TCS - Earnings call transcript Q1 2025 | Container Store Group, Inc.

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Operator

Greetings, and welcome to the Container Store's First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Caitlin Churchill. Please go ahead, ma'am.

Caitlin Churchill

Good afternoon, everyone, and thanks for joining us today for the Container Store's First Quarter Fiscal Year 2024 Earnings Results Conference Call.

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

certain like Before I statements. relating financial XXXX, the anticipated results to any The plans with call statements to business that does of risk matters call, management's the statements forward-looking press discussed events, performance objectives XX-K remind our quarterly and are as to Actual report issued forward-looking we release the materially subject forward-looking and in may the forward-looking in would and reports everyone made on and company today on undertake Store's to begin, future and that Form filed Exchange conference our today's in public future Securities that Store results for The SEC date and Form as the uncertainties. are referred of XX-Q could of in filings from affect statements. those the and annual XX, updated this risks obligation differ to these factors are Container with U.S. the other Container by today update May the on Commission. are not the

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

Satish Malhotra

of of all Thanks, details for I'll review will financial today's open up to thank performance, Caitlin, you questions. results discussion call first the discuss we quarter and with the Jeff our before a joining our then begin and us.

results. first our to quarter turning Now

General contend delivered launches comparable while general with sequential quarter. to with wood-based we reflected quarter both spaces in merchandise first continue improvement and in we spaces increase improvements notable encouraged response the compared Preston and we the by macro a in X.X% comparable trajectory merchandise premium XX.X% sales quarter. line, the the enthusiastic a order experienced Comparable Garage+ We environment, sales the sales as to fourth in XX.X% for were quarter June. and for decline history. our a change the in sales month-over-month sales, its While in trend to sequential challenging quarter custom attribute customer and our by which Elfa improvement custom positive first sales the had spacing in declined the year-over-year to Decor+ the quarter in progressed delivered best

We XXXX, which to our center challenging improvement improvement. a a dedication continued costs for to up Additionally, stores, outstanding orders. result per continue distribution to work, first latest gross the fixed promotional buy support and for again hard positioning Container due American the a stores service. of a and take the offering. in Promoter is that lower they of on the the we unique once least mix. in survey was online average need believe loss learned deleverage customer our now and rate XXX to team for their custom was with the recognize all our margin that teams had home favorable home adjusted across in one Based saw work overwhelmed their I reduced continued of of Despite despite Scores undeniable disciplined that fiscal our sales point consumers store this remain and have for backdrop, quarter QX to to Americans belongings. wishes Net in on gross loss their room margin was With moment cutter the Store committed X/X our pick from activity centers confirm focused have success. delivering by space wanted our basis at macroeconomic X rewarded to in retail we freight they quarter $X.XX for and an rooms Their exceptional compared profitability, respect $X.XX to to their our on share have more product costs, spaces

base systems, gives in the customers not space in-home have utilize and their possible. ways the and they they to customer did complementary services Our existing cutter know organizing power solutions overcome

which hosted recently across we our Additionally, excitement and drove our base. summit, energy second incredible vendor vendor

deepening we expanding our stabilizing fourth our quarter Preston our summer, and earnings and strategies, including expanding we general fiscal through Elfa also strengthening space the highlighting with brand new-term that reach our priorities offerings, our our discussed focused on These capabilities increasing for customers, winners. customer our our relationship growing merchandise on 'XX our business while business include and During call.

from focus our we core are Following believe conviction products. our on level a renewed our the summit, thrilled see there to who brand partners of is in our ongoing

our we offering addition, to customer our spaces. working closely expanding forward are with on core and providing looking solutions that complementary In us complete

related first deliver see especially headwinds. comp the prevailing As positive quarter, to customer we a macro I mentioned, the for were pleased spaces given

Our better for earlier. record a mentioned our and especially as quarter, are getting Preston which and our design leveraging improved delivered at tools I design leads, better line, specialists converting

also engagement over Elfa. our improving product offering and We enhanced generating Preston with time. path double we a our continue believe rates see opportunity conversion achieving are on through to business to great We're by to this

in last off line. to newest we Following the spring to launch awareness fall, our kicked Elfa bring some by Garage+ marketing of the campaign

of garages and channels As are for pleasing. now part reception can transformation aesthetically campaign, Garage, that Garage+ resulted marketing audiences of this to common and well spaces attributed efforts in April. resonated be in to launched we across notable the positive and The with transform their coverage. as and are both with as their seeing both we marketing media functional our Jason real-life this collaborated we Editor-in-Chief Kylie into Michael Sebastian, These and Kelce trends customers

