What: Shares of The Container Store Group (NYSE:TCS) were down more than 40% as of 11:45 a.m. EST Friday after the company announced weaker-than-expected fiscal third-quarter 2015 results and disappointing guidance.

So what: Quarterly revenue climbed 3.3% year over year to $197.2 million, which translated to a consolidated net loss of $1.7 million, or $0.04 per diluted share. Analysts' consensus estimates called for net income of $0.05 per share on higher revenue of $199.6 million.

The Container Store's top line was driven by a 5.4% gain in retail business sales to $177.6 million, helped by a combination of new store sales and a modest 0.5% increase in comparable store sales. Meanwhile, Elfa International AB third-party net sales climbed 2.1% to 165.9 million Swedish Krona, but the negative effects of foreign exchange ultimately reduced consolidated net sales in U.S. dollars by $3.3 million, or 1.8%.

"Our key initiatives our gaining momentum," insisted The Container Store CEO Kip Tindell, "which is encouraging as we position our company for sustained, long-term growth. However, we are very disappointed with our bottom line results for the third quarter."

More specifically, Tindell says the shortfall was primarily driven by non-recurring expense items during the quarter, as The Container Store's net loss included roughly $0.03 per share in spending for "key strategic initiatives." To be fair, that was only one penny per share higher than the company expected to spend.

Now what: Worse yet, Tindell stated The Container Store is enduring a "challenging" start to its fiscal fourth quarter. So as it stands, The Container Store now expects fiscal 2015 net sales of $785 million to $795 million, reflecting planned store openings and an expected comparable store sales decline of 1% to 1.6%. That should result in fiscal year 2015 net income per diluted share of $0.10 to $0.13, including roughly $0.08 per diluted share associated with implementing strategic initiatives.

For perspective, previous guidance called for fiscal year 2015 revenue of $800 million to $815 million, and adjusted net income per share of $0.30 to $0.38.

Wall Street, for its part, was modeling revenue and earnings near the low end of both previous ranges, so it's hard to blame investors for taking a big step back on Friday. In the end, while it remains to be seen whether that truly merits such an extreme drop, I'm personally content watching The Container Store's progress from the sidelines until the dust settles.