The Container Store Group (TCS) Misses Q1 EPS by 7c, Revenues Miss
The Container Store Group (NYSE: TCS) reported Q1 EPS of ($0.32), $0.07 worse than the analyst estimate of ($0.25). Revenue for the quarter came in at $151.7 million versus the consensus estimate of $152.7 million.
- Consolidated net sales were $151.7 million, down 27.6%. Net sales in The Container Store retail business (“TCS”) were $139.4 million, down 28.5% due to the impact of COVID-19 on store operations. Elfa International AB (“Elfa”) third-party net sales were $12.3 million, down 14.6% due to COVID-19.
- Online sales increased by 192.3% in the first quarter of fiscal 2020, which nearly tripled compared to the first quarter of fiscal 2019.
- Consolidated net loss and net loss per share (“EPS”) were $16.7 million and ($0.34) compared to a net loss of $4.1 million and ($0.08) in the first quarter of fiscal 2019. Adjusted net loss per share (“Adjusted EPS”) was ($0.32) compared to ($0.08) in the first quarter of fiscal 2019 (see Reconciliation of GAAP to Non-GAAP Financial Measures table).
- Net cash provided by operating activities was $25.6 million in the first quarter of fiscal 2020, compared to net cash used in operating activities of $8.3 million in the first quarter of fiscal 2019. Free cash flow generation during the first quarter of fiscal 2020 was strong, despite the significant impact of COVID-19, with free cash flow of $21.7 million generated in the first quarter of fiscal 2020, compared to $17.0 million utilized in the first quarter of fiscal 2019, as a result of the many actions undertaken by the Company to preserve liquidity (see Reconciliation of GAAP to Non-GAAP Financial Measures table).
Melissa Reiff, Chairwoman and Chief Executive Officer commented, “Our first quarter results were significantly impacted by the COVID-19 pandemic. We moved swiftly to protect the health and safety of our employees and customers by temporarily closing stores and shifting select locations to operate with curbside pickup. I am very proud of the dedication and commitment our teams exhibited during this time, and particularly pleased with the resiliency of our operating model as we were able to maintain over 72% of our consolidated net sales from the prior year period with our strong online channel growth that nearly tripled over the prior year in the first quarter. Deleverage on the sales decline, combined with a higher mix of online sales with certain temporary incremental costs to fulfill these sales, were meaningful profitability headwinds. However, we moved quickly to reduce expenses and preserve capital to help mitigate the bottom line and free cash flow impact, enabling us to deliver positive adjusted EBITDA for the quarter.”
Ms. Reiff continued, “As of today all of our stores are now reopened and operating at close to normalized schedules, with limited capacity. Retail sales trends have improved and we preserved approximately 90% of prior year sales for the fiscal month of July when looking at our sales orders taken. While we expect sales and margin performance to improve as fiscal 2020 progresses, we remain disciplined and agile as we manage the business in this still uncertain environment.”
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