The Container Store Group, Inc. Announces Fourth Quarter and Full Fiscal 2020 Financial Results
The Container Store Group, Inc. reported strong financial results for Q4 FY2020, with consolidated net sales reaching $314.7 million, a 30.4% increase year-over-year. TCS retail sales grew 31.3% to $294.2 million, driven by a 72.2% surge in online sales. Consolidated net income soared 180.0%$35.1 million, with EPS at $0.69. Yearly net sales amounted to $990.1 million, up 8.1%. The company anticipates approximately 50% sales growth for Q1 FY2021, with EPS expected around $0.08.
- Consolidated net sales increased by 30.4% to $314.7 million in Q4 FY2020.
- Net income rose 180% to $35.1 million, with EPS up to $0.69.
- Online sales jumped 72.2% in Q4 FY2020, supporting overall sales growth.
- Q1 FY2021 is projected to see consolidated sales growth of approximately 50%.
- TCS gross margin decreased by 130 basis points to 56.1%, primarily due to increased shipping costs.
- SG&A expenses rose by 16.4% to $123.4 million in Q4 FY2020.
The Container Store Group, Inc. (NYSE: TCS) (the “Company”), today announced financial results for the fourth quarter and fiscal year 2020 ended April 3, 2021. The fourth quarter and full fiscal year 2020 consisted of 14 weeks and 53 weeks, respectively.
For the fourth quarter of fiscal 2020:
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Consolidated net sales were
$314.7 million , an increase of30.4% compared to the thirteen weeks ended March 28, 2020. The 53rd week contributed approximately$17.7 million in net sales.-
Net sales in The Container Store retail business (“TCS”) were
$294.2 million , up31.3% , inclusive of a41.6% increase in general merchandise categories and a22.2% increase in Custom Closets. -
Online sales increased
72.2% in the fourth quarter of fiscal 2020. -
Elfa International AB (“Elfa”) third-party net sales were
$20.5 million , up18.8% compared to the fourth quarter of fiscal 2019; excluding the impact of foreign currency translation, Elfa third-party net sales were up5.0% .
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Net sales in The Container Store retail business (“TCS”) were
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Consolidated net income increased
180.0% to$35.1 million compared to$12.5 million in the fourth quarter of fiscal 2019. Consolidated net income per diluted share (“EPS”) was$0.69 compared to$0.26 in the fourth quarter of fiscal 2019. The 53rd week contributed approximately$0.07 of incremental EPS in the fourth quarter of fiscal 2020. -
Adjusted net income per diluted share (“Adjusted EPS”)* was
$0.71 , inclusive of approximately$0.07 of incremental Adjusted EPS* from the 53rd week, compared to$0.26 in the fourth quarter of fiscal 2019. -
Adjusted EBITDA* increased
66.7% to$59.5 million in the fourth quarter of fiscal 2020 compared to$35.7 million in the fourth quarter of fiscal 2019. The 53rd week contributed approximately$5.3 million of incremental Adjusted EBITDA* in the fourth quarter of fiscal 2020. -
Net cash provided by operating activities was
$138.3 million in the fifty-three weeks ended April 3, 2021 compared to$30.7 million in the fifty-two weeks ended March 28, 2020. -
Free cash flow* increased to
$121.1 million compared to ($2.9) million in the fifty-two weeks ended March 28, 2020. In fiscal 2020, the Company utilized$78 million to pay down principal on its Senior Secured Term Loan.
Satish Malhotra, Chief Executive Officer commented, “I am very proud of our team’s accomplishments in fiscal 2020 underscored by outstanding fourth quarter performance driven by broad-based product and channel demand. I want to thank all of our teams for their hard work and dedication in driving these results despite the difficult environment created by the COVID-19 pandemic this fiscal year. In addition, these results could not have been possible without the steady leadership and resolve of my predecessor, Melissa Reiff.”
Mr. Malhotra continued, “As we look to fiscal 2021 and the next chapter for The Container Store, we have developed our strategic priorities and supporting initiatives to make this great company the best version of itself. We will strive to deepen our relationship with our customers, expand our reach, and strengthen our capabilities through continuous improvement and by being an employer of choice. All while championing the enriching benefits of living an organized life. The addressable market is substantial and our solid foundation, combined with our focused strategic priorities, positions us well to capitalize on the many opportunities we see for our business and our brand.”
