July 9 Container Store Group Inc's shares
fell as much as 15 percent after the maker of Elfa wine
racks reported a bigger-than-expected quarterly loss and cut its
full-year forecast, hit by weak spending and its refusal to
offer bigger discounts.
The storage products retailer's stock fell to $22.91 - its
lowest since the company went public in November - and at least
five brokerages cut their price target on the stock citing
falling traffic at the company's stores.
Container Store has to not only contend with U.S. consumers
shying away from spending, but also faces growing competition
from Wal-Mart Stores Inc, Bed Bath & Beyond and
premium private companies such as California Closets.
Still, Container Store did not step up its discounting in
the quarter ended May 31, despite a "surprisingly tepid" retail
environment, saying it wanted to protect its gross margins .
" ... Higher end (retail) seems to be in better shape while
home furnishings trends have been solid. Thus, TCS' negative
traffic and (comparable store sales) are at odds with this
dynamic," Morgan Stanley analysts wrote in a note.
Container Store has two division - TCS, which includes
retail stores, a website and a call center; and Elfa, a Swedish
maker of component-based shelving and drawer systems that it
acquired in 1999.
Analysts expect the company's traffic and sales to get a
boost next year from the roll out of its customer loyalty
program, in-home personal organization service and premium
The company's stock was down 8.7 percent at $24.72 in midday
trading on the New York Stock Exchange.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by