(Adds details, updates shares)
July 9 Container Store Group Inc's shares
fell as much as 15 percent after the maker of Elfa
shelving systems reported a bigger-than-expected quarterly loss
and cut its full-year forecast, hit by weak consumer spending
and its decision not to offer more 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 targets on the stock, citing
falling traffic at the company's stores.
Even as U.S. consumers shy away from spending, Container
Store faces growing competition from Wal-Mart Stores Inc
, Bed Bath & Beyond and premium private
companies such as California Closets.
Stagnant wage growth and weak economy have pushed retailers
to discount more. Bed Bath & Beyond increased promotions and
deals in the first quarter while Wal-Mart has been lowering
prices to lure more customers to its stores.
Still, Container Store did not step up its discounting in
the quarter ended May 31, despite an "incredibly promotional
consumer environment", saying it wanted to protect its gross
"Consistent with so many of our fellow retailers, we are
experiencing a retail 'funk'," Chief Executive Kip Tindell said.
Container Store has two divisions - 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.
"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.
Analysts, however, expect the company's traffic and sales to
get a boost next year from the rollout of its customer loyalty
program, in-home personal organization service and premium
The company's stock was down 10 percent at $24.33 in midday
trading on the New York Stock Exchange.
(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by