TCS - The Container Store stock dips as Q4 earnings sales decline; Q4 sales outlook below estimates

The Container Store Group ( NYSE: TCS ) stock fell ~7% on Wednesday as Q3 adjusted EPS and revenue declined Y/Y even though the numbers beat estimates. However Q4 sales forecast was below estimates.

Adjusted EPS declined -71.4% Y/Y to $0.08.

Net sales fell -5.6% Y/Y to $252.2M, including 100 basis point negative impact of foreign currency translation, according to the company.

TCS said net sales in The Container Store retail business were $239.3M, down -3.8%. Elfa International thiird-party net sales were $13M, declining -30.6%Y/Y. Excluding the impact of foreign currency translation, Elfa third-party net sales were down -15.8%.

The company noted that comparable store sales fell -4.3%, with Custom Spaces up +2.1%, contributing an increase of 65 basis points to comparable store sales which was more than offset by general merchandise categories, which were down -7.1%, negatively impacting comparable store sales by 495 basis points.

However, the company's online sales grew +4.6% Y/Y.

Consolidated gross margin was 56.9%, a decrease of 10 basis points, compared to Q3 fiscal 2021.

Adjusted EBITDA declined to $22.2M, compared to $31.4M in Q3 fiscal 2021.

Buyback : The company said that in Q3 it bought back ~940K shares for $5M and has $25M remaining out of the original $30M authorization.

Outlook :

For Q4, the company expects consolidated net sales between $255M and $265M (consensus $278.45M). TCS expects EPS between $0.10 and $0.20.

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