As it moves forward with its small-store initiative, the Container Store expressed satisfaction with the third quarter despite lower sales and earnings.
Consolidated net income was $4.2 million, or eight cents per diluted share, versus $13.7 million, or 27 cents per diluted share, in the year-earlier period. Adjusted for one-time events, net income was $4.1 million, or eight cents per diluted share versus $14.3 million, or 28 cents per diluted share in the 2021 third quarter, the company stated.
Comparable sales decreased 4.3%, with Custom Spaces+ up 2.1%, contributing an increase of 65 basis points to comps. But that was more than offset by general merchandise categories, which slipped 7.1%, negatively impacting comparable store sales by 495 basis points.
Consolidated net sales were $252.2 million, down 5.6% versus the year-before quarter and including 100 basis point negative impact of foreign currency translation. Net sales in The Container Store retail business were $239.3 million, down 3.8% in the period year over year. Elfa International AB’s third-party net sales were $13 million, down 30.6% versus the year-previous quarter. With the impact of foreign currency translation excluded, Elfa’s third-party net sales fell 15.8%.
In announcing the financial results, Satish Malhotra, Container Store president and CEO, said, “Our third quarter performance reflects better than expected results led by Custom Spaces+, which benefited from a successful event focused on our new premium wood-based product line, Preston. We continue to be very pleased by the performance of our first small format store in Colorado Springs, CO, and are thrilled to share the new store opening in Salem, NH, in January exceeded our expectations, in particular with the number of new customers that signed up for our Organized Insider program. Looking ahead, we are excited to share that, in addition to our previously announced new small-format store opening in Thousand Oaks, CA this spring, we plan to open nine new small-format stores in the second half of fiscal 2023.”
Malhotra added that entering the company’s fourth quarter, “while we are encouraged by our new store performance and ongoing customer engagement, we are experiencing headwinds related to changing customer spending behavior in light of the current, uncertain macro backdrop. I am confident in our team’s ability to navigate this environment while remaining focused on driving long-term profitable growth on our path to $2 billion in revenue. We plan to continue a disciplined approach to expense management and allocation of capital to support our key long-term growth initiatives.”
Private equity firm Leonard Green & Partners is the primary Container Store owner.
