TCS - Earnings call transcript Q3 2020 | Container Store Group, Inc.

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Operator

Greetings, and welcome to The Container Store's Third Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded. I would now like to turn the conference over to your host, Caitlin Churchill, Investor Relations. you. Thank

begin. may You

Caitlin Churchill

and Third joining Earnings Quarter Call. everyone, The Results today Container Store's Fiscal thanks afternoon, us for for Conference Good Year XXXX

today open Satish and Chief have made Satish Miller, Speaking remarks, Financial to Jeff Reiff, we questions. formal and will Chief Melissa, Officer; call Jeff Malhotra, After Officer. their Melissa are the Executive Chairwoman;

are materially Container and to annual both statements. Those known financial you forward-looking the of within undertake plans, Before and COVID-XX are actual we cause goals, on on on in update performance, and forward-looking regarding results safe Private our factors business Form made of our of call, with to date unknown strategies, statements. meaning The could this risks during Reform from issued today such made that to report press release uncertainties the regarding may comments plans referred COVID-XX harbor and statements in differ our begin, constitute I XXXX. potential our our to anticipated and important that forward-looking Litigation does as of Store's need to SEC of today to filed June the of response The in impact XX, forward-looking the and statements Securities this Store subject pursuant the Container certain provisions to and expectations are the statements Act remind liquidity and any call XX-K obligation Such made not XXXX. are their The

today's to website A www.containerstore.com. obtained I turn now Store's copy GAAP is non-GAAP may the most A Container The may Investor over the this or will also Melissa. reconciliation of Finally, available financial non-GAAP press press the measures refer comparable be in release the the financial at call. adjusted Relations the page certain to directly Melissa? measures on speakers of issued release today. visiting call schedule by to measures of

Melissa Reiff

release month to my March you of our earnings my We last late Welcome call. replacement, everyone. hello, and press of fiscal this We the Malhotra. QX Satish appreciate retirement today. announcing appointment us a joining Caitlin, Thanks, and XXXX year X issued

We shared QX the But delighted that share before have tell do am expectations want Satish results. above plan that our roles just those in of It CEO going is and yesterday. we and also our you assumed our that were sales I results, well transition he we for with tracking I release officially President and in place. to smoothly, the I

far I great our amazing too, an looking wonderful planned on for among his very is rewarding as ideal and Jeff rewarding. me were were with an the the course, cylinders, And today searching on had has been we company, to I Satish in in of of ours, only lead. four making. stores, is annual the second and this real perfect until Satish's have moment perfectly for are smooth few Chairman words for He while the will under my our Officer; retirement Satish? the who last special will have a Board build I great words the the our a and this he XX a career March others. challenging have spent today joining very our of chain, no that The day firing proud ingredients job. makes XX-year in begins company and So I And business all Operating said, specifically, culture the say transition. It we been With for transition. Container found few for privileged our has and Store announced Satish, leadership Retail recently me as this is very outstanding on before future. X, Chief ask is and align about has which years successful financially values last so official in most is With technology, we am to estate welcoming of have And leading please a and I Jeff but success August leading months fit. and that I responsibilities results. ensure time supply have partnerships, both CEO as meeting a further Board very with the doubt come, how the My we services, some will to date we talk his Sephora, come his the will operationally, years our exactly The company. been in candidate Also for just important for him thoughts share on that preparing me We leadership. to I a I to nurtured what that, month, had success as cultural been journey enjoying in and thrilled Satish. join into with this of him our retirement this have and years and and years QX but call. for remain say have team

Satish Malhotra

in excited introduction I I'm this company. today the very Team Container as and the begin to Thank here of in kind headquarters unyielding have for as Store you, lead and the my The to support new incredible Coppell, your our sitting newest be Texas, role. member opportunity Melissa, for

is day in strong a results Melissa to only second outstanding team for upon. the keep this my The delivering on and to I build providing wanted me for congratulate such QX Container at brief. foundation Store, and I'll As my first comments

my and the strong success admired continues important, innovating storage to Custom great have me. and Sephora creating, weeks including Store I'm Closets, served over Organizational forward with will spending know particularly culture and is also has to to our meeting team investors. again, want XX-year to I has leading for importance. partnership long moment our you, And Equally centers. initial my industry, cultivated is been such attractive getting history the a brand during it It hand belief Melissa building The in very back in organization and our I to welcome at looking to her As the and stores forward analysts strengthen teams. Once unique to our and And will Container looking distribution its had in be culture virtually warm Company's that I'm though, to critically her this my tenure thank time spending the the momentum. important transition. her. to the for with that successful business. that, and which throughout was

