Source: The Container Store

After The Container Store Group (TCS 69.06%) reported earnings for the fourth quarter of its 2013 fiscal year on April 28, shares plummeted 8% in after-hours trading. Now, with the company's stock trading at such a steep discount of 42% from its 52-week high, does the business look like a bargain? Or is it time to close the lid on this struggling enterprise and focus on Lumber Liquidators (LL 11.34%) or Restoration Hardware (RH 5.16%) instead?

The Container Store couldn't please investors!
For the quarter, The Container Store reported revenue of $216.8 million. In addition to falling shy of the $221.4 million Mr. Market anticipated, the company's top line barely missed the $217 million management reported in the same quarter last year. While this looks bad, investors need to keep in mind that the $217 million figure from last year took into consideration 14 weeks of operation, while this year's quarter was comprised of only 13 weeks. Excluding this extra week from last year, The Container Store's revenue actually ticked up a modest 6%.

Source: The Container Store

In its earnings release, the company attributed the rise in revenue to a combination of higher comparable-store sales and a higher store count. During the quarter, The Container Store saw comparable-store sales inch up 1.4%, while its store count increased to 63, up from the 58 locations the business operated in the same period a year earlier.

From an earnings perspective, the company did far better. For the quarter, management reported earnings per share of $0.38. In addition to beating its performance last year, the business' results exceeded the $0.27 analysts hoped to see. As well as benefiting from higher sales, The Container Store saw a reduction in interest expenses and reported a $2 million tax benefit. However, the company's results were negatively affected by its cost of goods sold and selling, general, and administrative expenses rising.

Over the past year, the retailer's cost of goods sold increased from 40.9% of sales to 41.8%, which was driven largely by an appreciation of the Swedish krona in relation to the U.S. dollar as well as the company's move to discount winter merchandise. Meanwhile its selling, general, and administrative expenses rose from 43.3% of sales to 44.5%, which management chalked up to expenses associated with going public and the effects of expense leveraging that stemmed from the absence of a 53rd week this year.

But how does The Container Store stack up to other specialty retailers?
Over the past four years, The Container Store has done pretty well for itself. Between 2010 and 2013, the business saw its revenue climb 32% from $568.8 million to $748.5 million. The main driver behind this increase in sales has been the retailer's rising store count, which jumped 29% over this period. The company's performance was also improved by an aggregate 25% increase in comparable-store sales over this time frame, but the year-over-year increase in this metric has been on the decline since at least 2010.

  2013 2012 2011 2010
Comparable-Store Sales Growth 2.9% 4.4% 7.6% 8.1%

Source: The Container Store

In contrast, rivals like Restoration Hardware and Lumber Liquidators have fared significantly better. Over the past four years, Restoration Hardware's revenue has increased by an impressive 101% from $772.8 million to almost $1.6 billion. This rise in sales was the result of a 142% aggregate jump in comparable-store sales that management attributed to the company's comparable brand revenue rising 166% between 2010 and 2013. This was, however, partially offset by the number of retail locations falling by 23% from 91 to 70.

(millions) 2013 2012 2011 2010 Aggregate Increase
The Container Store $748.5 $706.8 $633.6 $568.8 32%
Restoration Hardware $1,551.0 $1,193.0 $958.1 $772.8 101%
Lumber Liquidators $1,000.2 $813.3 $681.6 $620.3 61%

Source: The Container Store, Restoration Hardware, and Lumber Liquidators

Another strong performer over the past four years has been Lumber Liquidators. Between 2010 and 2013, the specialty retailer saw its revenue climb 61% from $620.3 million to $1 billion. In its most recent annual report, the company showed that its rise in revenue came from a 29% aggregate increase in comparable-store sales; but, unlike Restoration Hardware, its store count rose instead of fell. During the past four year, the business increased its number of locations in operation by 43% from 223 to 318.

Foolish takeaway
Based on the data provided, it looks like The Container Store has done pretty well for itself. But the fact that its growth rate is slowing down while it's still so small suggests either corporate mismanagement or market saturation. Moving forward, it will be interesting to see how the business performs; but for investors looking for strong and stable growth, companies like Restoration Hardware and Lumber Liquidators might make for better prospects.