Image source: The Container Store.

What: Shares of The Container Store (NYSE:TCS) jumped 25.2% last month according to data from S&P Global Market Intelligence.

TCS Chart

TCS data by YCharts.

So what: There was no significant fundamental news out on The Container Store during February. Instead, the jump in the stock price seemed to be driven by a recovery in the S&P 500, which bounced off a 22-month low at 1,829, and a short squeeze. 

The Container Store was one of several battered stocks to jump sharply along with the recovery in the broad market as investor fears of a recession were allayed. The stock is still down close to 90% from its post-IPO high, however, as it has failed to live up to high-priced growth expectations.

Short-sellers have raided the stock with 29% of the float sold short as of the end of January, and the stock's bounce-back likely caused many shorts to cover their bets, forcing a squeeze as shorts rushed in to buy back shares.


Now what: The Container Store's most recent earnings report was characteristically ugly as same-store sales grew just 0.5%, and the company reported a per-share loss of $0.03 against the analyst consensus of a $0.05 profit. It projected full-year earnings of just $0.10-$0.13 per share, and shares fell 42% on the news as investors seemed to give up hope on the company delivering meaningful profits.

Considering the generally weak retail results over the holiday season, I wouldn't expect the storage-themed retailer's performance to be particularly strong. Investors may be heartened by the recent bounce in the stock price, but it shouldn't change anyone's thesis. The long-term outlook for The Container Store looks questionable at best.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool owns shares of and recommends 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.