Melissa Reiff

are Thanks making I'll Satish. Jeff highlights QX our much, then performance progress and fiscal the of begin follow will by share the initiatives. detail. financial strategic share against our results our more discussing and in we

driven our record net increase at well quarter up we saw $XXX.X prior any third-party to a for date. business, to strong our XX.X%, by the For in history we company's Container of reported The sales of year. Store XX.X% as compared sales highest sales quarter represent which sales the this the consolidated million, quarter, growth as with Elfa generated The

time strength also Our the be with doubling period online a last nearly of channel same online source year. continued to versus sales

last SG&A the a This compared of resulted to performance, sheet sales From QX $X.XX revolver. our strong offset zero with in with to margin. perspective, on leverage freight-driven and better-than-expected gross combined balance we more adjusted in $X.XX year. than due strong performance, in ended EPS Our financial balance the our decline quarter

to loan senior the our debt quarter, during also refinance term XXXX. January the with conjunction our its third We maturity by extending reducing million in refinanced $XX and

stores As in and nearly other quarter, product remainder selling the in really the to sales XX% momentum It's this Custom a and continued QX strong Closets solutions sales quarter. departments this into almost we across momentum, broadly a that over has our and growth see previously online. for continued third start in growth gratifying And we're fourth to the driving of Back moment. saw quarter, all an categories. of XX% our to communicated, throughout third this the

we robust XX. performance, event I'm With negative proud storage, Elfa that sales most record-breaking prior office to make and despite QX, notably a Thanksgiving, our of Store kitchen, And a closet, and success COVID-XX the said, on progress report with we with fiscal annual with I third-party were our year-to-date basis, And to quarter-to-date of attribute home momentum. year kitchen QX. fiscal with growth end much QX our our made current fiscal other as strong positive as very the XXXX particularly end great to Elfa well this bath. we product to mini in held on turned continue we pleased our earlier strong the sales, our strategic of to-date our As I The initiatives. have to saw in to as with expect strength at December have began sale, performance which of both the impact with experienced consolidated start and we Container categories,

our mentioned, quarter. Custom improvement I growing for Closets saw the almost business XX% As significant

solutions. Elfa billion a & impacted focused including has estimated remained installation for product and Closets. With solutions, on we and given choosing on COVID-XX year-over-year by notable pandemic, Elfa closures DIY, market store services our in opportunity temporary our increase $X been focused remains While ongoing the our know addressable our have that seen predominantly Custom which down with restrictions, Grab are have the customers business the goals do-it-yourself Go offerings we we pre-packaged

We increased range a In same gain or solutions XXX,XXX are during of for XX% position enrollments that a over pleased our stars now representing current by trends. last time. of to matter compared POP! great year, environment customers And new to our offer to period POP! marketing. the be in such time QX, the a no

highest QX. our continued see In fact, POP! we grow the XXXX, QX, since have program to into in we enrollments recorded and

to the product have Edit, excited January we the XXX launched to online are more years, have Following are collection, sourced to than features enhance thrilled partnership launched January products XX XXXX our we collection co-branded The future with sustainably new which stores in which continue and successful recently with we Kondo. and Home Marie in XX.

