Why The Container Store Group Stock Shattered Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of The Container Store Group  (NYSE: TCS  ) were getting dropped like a hot potato today, falling as much as 15% after the company issued another underwhelming earnings report last night.

So what: The storage-specialty retailer missed estimates once again in its second quarterly report as a public company, as CEO Kip Tindell blamed a wide-reaching retail "funk" for the company's struggles. Same-store sales dipped 0.8%, while overall revenue climbed 8.6%, to $173.4 million, short of expectations at $174.2 million. On the bottom line, the company missed estimates by $0.01, posting a loss per share of $0.07, even with its results a year ago.

Now what: While Tindell was careful to note that the first quarter is the company's weakest, and has little bearing on full-year results, The Container Store still lowered its guidance for the fiscal year, which seemed to be the biggest reason for the stock's tumble today. Management now sees full-year EPS of $0.49-$0.54, down from a previous range of $0.56-$0.61, and expects comparable-sales growth of 1.5%-2.5%, down from the 3%-4% it predicted earlier. For a high-flying recent IPO like The Container Store, reduced guidance is often a warning sign for investors, and will almost always send them fleeing. The company has ambitious expansion plans, hoping to grow to 300 locations from just more than 60 today, but its organic growth is only modest, and the concept is far from groundbreaking. I'd expect to see further multiple compression as the stock still carries a P/E above 40 based on this year's earnings, even after today's slide.

Try to contain your excitement: Apple's working on a new smart device
Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!


Read/Post Comments (0) | Recommend This Article (7)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 3022921, ~/Articles/ArticleHandler.aspx, 9/23/2014 2:53:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement