COPPELL, Texas-The Container Store posted a first-quarter net loss of $3.6 million, compared to a net loss from last year’s first quarter of $4.8 million.
The specialty retailer was able to lighten its red ink partly through a gain of 8.6 percent in net sales, which totaled $173.4 million. Although sales rose, Kip Tindell, The Container Store’s chairman and CEO, characterized the quarter (which ended on May 31) as “sluggish,” pointing out that same-store sales were down 0.8 percent.
Tindell added that the company had hoped that, once the early-year bad weather and calendar shifts were left behind, sales would be more robust. However, “now we’ve come to realize it’s more than the weather and calendar,” he said. “Consistent with so many of our fellow retailers, we are experiencing a retail ‘funk.’”
On the plus side, The Container Store was able to increase its average ticket in what Tindell described as a highly promotional retail environment. He noted that the company didn’t accelerate its own promotional levels “in order to preserve our brand and to protect gross margin.” However, gross margin did fall by 23 basis points to 58.2 percent.
Selling, general and administrative expenses were up 9.3 percent in dollars and 31 basis points as a percentage of sales, to 52.6 percent. The company’s bottom line received help from a 22.6 percent drop in interest expense.
Looking ahead, Tindell said The Container Store is looking forward to a slight improvement in its financials for the second and third quarters. For the fourth quarter, he said there should be a significant gain for the numbers, aided by strong same-store comparisons against the worst weather in the company’s history last year.