During do that a for. the further of have give handling new elevated in launch reveal quarter, wood have modular an the customer customers like themselves by in lighting, the their June. exceptional fact professionally that innovation we system space excited asking gives birch space wall comes building LED value installed. Elfa they look fully our and been at or enclosed This of options to drawer Decor+ offering in and finally with they can it system panels were It

customers lot focus spaces of excitement of generating services and received to to response belief time. sales the continue The offerings. While and a and sharpen still to in our we and in-store is early expand and days, drive of our stores. these awareness to the sales solution-oriented only recent well XX% marketing XX% our can launches launch has from custom our our We'll been in-home assortment, efforts that grow strengthens design by initial innovate brand across over our strengthen of build differentiated for Elfa

stock be of SKUs are products premium work build is core to new driving reflective reallocating improvements our resulting stores, our general coal inventory on XX% infusing we Turning and focus in of inimicand that while still our it we essential storage to with and innovation. includes traffic plus merchandise always general the core to business stabilizing ensuring in offering, basket. we spaces, customized in merchandise, organizing are shopping This productivity. more and space products discovery complement which next In to our critical the significant is customer the in

new our a environment, the track year in Springfield more forward During than first our and on in Francisco Florida The saw the similar Virginia. and welcome store in Wispe in open downtown XXX and those on people waiting as relocation team are waiting response from excitement quarter, well. from the San and we Francisco progress we a more opened new recently, is a ahead X look relocated and new power we Most great to community customers with opening quarter new Aspira. start location to in line more people another end, In than store experienced organization. day. on in summary, opportunities the the in this control later Springfield, communities. a a the robust are line with Virginia we store as current stores more San pleased we off on and in XXX day, initiatives following believe opened realize strong making the while to of macro reception cannot our continue with to Again, the

continue capital We strategic when tightly the of to are review refinance to The are returns us the are controllables, Board the and managing strengthening maximizing business effort plans will alternatives ensure an and condition normalizes. of market facility to our we competitive to while the expenses both management well serve all shareholders. for controlling and which work position, our credit in continuing potential concurrently and on

not disclosure now until to our necessary turn of detail. will over review is any discuss advisable. questions being results do comment the financial further more call regarding taking Jeff? call I'll in We end process the strategic at intend the we be Jeff to or And nor the to

Jeffrey Miller

everyone. afternoon, and Thank Satish, you, good

As comparable our the within period strength the results sales through positive spaces, for Satish ongoing month-over-month which growth improvement reviewed, and quarter delivered first relative sequential custom reflect quarter.

business impacted segment, compared merchandise by points. positively decrease sales primarily net store decreased store were sales net negatively comp general XX.X% million, $XXX.X The driven a our last the of comp sales quarter, in Custom from a impact were to and decrease TCS year to sales million. in comp decrease total store XX.X% X,XXX categories, decline of basis first Store spaces XX.X% X.X% points. increased net benefit inclusive sales store for by compared basis points. $XXX.X XXX consolidated XX which $XXX.X is Container Sales the year. comp the sales prior sales stores to noncomparable basis retail the For million by a to of By XX.X% year-over-year

net XX.X% quarter Unearned in million sales, curbside quarter reflective is sales last the year. of QX net XX.X% decline decreased website-generated sales revenue For XX.X% first overall third-party last TCS compared pickup, of last year, total $XX includes XX.X% Elfa channel which Website-generated XXXX. compared sales. And to XXXX, year. $XX.X of the million decreased than QX, year-over-year. is million which year which of basis versus XX.X% to of of $XX.X a QX first points in to XXX decreased fiscal decreased our our in in sales fiscal lower represented the online this

points last SG&A basis primarily impact for gross to gross QX to mix the QX XX.X% the in year-over-year, to tailwinds, decline and increased TCS increased compared primarily sales in promotional $XXX.X a From year. profitability foreign due sales net points basis in favorable translation, Elfa to standpoint, in year, to to Excluding price consolidated $XXX.X to segment, our the to of QX points compared primarily gross By million year. margin of freight margin dollars XX.X% a year, last increases compared activity XXX customers. XXX year. basis due Consolidated due third-party currency decreased this markets. decreased XXX Nordic XX.X% to last or to compared million X.X% million increased $X decreased Elfa margin last

fiscal points increased sales first As quarter, a marketing to to in first $XXX,XXX associated of in of incurred the which In basis we recorded expenses, all to XXXX. related a closure XXX fiscal to and quarter the lower related store fiscal first cost million of we has primarily the in $X.X and percentage long-lived with is due is The Also of the quarter asset been of XX.X%. deleverage in of first increase net of sales, fixed SG&A a increased spend year-over-year impairment expertise professional other XXXX. for quarter, almost XXXX. alternatives legal which recorded strategic identified

