saw in custom closets, which resulted in seven consecutive comparable quarters of growth in this category.”

The earnings release explains that this particular category saw a 14.7% surge in comparable sales. That growth helped to offset a 250 basis point decline in gross margins as inflationary pressure bore down on the business overall.

Still, these pressures are likely to weigh on results for the full year. As such, the company trimmed full-year EPS forecasts to a range of $1.10 to $1.20 from a prior $1.20 to $1.30 anticipated during the company’s fourth quarter forecast.

“While we are cognizant of the volatile backdrop for the consumer and are taking a prudently conservative view of the rest of the year, we are operating from a position of financial strength and remain confident in our ability to achieve our long-term objectives, including our path to $2B in sales by the end of fiscal 2027,” Malhotra commented. “This confidence is reflected in the authorization of our first stock repurchase program as we look forward to delivering results and value for all of our stakeholders.”

The company approved a new $30M stock repurchase program, according to the earnings release. Nonetheless, shares fell 7.04% in after hours trading on Tuesday, adding to an over 30% year to date decline.

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