This is What Happens after PE Firms Get Through with a Retailer

At least, they didn’t blame China.
Thursday afterhours, the Container Store, former LBO queen and IPO hero with 77 stores around the country, reported third quarter ‘earnings’ – in quotes because those ‘earnings’ were a loss.
Consolidated net sales for the quarter ending November 30 rose 3.3% to $197.2 million. But cost of sales rose 5.3%. CEO Kip Tindell blamed their new ‘$75 free-shipping service.’ It’s ‘driving sales’ and is ‘absolutely a good thing, but of course it’s a headwind to gross margin,’ he said. That’s how Amazon leaves its mark.
Selling, general, and administrative expenses jumped 8.6%. ‘Disappointing,’ Tindell called it. CFO Jodi Taylor blamed the ‘complexity of our transformational TCS Closets initiative,’ plus higher payroll, healthcare, and storage expenses. Stuff happens in real life.
Stock-based compensation, pre-opening costs, and depreciation and amortization also rose. So income from operations plunged 87% to $1.8 million. And after $4.2 million in interest expense and a tax benefit of $694,000, there was a net loss of $1.7 million. It brought the net loss for the nine months to $4.3 million.
The company had lost money in fiscal 2013 and 2014 and had made a little in fiscal 2015. All hopes are resting on fiscal 2016 as the big profit year. But the company had some more news:

This post was published at Wolf Street by Wolf Richter ‘ January 8, 2016.