$XX.X interest quarter rate facility on first last the was XX.X% net first during loss tax higher loss last quarter first year-over-year million GAAP compared well on for to borrowings The $X.X net to rates year. interest the increase $X as or the The Net $XX.X $XX.X revolving in XX.X% compared was per share compared the compared net of fiscal the higher share the for a credit expense $X.XX of in loss our loss increased is or last last per adjusted of to was of million XXXX year. share or $X.XX diluted Our in net million year. quarter million in first GAAP $X.XX to basis to million as primarily $X.XX or QX. quarter $XX.X effective per per as first to due the quarter of as quarter loan year-over-year year's share. Adjusted million on a term

the first QX in decreased $X.X of $X.X Our year. to quarter to in this adjusted million EBITDA million year compared last

cash, debt our the $XXX.X and to million liquidity, million with availability facilities total revolving including of $XX.X in our Turning total credit We on in $XX.X quarter ended sheet. million. balance

is ended manage At costs down Capital driven Our freight XX.X% environment quarter primarily inventory last X.Xx. was expenditures current fiscal fiscal year-over-year first to unit a tightly million $X.X TCS, and quarter general XXXX. of the units year. down of quarter XXXX on ratio We is of reflects the fewer on-hand to compared the decline leverage approximately The result first in effort merchandise. versus and inventory with inventory year-over-year. quarter were in the first the of current inventory by million the in consolidated $X.X basis, a lower X.X% concerted

capital in XXXX. a we As spend plan million $XX of to million fiscal $XX reminder, to

technology Free a XXXX $XX.X used stores to million $XX.X million We of are use quarter our the quarter and for of first fiscal in of first year. this fiscal flow versus in the prioritize XXXX. continuing cash investments was

Given evaluating QX. not alternatives, our we current are reported has just from process decline improved providing for we strategic the of slightly

in business Preston with Elfa lines. growth spaces performance year-over-year in our QX product driven our to by continues be relative custom Our strength and in

remains merchandise exercising should first to of total cost resulting the for in compare the fiscal we category fiscal gross noted, double-digit year-over-year the However, magnitude expanding gross rate easiest gross with for it mix, It year promotional margins and continue negatively year. stable full not favorable pressure sales perspective. reported activity making modestly by freight full seeing the of our to in continued Despite in a should our XXXX. in challenged, were XXXX, general currently discipline are quarter declines for the orders be business margins impacted more to result promotional consolidated margin from

the and primarily in front, SG&A spend X million X fiscal $XX in Capital store expect XXXX remain as to cost in store executed we infrastructure. are well fiscal extremely in meaningful technology the new during quarter, and a and the to to store. it Subsequent XXXX. expected in new as well to our store plans the relocated XXXX to Virginia, openings begin concludes million, opened of closed fiscal expenditures and $XX disciplined the On to for of in actions approximately first opened end session to XXXX. remarks. as SG&A I'll be as X XXXX first manufacturing stores have related We in remainder the we store X our This to we quarter over fiscal new the Q&A investments operator fiscal turn open Ashburn, of questions. prepared now

Operator

McShane much. we Goldman have [Operator question-and-answer be very from The Instructions] Kate you will Thank question session. conducting we a At this of comes first Sachs. time,

Katharine McShane

the a store start I storage with in being space asking about change reallocation core What store? organization. and to could wondered the the out within is changed as I of of if this result

