Store stock

Why the container store’s stock rallied as other retailers fell hard

What happened

Shares of The container store (TCS 7.07%), a retailer specializing in storage and wardrobe items, rose 12.5% ​​in early trading on Wednesday. The big news was the company’s fourth quarter 2021 earnings release, which hit the market after the close on Tuesday. As the stock gave back nearly half of that gain to end the session up 6.8%, the broader market ended the day in the red, with retailers particularly hard hit. So that gain was still quite impressive, relatively speaking.

So what

In the fourth quarter of its fiscal 2021, which ended April 2, The Container Store’s sales totaled $305.5 million, down slightly from the year-ago quarter. This comparison, however, is not neat, as its fourth quarter of fiscal 2020 included an additional (fourteenth) week. Notably, sales for the quarter increased by 26.6% compared to the fourth quarter of fiscal 2019 (13 weeks).

For the full year, the retailer’s sales reached a new record high of $1.1 billion, 10.5% above the total for fiscal 2020 and 19.5% above in 2019. Overall, it looks like The Container Store is still in growth mode.

Image source: Getty Images.

In the end, The Container Store reported adjusted earnings per share of $0.46, down from $0.71 a year earlier, but up from the $0.30 earned in the fourth quarter of fiscal 2019. For the full fiscal year, the company recorded earnings per share of $1.65 compared to $1.24 for fiscal 2020 and $0.30 for fiscal 2019. Again, the retailer seems to be moving in the right direction, noting that capital expenditure needs are significant when a small business is still expanding. (The Container Store’s market capitalization is only about $380 million.) It’s no surprise that investors are happy with the results: Sales and earnings beat consensus analyst estimates.

Now what

Adding to the headline’s appeal, management also issued long-term guidance that calls for the company to exceed $2 billion in sales by 2027. Which will drive same-store sales growth in percentages. single-digit and expected opening. of 76 new stores. Two store openings are planned for fiscal 2022. Ultimately, the big takeaway here is that The Container Store remains a fast-growing retailer. While a recession could make management’s goals harder to achieve, given the company’s record success in fiscal 2021 and business expansion since 2019, there’s no reason to doubt of its ability to finally deliver on these heady promises of growth.