Late yesterday, The Container Store (NYSE:TCS) announced disappointing earnings, sending shares way down today. Some of the highlights from the company's first-quarter results included a miss on estimates with both sales and EPS. On top of that, the company revised its annual guidance $0.07 below its previous forecast.
According to Motley Fool analyst Simon Erickson, these poor numbers were a result of a same-store sales decline of 0.8% this quarter. This was unusual, because it's the first decrease in same-store sales that The Container Store has seen in more than four years.
So what's a long-term investor to do after these announcements? Simon thinks that The Container Store is an interesting story of culture versus growth. Simon likes what CEO Kip Tindell has done to create a strong culture at the company that includes average tenure of about 17 years among management, not to mention a very loyal customer base that has increased their ticket size by about 6%. That said, now that it's a public company, The Container Store needs to translate that culture into growth, which will be a rocky road in the short term. However, Simon remains a shareholder, and believes in The Container Store's long-term prospects.
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Mark Reeth has no position in any stocks mentioned. Simon Erickson has the following options: short July 2014 $40 puts on The Container Store Group. The Motley Fool recommends The Container Store Group. The Motley Fool owns shares of The Container Store Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.