been customer has know to Jeff response chain. on And that more quarter terrific. forward Supply call. and early, about I much very our will still look sharing Satish While next

distribution congestion that are deliver we center us this second and in While freight are form and are orders related freight of the delays has rates to industry broader faster. benefits higher dynamics to port enabled twofold. navigating, The others of our container costs, and customers there

we of stores we as growth, to analysis, have continue position us topic their well the I'm when this And operational interested continue our happy our can property of tax see rates it have able that store First, lease an orders. store we from generate to a we to The right not leverage in have is renew employees at the capacity I the store also the on read of were growing can retailers do And fulfill newer our customer when flight city. We am, And delivery online expires nice Avenue, we of on additional constantly the analyze transfer in store we have will times. Chelsea especially stores company. made amount will opening course, know while lease see vicinity COVID, also on fleet. And Lexington I a store But as and this to space to And occupancy the our prudently that month. quicker were where have beautiful discussed due lease close more from increases the on that desire calls. other satisfies for and sad New of the and fact closed. we this transfer white store we the the to very costs, decided location. locations. the with openings. very not of right the learnings high decision to future. decision. the we And unprofitable store for to This The is many Avenue, we Avenue of from a that our perspective, increase successful pace stores, as that us This risen further to York an it format new suburbs for perspective, you very based decision the our significant capacity we've previous Sixth our the in believe end City sales. the imagine, at Lexington due to our performance around to to

this year, our to our execution of challenging customers and with in under confident and for we their So the positive an our results the for all given are the pleased thank beyond. smooth delivered servicing quarter, want and summary, especially through so conditions. to fiscal their teams exceptional end that business areas year I attitude of again our feel drive of positioned results and I'm pandemic of to well all continue

an their Our doing accomplish their and always home each entire organized in organization elevated prioritizing customers and customers while job other. safety for is the needs helping first, projects our excellent an of in meeting our

we as across ahead, continue I under Chairwoman team supportive investors. of also the As improve loyal customers vendors listening until you my to today. of to it look the to we the have Thank and Jeff. been in who over to the has be four call I chapter to the and August. Meeting working are The for the our And XXXX analysts may in look family to to our Satish have TCS as next ahead know we want privilege Container you will I'm capabilities with Annual as that, many the I I'm thank and you built, of Satish's them. confident very the to excited call we all forward upon incredible on I this months Thank the of best. incredible I to And and with a continue in special It each years, leadership. past really company turn serve talent and and and that in our very, organization Store the going I'm wish CEO you.

Jeff Miller

and you, Melissa, good Thank everyone. afternoon,

done express to just into into to my our special our today get and we for build culture it she's what more of. want regarding proud is Melissa company I everything results, Before establish are the thanks so deepest detail to I

on new While call we leadership this as only date. partnership forward to to excited build will continue have a we she's we and I'm away. we success miss Satish her, we know strong to look chapter, to phone start welcome and And as the seen his

shared, very our we quarter are of Melissa performance. As proud third

plans Our that uncertain for in ongoing as factored expectations sales as conservative our and categories COVID-XX. outperformed our the with environment earnings results well significantly holiday macro

look increased sales As quarter, to XX.X% we consolidated net at year-over-year the million. third $XXX.X

As the quarterly recorded Melissa this our history sales in is company. we mentioned, of the highest have

the its XX.X% performance you of in QX growth generated to compared QX net from the delivering is Our in Store to strong the not XX% million end of $XXX.X end include XX.X%. returned categories When website quarter. improvement compared last of sales Closets, business orders in holiday XXX.X%, sales Online curbside quarter. Custom third $XXX a online for of The $X.X net year. channel but sales. orders to quarter other increased retail the XX% our QX, total sales contributing with but $X.X had of customers up shipped taken, net other of from third second continued in categories, were were offset segment, improvement shipped in The Container to of impact than XX% year. last departments an product the in QX, sales more XX% normalized to levels performance taken strong negative TCS the By a product representing X.X%. ended QX. million as departments totaling our up well million pickup, our Within of We as holiday product Other the significant at categories underperformance XX.X% not our in which increase million, of

a $XX down sales Elfa departments Custom XX.X% planned and sales inventory XX.X% up we our us contributed increased seasonal quarter on bought recall, to our Closets holiday of you great the allowing end million. third-party the X.X% sales As to net products. remaining in increase. and were conservatively, position

third-party favorable gross original headwinds for at currency margin last XX.X% point XX.X% a slightly was profitability cost to decreased increased decline increased margin impact Store standpoint, quarter. during expectations XX worse Container was result as net increased less due the costs in By year-over-year. SG&A third XX $XXX.X material points, sales Elfa sales. X.X% by basis than higher-margin our This product due with lower increased million driven of heightened online primarily dollars shipping to primarily translation, points, incremental mix combined compared surcharges consolidated sales was X.X% the $XXX QX year. a QX by last to margin gross activity mix by year. foreign direct our Consolidated higher partially From and of of shipping Excluding million costs. basis to promotional instituted basis The compared offset Elfa gross freight XXX a to The of segment, parties.

