Shares of Container Store Group Inc. soared 40% on Wednesday, putting it on track for its biggest one-day gain, after the retailer posted better-than-expected earnings for its fiscal first quarter and raised its guidance. .
TCS company,
which specializes in products to help consumers store and organize their belongings and save space, said it narrowed its net loss to $6.8 million, or 14 cents a share, from 7.7 million and 16 cents per share the previous year. The adjusted loss per share was 8 cents, narrower than FactSet analysts’ loss consensus of 13 cents. Sales rose 6.9% to $195.8 million, also ahead of the FactSet consensus of $191 million. Same-store sales rose 4.7% to beat the consensus of 1.5%.
The company now expects annual sales of $890 million to $900 million, with same-store sales increasing 1.5% to 2.5%. This should give an EPS of 30 cents to 40 cents and an adjusted EPS of 38 cents to 48 cents. The FactSet consensus forecasts sales of $885 million and adjusted EPS of 45 cents.
JPMorgan analysts said the quarter was the strongest in memorable history and showed that merchandising and marketing initiatives are working. Margins rose 200 basis points, well above their forecast of 40 basis points, as the company benefited from increased discretionary spending.
There are “multiple strategic initiatives underway to drive revenue and margin,” they wrote in a note, including owning the custom closet category through targeted campaigns, product introductions and improved visual merchandising.
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During the company’s earnings call, chief executive Melissa Meyer Reiff said the custom closet business drove the rise in same-store sales and was helped by delayed fourth-quarter sales.
“From April to May, we had a very strong closet sale, as we moved from a blanket category promotion last year to a more deliberate and targeted approach this year, and customer response to our promotion free installation Elfa in May and June was also positively received,” she said, according to a FactSet transcript.
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The company sells to customers at a range of prices and markets through local television and social media in select markets. It focuses on omnichannel growth by leveraging digital insights and data and taking other actions to improve price perception and maximize gross profit.
JPMorgan raised its estimate for fiscal year 2018 to 43 cents on same-store sales growth of 2%. Analysts rate the stock as neutral. Stocks gained 92% in 2018, while the S&P 500 SPX,
gained 5.6%.