Fourth Quarter Fiscal 2020 Results
For the fourth quarter (fourteen weeks) ended April 3, 2021:
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Consolidated net sales were
$314.7 million , up30.4% compared to the fourth quarter of fiscal 2019. TCS net sales were$294.2 million , an increase of31.3% with other product categories up41.6% , contributing 1,940 basis points of the increase, and Custom Closets up22.2% , contributing 1,190 basis points of the increase. Our online sales increased72.2% compared to the fourth quarter of fiscal 2019. Elfa third-party net sales were$20.5 million , up18.8% compared to the fourth quarter of fiscal 2019. Excluding the impact of foreign currency translation, Elfa third-party net sales were up5.0% . As a result of the impact of the COVID-19 pandemic on our Company’s stores in the fourth quarter of fiscal 2019 and the Company’s policy of excluding extended store closures from its comparable sales calculation, the Company does not believe that comparable store sales is a meaningful metric to present for the fourth quarter of fiscal 2020. -
Consolidated gross margin was
59.3% , an increase of 30 basis points, compared to the fourth quarter of fiscal 2019. The increase in consolidated gross margin was driven by the realization of more intercompany profit on sales of elfa® product at TCS this year as compared to last year. TCS gross margin decreased 60 basis points to57.1% , primarily due to increased shipping costs as a result of a higher mix of online sales and an unfavorable mix of lower margin product and service sales, partially offset by less promotional activity in the fourth quarter of fiscal 2020. Elfa gross margin decreased 70 basis points primarily due to higher direct material costs. -
Consolidated selling, general and administrative expenses (“SG&A”) increased by
16.4% to$123.4 million in the fourth quarter of fiscal 2020 from$106.1 million in the fourth quarter of fiscal 2019. SG&A as a percentage of net sales decreased 480 basis points primarily due to leverage of occupancy and payroll costs on higher sales during the quarter. -
Stock-based compensation increased to
$2.8 million in the fourth quarter of fiscal 2020 from$0.5 million in the fourth quarter of fiscal 2019. The increase was primarily due to liability accounting for a portion of performance awards that were significantly impacted by increases in our stock price during fiscal 2020 combined with achievement of fiscal 2020 performance awards at the maximum level. The increase was additionally impacted by the acceleration of expense for awards made to certain executives under employment agreements whose service periods expired in the fourth quarter of fiscal 2020. -
Pre-opening costs declined to
$0.9 million in the fourth quarter of fiscal 2020 from$2.2 million in the fourth quarter of fiscal 2019 primarily due to$2.2 million of net costs associated with the opening of the second distribution center in the fourth quarter of fiscal 2019. The Company opened one new store in the fourth quarter of fiscal 2020 and did not open any stores in the fourth quarter of fiscal 2019. -
Consolidated net interest expense decreased
29.6% to$3.7 million in the fourth quarter of fiscal 2020 from$5.3 million in the fourth quarter of fiscal 2019. The decrease is primarily due to a lower principal balance on the Senior Secured Term Loan Facility combined with lower interest rates. -
The effective tax rate was
25.8% in the fourth quarter of fiscal 2020, as compared to29.7% in the fourth quarter of fiscal 2019. The decrease in the effective tax rate is primarily due to the impact of discrete items on higher pre-tax income in the fourth quarter of fiscal 2020. -
Net income increased
180.0% to$35.1 million in the fourth quarter of fiscal 2020 compared to$12.5 million in the fourth quarter of fiscal 2019. EPS in the fourth quarter of fiscal 2020 was$0.69 compared to$0.26 in the fourth quarter of fiscal 2019. Adjusted net income* was$35.7 million , or$0.71 per diluted share, in the fourth quarter of fiscal 2020 compared to adjusted net income* of$12.5 million , or$0.26 per diluted share in the fourth quarter of fiscal 2019. -
Adjusted EBITDA* increased
66.7% to$59.5 million in the fourth quarter of fiscal 2020 compared to$35.7 million in the fourth quarter of fiscal 2019, driven by higher consolidated net sales and a 480 basis point improvement in SG&A as a percentage of consolidated net sales as well as consolidated gross margin increase of 30 basis points.