due reductions with by year, other decreased expenses. of and SG&A the sales, of last occupancy percentage combined costs primarily quarter, versus leverage points payroll and sales in on a As basis costs higher marketing to during XXX

net in $X.XX share compared million tax as the or the last income share GAAP income primarily income basis per last effective GAAP $XX.X higher $X.X share share. third per rate or diluted senior XX.X% third of lower million the loan million was the on diluted senior pretax is million decreased QX, due on about in quarter or Our net the $XXX,XXX. tax Net Adjusted lower of to discrete and of due year. $XX we expense on In year. on diluted in loss as to year-over-year. compared per $X.XX income a items $X.XX for adjusted was in facility. The balance with facility net of the term quarter XX.X% combined term $X.X third XX.X% amended XXXX loan debt our secured secured prior $X.X was rates last The in from compared our year net or rate of million for incurred a to decrease quarter quarter the interest fiscal to $X.X quarter per diluted million to of principal the $X.XX interest income effective impact extinguishment year's the of to

year increased quarter $XX million to year. last million Our to the in in this XX.X% $XX.X QX EBITDA third compared adjusted

to sheet. balance Turning our

As were to to quarter, previously the pleased extended mentioned, refinance the loan, our January during XX, very term we maturity XXXX. which

million, overall balance debt $XXX the We also $XX aggregate by principal to closing. reduced at our bringing balance billion

maturity quarter also zero the we our We a as of revolver. on revolver balance on to end, had extended and XXXX, our

credit with reducing $XXX.X borrowings debt the on a balance term approximately refinancing, revolving facilities with and We in loans expense result including cash, of our in overall of QX $X approximately As million million be in in net connection quarter our interest million. ended to on availability our expect $XXX.X we liquidity, million. our total $XX.X

we Our X.X demonstrates in to balance down our commitment $XX consolidated The current debt we seeing were times. QX, ratio to are which chain our Though ended use disruptions the we industry. the in-stock leverage an in million prevalent compared inventory We were levels to pay cash where X.X%. quarter down rising reduction improvement our not debt. our approximately freight immune with is across during were excess to costs, the as supply and

possible continue minimize teams navigate to lead to headwinds, where Our times adjusting interruption. these

our significantly We the very in are cash when $XX.X pleased flow. from last of million strong generated up We free with flow cash year year-to-date cash through free $XXX performance. we period QX, free million in utilized flow

this amounts total primarily be to lease to the EBITDA. fourth remaining cash deferred of to fiscal our quarter in as Less is of quarter for approximately XXXX. cash be reflected amounts third the are quarter, these reminder, remain of our the year year, the payments fiscal fiscal and lease of CapEx million adjusted are the year. repaid in in expect half repaid end than certain of fiscal expected year-to-date of in the at We be million expected benefit which we $XX deferred About the these of payments $XX this a million. $XX first approximately And

the Closets of coming this momentum very Custom in out As QX, with of with end unprecedented and we we are start fiscal other categories. the year, and continued QX of product strength approach pleased both

earnings resulting QX reminder, fourth our our pandemic-driven earnings March, fact to share $X.XX in quarter XXrd week certain a earnings the to growth our per will per strength approximately the marketing in in quarter-to-date, As are the be to the share be the be key XXXX. closures lapping the that fiscal of sales given low spend $X.XX to is diluted full a in $X.XX to diluted in adjusted benefit in product to incremental store expect we support approximately mid-XX% QX QX expected range. year $X.XX and Embedded outlook launches. approximately performance combined of versus $X.XX, include week. Adjusted fiscal And of we'll with XXrd

pandemic the in firing approximately million forward with week contribute quarter. $XX $X.XX fourth diluted operationally, cylinders, is we business our will earlier, and strong. customers, strong come to Additionally, concludes XXXX will operator and Melissa lines out of said our the as believe fiscal on XXrd and both remarks. and better financially to for approximately the to fiscal adjusted up In company That the looking with closing, all questions. the even to more now to are share product we expected out to sales per over a prepared closing Overall, selections turn call open balance we fresh sheet. earnings I the

