Container Store falls in premarket as key sales metric drops in 2nd quarter

MarketsAssociated Press

Shares of The Container Store Group Inc. are tumbling in premarket trading Tuesday as a key sales metric declined in the second quarter and it lowered its fiscal 2014 revenue guidance.

On Monday, Container Store reported that sales at stores open at least a year — a key gauge of a retailer's health — fell 0.4 percent in the second quarter.

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Analysts polled by FactSet expected a 0.3 percent rise.

Sales at stores open at least a year excludes results from locations recently opened or closed.

Container Store's quarterly adjusted profit of 11 cents per share met Wall Street's view, but revenue of $193.2 million fell short of the $199.1 million that analysts expected.

Jefferies' Daniel Binder said in a client note that he believes Container Store's sales were hampered by increased competition online and in its rival's stores. The analyst lowered the retailer's price target to $20 from $24 and kept a "Hold" rating.

Going forward, the company now foresees full-year revenue in a range of $800 million to $810 million. Previously it predicted revenue between $820 million and $830 million. Container Store expects an adjusted profit of 41 cents to 46 cents per share.

Analysts are looking for a fiscal 2014 profit of 50 cents per share on revenue of $822 million.

The chain now expects third-quarter sales at stores open at least a year to be flat to down low single digits. Its prior outlook was for the metric to be flat to slightly positive.

For the fourth quarter, Container Store now anticipates sales at stores open at least a year increasing in the low to mid-single digit range. The company's previous forecast was for an increase in the mid-single digit range.

Container Store's stock dropped $3.23, or 14.8 percent, to $18.66 in premarket trading shortly before the market open.