The Container Store Group provided an update on its third-quarter fiscal 2023 outlook, including lowered sales guidance, in advance of its presentation and investor meetings at the 2024 ICR Conference.
The Container Store President and CEO Satish Malhotra said the company expects the custom business to drive growth going forward. He stated the company would look to better integrate the custom business with the traditional general merchandise assortment.
The company stated it now expects third-quarter consolidated net sales to come in at about $214 million versus prior guidance in the range of $220 million to $225 million. The Container Store continues to finalize its quarterly closing procedures but expects its profitability for the quarter to be negatively affected by the sales shortfall, the company pointed out. The Container Store will discuss its full third-quarter financial results and outlook for the fiscal 2023 fourth quarter in its next earnings call, which the company said should occur in early February.
In the update, Malhotra commented, “The challenging business trends we experienced in the second quarter continued. General merchandise categories underperformed compared to our expectations and were relatively consistent with our second quarter performance. While our Custom Spaces business showed sequential topline improvement compared to our second-quarter performance, the magnitude of improvement fell short of our expectations. We saw particular strength in our premium, wood-based Custom Spaces line, Preston.”
Malhotra added, “We continue to believe there is significant opportunity for growth in the Custom Spaces business. We remain focused on maximizing the potential of Custom Spaces as we manage the challenges in our general merchandise business. Our teams are dedicated to delivering exceptional customer experience across our channels and we are committed to positioning The Container Store for improved sales and profitability.”
At the conference, Malhotra noted, in a time when consumers were careful about discretionary spending, the holidays saw soft general merchandise sales. Going forward, he said, The Container Store plans to emphasize customer programs in its positioning but will tie in compatible general merchandise products, which range from tubs to drawer organizers to housewares and still account for 60% of sales, providing shoppers with a range of products and services that will give them the ability to readily satisfy their specific storage requirements.
The ICR Conference is an invite-only event open to institutional investors, private equity professionals, presenting companies, designated media, equity research analysts and other select organizations.