Operator

Instructions] Our time, we a session. Please Steven [Operator Securities. will question. this comes from the conducting with of with line proceed Guggenheim At the question question-and-answer first Forbes be

Steven Forbes

to margin I I to guess, the performance, focus I wanted gross start with segment wanted right. level on,

above but drivers help us mentioned within puts was You the various foresee to and here could think the you takes, them to hoping I gross the quarters 'XX at or within Elfa, talked do you margin you about quantify looking level forward? right, on the out And then and line. incremental that about them right and release Is again, opportunities consecutive have mentioned? going the you beyond? four XX% Or

Jeff Miller

while lot sales, online continue. thought. Steve, necessarily a last originally mentioned, third-party can't We're pressure is in now. XXXX as Elfa we is looking we is at of impactful both segment will I really gross than that front. there much to we're impact manage at over increases. discussed, shipping wouldn't you there are the into cost look was commodity Store, 'XX in the of look it at no saw like, that could And expected. reminder, activity some experiencing through looking as this negotiations costs on higher more to right a Container margin price when incurring to we able at Elfa, Store to Container on certainly increases, the historically, fiscal the related we been course, QX, you of saving we And the commodity or in certainly we 'XX. than have as speak but what early mix stages either fiscal Yes, to more say And to and four their level, Jeff. headwinds QX And Okay. vendor price Store, is see at the expect there have originally a And we of we I lot margin, going through and gross they come quarters, at And freight, planning benefited surcharges price increases Container fiscal have through of but through

Steven Forbes

a And follow-up maybe just quick on that.

the those going as the don't you gross on color what what provide think segment I the implied models specifically Because imagine you guide or on performance want level right, the here? of quantify level quarter fourth some performance? to are margin we pressures, in some Can the drivers. weigh If to would is of

Jeff Miller

surcharges and certainly freight those incur. business, continue that to continue higher the the only at and looking to we online we're QX, increased the due costs, online to freight seeing cost, Yes, -- strengthen our not mix, experience business to but also way Correct. we're the shipping due Steve, we'll

at flat. we So, see down we're right QX it to about slightly thinking now,

Steven Forbes

of additional don't can, I answering, then as up, or if this mind right Perfect. year's sort about you follow one Satish, think ramping strength. awareness you Melissa brand the And if behind

of pushed to year. spring out I right Richmond think, you this

time initial to return just unit in strength all just especially that love taking sort right, behind of So, given brand, and for the the experiencing? right right top on I growth you're here line your the growth the you're to of advantage would thoughts get any line, seeing the

Melissa Reiff

planned XXXX. growth. he Melissa. Right. we new open Steve, We're our more be have for in confident then the you're this And one Yes, And the going at fiscal Satish, then team it's I conversations that store evaluating store end already of year. to will my Richmond right. with and feel

might all is going much and a I but know, imagine, determining store to As the he in you add so that, space. to that but you can to Satish, our be, investments make this growth white want Steve so, some there will evaluating because day, color that second is new we're

Satish Malhotra

I plan Yes. thinking to and Melissa. time would the say my assured, definitely business rest be it's get it help formulate our me way XXXX. spend I too And to Steve, organization, specifics really hi, Thanks, with just into listen, talking as But the early for and will about approach. the

So just for tuned stay that.

Operator

Our next the your with question question. with proceed Goldman Sachs. McShane Please comes from line Kate of

Kate McShane

the retail regards I change I one just been you inside the point But installation to you with start, of seen to trend time? the Melissa, I just to and DIY coming the wondered Obviously, people amount regards home from the have in if cadence in was meaningful comments across in home interested as of pros DIY made, the had pandemic. prevented because a at of this you're seeing. that's the have been with

Melissa Reiff

installation, to Kate? Specific

Kate McShane

Yes.

