After a Tuesday meeting regarding The Container Store’s most recent fiscal quarter, the company’s shares jumped 6% in after-hours trading. This increase was caused by the store’s lower-than-foreseen losses, which were made public during the meeting.
On Wednesday evening, The Container Store Group Inc.’s shares had gone up 43 cents to $17.93 per share.
“Our first quarter financial performance exceeded our expectations, as we delivered better than forecasted comparable store sales and improved gross margin,” The Container Group CEO, Kip Tindell said.
But the store’s sluggish traffic and weak sales point towards a hard truth. In the first quarter of 2015, the company experienced losses of $5.2 million as compared to negative $3.58 million during the same period of last year. It may very well be that The Container Store has chosen a somewhat difficult business: that of keeping America Organized.
This quarter’s losses reflected not only the strong US dollar, but also decreases in sales at some of the group’s stores.
Still, The Container Group CEO is confident that 2015 will be a good fiscal year and that the company’s newest collection will help drive sales and cut losses. He hopes that this new collection will not only increase sales but also average customer visits. Currently, the average consumer only visits The Container Store 2.5 times per year. In fact, even loyal customers only visit 4 times a year.
The new Closet collection has been launched in 36 stores nationwide and the group has already revealed that in those stores where TCS Closets and Contained Home had been released, sales experienced significant increases. As a result, the implementation of these strategic initiatives will remain on track.
TCS Closets is designed to appeal to more affluent shoppers and is viewed as a luxury product. It employs finer and better-looking materials and finishes. But one can’t fail to wonder whether this particular idea isn’t a risky gamble on TCS’s part. After all, how can a company convince cautious shoppers that they should splurge on storage products that will remain out of sight.
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