For the year (fifty-three weeks) ended April 3, 2021:
-
Consolidated net sales were
$990.1 million , up8.1% as compared to fiscal 2019. Net sales at TCS were$923.1 million , up8.3% , with other product categories up10.4% , contributing 550 basis points of the increase, and Custom Closets up5.9% contributing 280 points to the increase. Our online sales increased109.5% compared to fiscal 2019. Elfa third-party net sales were$67.0 million , up5.3% compared to fiscal 2019; however, excluding the impact of foreign currency translation, Elfa third-party net sales were down2.2% . TCS and Elfa net sales were negatively impacted by COVID-19 during the first quarter of fiscal 2020. As a result of the impact of the COVID-19 pandemic on our Company’s stores and the Company’s policy of excluding extended store closures from its comparable sales calculation, the Company does not believe that comparable store sales is a meaningful metric to present for fiscal 2020. -
Consolidated gross margin was
57.6% , a decrease of 60 basis points compared to fiscal 2019. TCS gross margin decreased 130 basis points to56.1% , primarily due to increased shipping costs as a result of a higher mix of online sales, partially offset by a favorable mix of higher margin product and service sales. Elfa gross margin increased 310 basis points primarily due to lower direct material costs, favorable customer and product sales mix and production efficiencies. -
Consolidated SG&A decreased by
3.1% to$426.8 million from$440.4 million in fiscal 2019. SG&A as a percentage of net sales decreased 500 basis points. The decrease was primarily due to reduced spending in payroll and marketing, combined with leverage on occupancy costs due to higher sales in fiscal 2020. -
Stock-based compensation increased to
$7.8 million in fiscal 2020 from$3.1 million in fiscal 2019. The increase was primarily due to liability accounting for a portion of performance awards that were significantly impacted by increases in our stock price during fiscal 2020 combined with the acceleration of expense for awards made to certain executives under employment agreements whose service periods expired in the fourth quarter of fiscal 2020. The increase was also impacted by fiscal 2020 performance awards that were achieved at the maximum level. -
Pre-opening costs declined to
$1.0 million in fiscal 2020 from$8.2 million in fiscal 2019 primarily due to$7.2 million of net costs associated with the opening of the second distribution center in fiscal 2019. The Company opened one new store in fiscal 2020 as compared to opening two new stores, including one relocation, in fiscal 2019. -
Other expenses increased to
$1.1 million in fiscal 2020 due to severance costs associated with the reduction in workforce as a result of the COVID-19 pandemic, as compared to$0.4 million for charges primarily related to the closure of Elfa France operations in fiscal 2019. -
Consolidated net interest expense decreased
19.8% to$17.3 million in fiscal 2020 from$21.5 million in fiscal 2019. The decrease is primarily due to lower interest rates combined with a lower principal balance on the Senior Secured Term Loan Facility. In the third quarter of fiscal 2020, the Company amended its Senior Secured Term Loan Facility and incurred a loss on extinguishment of debt of$0.9 million . -
The effective tax rate was
27.9% in fiscal 2020, as compared to31.7% in fiscal 2019. The decrease in the effective tax rate is primarily due to the impact of discrete items on higher pre-tax income in fiscal 2020. -
Net income increased
302.3% to$58.3 million in fiscal 2020 compared to$14.5 million in fiscal 2019. EPS in fiscal 2020 was$1.17 compared to$0.30 in fiscal 2019. Adjusted net income* was$61.8 million , or$1.24 per diluted share, in fiscal 2020 compared to adjusted net income* of$14.8 million , or$0.30 per diluted share in fiscal 2019. -
Adjusted EBITDA* increased
65.7% to$150.5 million in fiscal 2020 compared to$90.8 million in fiscal 2019.
53rd Week Impact
The Company’s fiscal fourth quarter consolidated sales of
Outlook
The Company currently expects first quarter of fiscal 2021 consolidated sales growth of approximately
Balance sheet and liquidity highlights:
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(In thousands) |
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April 3, 2021 |
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March 28, 2020 |
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Cash |
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$ |
17,687 |
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$ |
67,755 |
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Total debt, net of deferred financing costs |
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$ |
165,984 |
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$ |
333,487 |
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Liquidity (1) |
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$ |
126,771 |
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$ |
96,421 |
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Free cash flow (2) |
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$ |
121,111 |
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$ |
(2,871 |
) |
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(1) |
Cash plus availability on revolving credit facilities. |
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(2) |
See Reconciliation of GAAP to Non-GAAP Financial Measures table. |
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Conference Call Information
A conference call to discuss fourth quarter fiscal 2020 financial results is scheduled for today, May 18, 2021, at 4:30 PM Eastern Time. Investors and analysts interested in participating in the call are invited to dial (877) 407-3982 (international callers please dial (201) 493-6780) approximately 10 minutes prior to the start of the call. A live audio webcast of the conference call will be available online at investor.containerstore.com.
A taped replay of the conference call will be available within two hours of the conclusion of the call and can be accessed both online and by dialing (844) 512-2921 (international callers please dial (412) 317-6671). The pin number to access the telephone replay is 13718355. The replay will be available until June 18, 2021.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our future opportunities; our goals, strategies, priorities and initiatives; sales trends and momentum; and our anticipated financial performance.
