The Container Store is cutting its guidance for the year after the company says expenses led it to report a loss in the third quarter.
The Texas-based retailer said same store sales in the quarter were also disappointing: a 0.5% increase compared to the third quarter of fiscal 2014.
“Our key initiatives are gaining momentum, which is encouraging as we position our company for sustained, long-term growth,” said Kip Tindell, chairman and CEO. “However, we are very disappointed with our bottom line results for the third quarter. The shortfall versus our expectations was largely driven by expense items, the majority of which are non-recurring and unusual in nature. We have a history of strong fiscal discipline and expense management, which has always been a core competency, and in response to our third quarter we are increasing our efforts to reduce costs and improve selling, general, and administrative expenses, without harming the momentum of our TCS Closets initiative.”
The Container Sore had a third quarter loss of $1.7 million, or 4 cents a share, from a profit of $6.2 million, or 13 cents a share, a year earlier. The loss reflects 3 cents a share in expenses related to strategic initiatives, which was a cent higher than anticipated, the company said. Revenue increased to $197.2 million from $190.9 million a year ago.
“Overall, we were pleased to see continued improvement in our comparable store sales performance in the third quarter, with much of the improvement directly attributable to TCS Closets and elfa," Tindell said. "Unfortunately, the start to the fourth quarter has been more challenging, which we have reflected in our revised outlook. We have now completed the rollout of our top three strategic initiatives, which were unprecedented in complexity for the company, and we are diligently focused on maximizing sales paired with expense management despite some unpredictability and additional expenses that impacted our results in the third quarter. We planned fiscal year 2015 as an investment year and remain steadfast in our belief that the investment is essential to maximizing the potential of these initiatives.”
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