Container Store Swings To Profit, But Stock Down On Outlook Cut

(RTTNews) - Shares of Container Store Group Inc. (TCS) tanked 8 percent in extended trade on Thursday, after it slashed its full-year 2014 outlook. The company reported a swing to profit in the third quarter reflecting an absence of hefty distributions for preference shareholders.

For the full year 2014, the company now expects adjusted earnings of $0.41 to $0.44 per share on sales of $785 million and $795 million. Analysts currently estimate earnings of $0.43 per share on revenues of $803.31 million.

Earlier, the company expected earnings of $0.41 to $0.46 per share on revenues of $800 million and $810 million.

Container Store reported third-quarter profit of $6.2 million or $0.13 per share compared to last year's loss of $25.1 million or $1.39 per share last year. Last year's bottom line was impacted by distributions accumulated to preferred shareholders of $15.6 million.

Adjusted earnings for the quarter were $0.07 per share, down from $0.11 per share as last year. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.07 per share for the quarter.

Sales for the quarter improved 1.4 percent to $190.9 million from $188.3 million last year. Analysts expected sales of $174.21 million for the quarter.

Company comparable store sales for the third quarter were down 3.5 percent.

Gross margin dropped 40 points to 59.6 percent due mainly to a decrease in Elfa segment gross margin, which was due to a shift in sales mix. Selling, general and administrative expenses increased 200 basis points primarily due to decreased leverage of fixed costs.

Chief Executive Kip Tindell said, "While we are working vigorously to improve our comparable store sales and traffic trend, we're pleased with many other third quarter key metrics like our stable gross margins, disciplined expense management and our comparable store average ticket increase of almost 2% due to our expertise in solutions-based selling."

TCS closed Thursday's trading at $21.21, up $0.87 or 4.28%, on the NYSE. The stock, however, dropped to $1.71 or 8.06%, on the NYSE.