These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the COVID-19 pandemic and the associated impact on our business, results of operations and financial condition; our ability to continue to lease space on favorable terms; costs and risks relating to new store openings; quarterly and seasonal fluctuations in our operating results; cost increases that are beyond our control; our inability to protect our brand; our failure or inability to protect our intellectual property rights; overall decline in the health of the economy, consumer spending, and the housing market; our inability to source and market new products to meet consumer preferences; failure to successfully anticipate consumer preferences and demand; competition from other stores and internet-based competition; vendors may sell similar or identical products to our competitors; our and our vendors’ vulnerability to natural disasters and other unexpected events; disruptions at our Elfa manufacturing facilities; deterioration or change in vendor relationships or events that adversely affect our vendors or their ability to obtain financing for their operations, including COVID-19; product recalls and/or product liability, as well as changes in product safety and other consumer protection laws; risks relating to operating two distribution centers; our dependence on foreign imports for our merchandise; our reliance upon independent third party transportation providers; our inability to effectively manage our online sales; effects of a security breach or cyber-attack of our website or information technology systems, including relating to our use of third-party web service providers; damage to, or interruptions in, our information systems as a result of external factors, working from home arrangements, staffing shortages and difficulties in updating our existing software or developing or implementing new software; our indebtedness may restrict our current and future operations, and we may not be able to refinance our debt on favorable terms, or at all; fluctuations in currency exchange rates; our inability to maintain sufficient levels of cash flow to meet growth expectations; our fixed lease obligations; disruptions in the global financial markets leading to difficulty in borrowing sufficient amounts of capital to finance the carrying costs of inventory to pay for capital expenditures and operating costs; changes to global markets and inability to predict future interest expenses; our reliance on key executive management; our inability to find, train and retain key personnel; labor relations difficulties; increases in health care costs and labor costs; violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery and anti-kickback laws; impairment charges and effects of changes in estimates or projections used to assess the fair value of our assets; effects of tax reform and other tax fluctuations; and significant fluctuations in the price of our common stock; substantial future sales of our common stock, or the perception that such sales may occur, which could depress the price of our common stock; risks related to being a public company; our performance meeting guidance provided to the public; anti-takeover provisions in our governing documents, which could delay or prevent a change in control; and our failure to establish and maintain effective internal controls.
These and other important factors discussed under the caption “Risk Factors” in our Annual Report on Form 10-K filed with the Securities and Exchange Commission, (the “SEC”) on June 17, 2020 and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
About The Container Store
The Container Store Group, Inc. (NYSE: TCS) is the nation’s leading retailer of storage and organization products and solutions – a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 11,000 products designed to help customers accomplish projects, maximize their space and make the most of their home. The Container Store also offers a full suite of custom closets designed to accommodate all sizes, styles and budgets.
Visit www.containerstore.com for more information about store locations, the product collection and services offered. Visit www.containerstore.com/blog for inspiration, tips and real solutions to everyday organization challenges, and www.whatwestandfor.com to learn more about the company’s unique culture.
* See Reconciliation of GAAP to Non-GAAP Financial Measures table.
The Container Store Group, Inc. |
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Consolidated statements of operations |
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Fiscal Quarter Ended |
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Fiscal Year Ended |
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(In thousands, except share and per share amounts) |
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April 3, 2021 |
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March 28, 2020 |
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April 3, 2021 |
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March 28, 2020 |
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(unaudited) |
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(unaudited) |
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Net sales |
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$ |
314,683 |
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$ |
241,344 |
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$ |
990,088 |
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$ |
915,953 |
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Cost of sales (excluding depreciation and amortization) |
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127,990 |
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98,855 |
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419,611 |
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382,488 |
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Gross profit |
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FAQ
What were the Q4 2020 financial results for TCS?
TCS reported Q4 2020 net sales of $314.7 million, up 30.4% year-over-year, with net income of $35.1 million.
How did TCS perform in FY2020?
For FY2020, TCS achieved net sales of $990.1 million, an increase of 8.1% compared to the previous fiscal year.
What is TCS's expected EPS for Q1 FY2021?
TCS expects an EPS of approximately $0.08 for Q1 FY2021.
What growth did TCS experience in online sales?
TCS experienced a 72.2% increase in online sales during the fourth quarter of FY2020.
THE CONTAINER STORE GROUP, INC.
NYSE:TCSTCS RankingsTCS Latest NewsTCS Stock Data
11.87M
2.04M
4.41%
59.36%
8%
Specialty Retail
Retail-home Furniture, Furnishings & Equipment Stores
United States of America
Coppell
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