Shares of The Container Store (NYSE:TCS) plummeted on Wednesday after the retailer reported disappointing fiscal third-quarter results. Both revenue and earnings missed analyst expectations, and comparable sales declined. The stock was down about 22.2% at 3 p.m. EST.
The Container Store reported third-quarter revenue of $221.6 million, down 0.6% year over year and nearly $9 million below the average analyst estimate. Comparable-store sales slumped 0.8%, with sales in holiday departments tumbling 15.8%. One silver lining was the Custom Closets business, which enjoyed 4.5% growth.
Non-GAAP earnings per share came in at $0.07, down from $0.11 in the prior-year period and $0.05 below analyst expectations.
The Container Store expects its full-year revenue to come in at the lower end of its $885 million to $895 million guidance range, along with non-GAAP earnings per share at the low end to slightly below its guidance range of $0.41 to $0.51.
While The Container Store's holiday quarter didn't go so well, the fourth quarter is off to a strong start. Comparable-store sales from Dec. 30 through Jan. 26 are up 9.4%. The success of Marie Kondo's Netflix show focused on tidying could be a factor, and CEO Melissa Reiff said during the earnings call that the company plans on leveraging that popularity. The durability of this increased demand remains to be seen.
While the Custom Closets portion of The Container Store is doing well, the rest of the business is struggling. Given the weak holiday performance, the steep sell-off on Wednesday isn't surprising.