Melissa Reiff

Yes.

don't are at don't really going because really to But really, of picked know. I our home. customers I They not have been -- doing it in solution because Elfa up, themselves. for a solution, they the Kate. it's And and as again, and that gratification tremendously. our we Elfa are this, if company. we're that our we And that's what will prepacks the of so we is Grab-&-Go, pantry down but XX-plus call we pivoted or only of a year-over-year in are delivery year or it XX increase to continue, that. past and we've get for I'm what installation really, well, and But continue we Also, is the has installation. great installation once it a And -- the pandemic. Elfa, old will anticipating the home seen, helped sure, years, with selling them immediately as closet said pandemic that that we are for remarks, will is have do design We for the proud and and include prepared virtual know

Kate McShane

you Okay. the from more still change, real But same? been assume the I saw in pandemic no the installation, with then what regards there's versus it's kind the now summer to in maybe of middle of

Melissa Reiff

is in no. sure I are all. better. same. home ways, Kate, some and think comfortable No, the having at the in are change that just with getting more making the because on Customers It's we practicing No safety significant getting a protocol so installers little that, it's big so priority. bit Actually, their

much And are so, more I think comfortable. some of getting our customers

Kate McShane

disruption know of And then there a disruption comments. been a your within of less how could impact maybe you Okay. any in where feeling And through that seen? the about the a quantify feel Is the I other categories? comp to which during way inventory you've from less by to there maybe Are applied available supply you're you places categories there's -- bit currently? also prepared little walk chain, inventory certain Great. you lot there's

Melissa Reiff

the but there. I which Yes. of our middle every results, the been we with that. quantify XX And are how and December from December, I'll to I in we're look team chain. chasing the like inventory tell has other great I excellent the retailer, do one across and XX. Elfa know product this, through in for you terms know But impact shape And shape can inventory board, job an you to this how good in we've don't can supply began very February just don't goes categories, the let sale, Jeff take done at comment. our the of all that. that other but

you mean, that. Jeff, know I to if So don't know I how quantify I do but can it, don't

Jeff Miller

simply quantify, there's because in we to it. play different a I difficult -- mean areas sorry, -- really factors hope lot address at it's just think in of how I I'm I

Melissa Reiff

That's okay.

Jeff Miller

want lines vendors. Whether may to they're disruption it'd the they we're it's I be customers in a -- the situations freight hard choosing really the because have standpoint, -- or we seeing and they business of negotiate but in, may else. come our with dealing with From negotiating We're product picking disruption, something not the mean, vendors where are also in manufacturers, different

Melissa Reiff

quantify. To

point. supply some great build solution they're strength lead other comes times and if and we opportunities even looking job specific really the for team -- or try them, stock. in specific really a a assortment, our Kate, that's more our have chain Because, a of it. taking a think customer item, one safety for in other to of And has for done and great adding advantage options I

So But are most even worry I inventory. about very the the can't a that. on continue we're mean, good done and mind for speak that part, think really to though has And job. feel inventory going overall, -- I it, things some chasing due to think been shape. to again, a I some very good I confident results we've and we I we control constantly, my for

Kate McShane

could I If Okay. sneak just maybe question. one last in

there's Is you're when with pandemic. this or your I this CEO a experienced how investment context a shift forward. as the in the back about the throughout about you just company your of year? CapEx, kind But of spend there to your think XXXX, of spend lot made any going Just decisions know for thinking going of transition, question. reprioritization we what just be that to investment going being

Melissa Reiff

We don't Satish Kate, the on being day shared and all planning think number two this I my midst Satish. just and right with either in We're of XXXX, thoughts the don't know job. I've yet. can address

Now to going focused whether can right? increase whatever, here. have are because stores assume would at or going from comment. Satish, opinion, so to that lovely either to you I new or on it it's the whether is the personally my would -- I a he take more decided going we're ahead don't personal because our in. we're I think And or position team look can't technology and much opportunity investment, we but digital I team and it's CapEx Satish

Satish Malhotra

No, my a early no. coming of possible spend weeks very just to that really It's learning too much months just I into listening And next and actually look as decision. early. lot make to as the

Jeff Miller

that. to Right. Yes. to I'd like add just

of CapEx would return very expect our will And of you COVID, just always be we course, our us looking down good CapEx between a when or making because fiscal at to going whether it's we we're money balance low And striking a 'XX. the to debt return, to I for levels have of business levels get invest normalized always, it, look As expanding amount 'XX, two. and where paying

Melissa Reiff

your hope Did another drink. I answered, answer Kate. that take choking, you're Jeff, question? that

Kate McShane

Yes.

