TCS - The Container Store Stock Tanked Today -- Is It Worth Buying?
Management at The Container Store (NYSE: TCS) , a specialty retailer focused on closet and general storage needs, tried to put its best foot forward when it reported earnings after the close on Feb. 8. For example, it highlighted that sales in the third quarter of fiscal 2021 were up nearly 17% compared to the same quarter of fiscal 2019. Earnings per share of $0.27 were way higher than the $0.05 per share earnings in the same quarter of 2019.
But the market chose to focus on the fact that sales were down 3% from the third quarter of fiscal 2020. Earnings, meanwhile, were down from $0.42 per share in the year-ago period. These two different time periods are important. Basically, when people were forced to stay home to work or just socially distance they appear to have taken on some home improvement projects, including things that The Container Store is focused on, like closet makeovers. That resulted in windfall sales and earnings in fiscal 2020. Now that the world is starting to get back to a more normal environment, business is starting to cool off.
Wall Street has a habit of taking things to extremes, so it shouldn't be surprising that the stock rallied strongly when sales were benefiting from pandemic-related buying. And, now that the benefit is starting to wane, investors are selling. The stock is off over 50% from its early 2021 highs, including today's over 20% price drop in early trading. But is that a fair assessment of the company's prospects?
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The Container Store Stock Tanked Today -- Is It Worth Buying?