Satish Malhotra

look pendemic. merchandise relates ways pointed to that at benefited looking as of space to this as we well and end Kate, the back firstly, caps. a We're our I'll take reallocation distinct all stabilize really during continue step is quite question. to certain really Satish. take I'll our say, out, that it general

organized complements to marketing and lot seeing perfectly. our quite And a of success merchandise label definitely that relative collection Elfa increase things as through our that Some on we're is categories. doing, our more everything, of a with designers, of collections, around 'XX. there. great approach promoting had, collection reminder, have and being in that's we And way exclusive in other believe the also which more more QX business. of can solutions of the and bundle in-store a and sits our we had true with we're And to general meaningful additive everything in a Elfa we up organizer and XX% business, some merchandise replaced an now as is integrated and of we've our everything that our But seasonal private currently such our productivity driving core there seen organize tried some collection discovery thereby

which They more And I do stores premium have well then opportunity spaces. believe make some in premium and reception that so to solutions customer more include particular, also these core lastly, And storage and product and our we assortment, expand out premium on-the-go-travel way of home our which to core in start on headers would to general our finish say, will its we're significant organization, we for well. and our as integrate of incredibly you'll as fragrances looking continue helps custom see a lot merchandise, us, more there.

Katharine McShane

that of offering Okay. now historically seasonal And percentage a it going Was smaller can going to be percentage will with expect mix forward? a of regards what and forward? we sales certain

Satish Malhotra

Yes.

to assortment. offering which we main our have then seasonal occasions, that's college, stores right in is typically Our now, X what to and and is back limited holiday our

so continuing that well. years of more And you would likely future in as see the

Katharine McShane

then And just few on And over store our see question other closure expect can Was mentioned the Okay. any this about you the unprofitable? we closures months? announcements call. the store store second closure was or next to store

Jeffrey Miller

Yes, Jeff it's Kate, here.

we there we're that our In we As certain have decided look chose a to locations. at store particular continued evaluating not in a this closure. store renewal operation and take to opening, was always portfolio,

but we're announced any in We continuously store the fleet. future this other have not closures evaluating store at point, our

over and of looking As years fleet very many you store that's the business We're stores. very of of proud fiscal those the of the know, operation our productivity 'XX. been we're to proud grown the of forward

opened openings waiting also opened of one X in on already. the Both door. those Virginia. have is in Virginia customer exciting in Ashburn, store base at relocated the end Francisco, with store we opened quarter post call, As San the One and we a mentioned Springfield, stores other the

store drive growth. about as through new We space that for the business back where and from beyond 'XX really And white at awareness us this we see are planned expand very and growth the still pulled to a to fiscal and for conditions the Certainly, store on 'XX. but point, for we a just the given standpoint, openings large still fiscal macroeconomic to feel so business have change. continue openings store we wanting good

Katharine McShane

Okay.

of that know is Is the comments the timing facility. the Our out? being prepared I of mentioned worked was any when that, in question credit on. just last figured refinancing of indication on you that can be there

Jeffrey Miller

announced with our just refinancing. have on partners timing work financial We front. continue We any associated to with not that

Operator

The from JPMorgan. Horvers next question we comes of have Chris

Christopher Horvers

Wasserman Julie is This on Chris for Horvers.

were you As about? you has that need ago? unfavorable this investing right aggressive the Are into some retailers the to consumer under is X competitive you months, you also is heading in lot price to time and were improvement I worse now competitive, of been response mentioned pretty consumer for you're stay seeing with the keep you you recent months yes. And investing top pressure drive promotions you suggest than more last worse pure commentary part Would all the as mentioned, pricing to But than a in if that answer sequential quarter-to-date. season? would we're line to macro know seeing now that continue some suggesting to notably in seeing units. in talking back-to-school of especially are to

Satish Malhotra

with Jeff rates, products. do no there's housing in inflation, our as continue decisions, perhaps merchandise elevated to weigh rising general and they the to costs, it their And interest Yes. especially margins. let I'll first in gross relates then living and markets. uncertainties impact it to relates job purchase doubt the as Look, part contend take customers

a more to but promotions. strong events found also -- us through events, the of living in linear We continue help enables Americans time to the Container that customer time we've counterbalancing and we sales remains really current as have to space, are compared we events, more Store clutter extended drive stress need equipped are then of with strong creating profitably the that incredibly observed urgency contend sense claim to their seen promotional in during of today. engagement uniquely macro we environment and homes still

Satish Malhotra

other Any follow-up?

Katharine McShane

you. That would be it. Thank

Operator

have reached for of we end joining conference. our of session, we question-and-answer and gentlemen, end and reached the the Ladies Thank you our us have today.

You now lines. disconnect your may

Container Store (TCSGQ) 6 Aug 242025 Q1 Earnings call transcript