Operator

final Zakaria Our proceed with question. of your Please Tami line the question Morgan. from comes JP with

Tami Zakaria

you thank Hi, so on much excellent my for question congrats and taking results.

So my first question is around Custom Closets.

mentioned XX% quarter. I the about think grew it you in

Or Meaning, pure versus growth? was of that ticket? price much So that by it impressive was was wondering increase how volume just driven? volume any driven it I driving is

Melissa Reiff

can can very, any been there has Closets the customer we It Elfa price the of by the not because, Custom growth. it Elfa. were install from We're Tami, customer course, very mostly and driven increases. pleased for or install

and Now you'll install, Laren, we as Tami. Avera recall, have to

with And we've sale the and pleased far very as Elfa with begun said, so sale. it. good I we're the yes, so So, Elfa

lot to momentum things So, and we've a of expecting continue. got

Tami Zakaria

revenue then And income Chelsea through you expect recapture side, expect switch rent That's much say how could you the much Leg around lease store, to to the that? to And the detail it. if when impact how on so Got super helpful. location. the any expires? do I from the And closing do

Melissa Reiff

Avenue. The store the that continue was a you'll Sixth lot -- that of I down of all at I hesitate in We this that Avenue say my to of coming customers just And end proud lease and to customers. month, percentage and sold closing with as had we and to the Tami, think so of transferred recall, said our we the And I expires our we which we're I have of think give at merchandise I what Sixth communicate the store, that the But remarks. -- encouraged. to a still Yes. as was in they'll we come shopping be incredibly team way Chelsea. close way in, were the

that. by encouraged I'm So

the As the was because occupancy was so unprofitable high. I store said,

sad but for another the it, the there we call for the at Lexington they're decision kind And was jewel long wasn't XX, that's us mid because So, of term. It's just for of box, all and decision. the decision right it it's Company. short, the right

Tami Zakaria

it. Got

closing So rent say no much you how quantification it? might around after

Melissa Reiff

No.

Tami Zakaria

one Got it. from me. last then And one Got it.

the the coming goods that pressures, So, freight from from mile? the freight mostly import the is of last overseas, like it is is Or happening? where primarily pressure

Jeff Miller

shipping charging direct-to-consumer all the carriers volume that over plus disruption then, incurring there's the cost top course, kinds being that much costs we business, sales, category. more incurring of It's the third-party freight freight the of the the pay are it's for the higher our It's place. that. over water, we're first because more in we're that of well. all surcharges us And in the front Tami, mix lanes on online And of on of much as

to cost we're it costs both goods shipping us. get seeing So, to the and in our

Melissa Reiff

Yes.

Jeff Miller

of we're the that because and think but contracted that do of spot driver have I than our to higher we really, have And we're gone and up is, for expected, the contracted than of one the much higher rates that's much rates, even into reasons having doing, course, volumes go market, those grades.

Tami Zakaria

it. Got

Sorry, one last one.

down the say? the died and quarter saw to that that should volume are is to driven it was past quarter all peak wane charge Is And the fair that probably charges that holiday ahead. shipping is of we surcharge say -- peak look the pressure the sort the has probably in past the of So, fair now headwind. as

Jeff Miller

holidays. Tami, in we any not the seen have reduction surcharges since the

them. third-party are charging The still carriers

Melissa Reiff

Tami, and just know. seen abate that haven't yet, We don't

Operator

session. over to I reached end we back like closing to the our remarks. for that, turn with the would And management question-and-answer any And of floor

Melissa Reiff

thank just because let it just I incredible. all us much and this over here And opportunities again, congrats support today. for joining of want so are Store years. you just Satish the the appreciate just and to your soar Container The And Well, again, say I from take company

So everybody. good luck to

Caitlin Churchill

you. Thank

Operator

today's teleconference. This concludes

You this your wonderful for now time. have participation, your lines at disconnect and Thank a you may day.

Container Store (TCSGQ) 3 Feb 212020 Q3 Earnings call transcript