The Container Store(US:TCS)2024-02-07 12:36Financial Performance - Net sales for the thirteen weeks ended December 30, 2023, were $214.9 million, a decrease of 14.8% compared to $252.2 million for the same period in 2022[88]. - Gross profit for the thirty-nine weeks ended December 30, 2023, was $366.4 million, down 18.1% from $448.0 million in the prior year[88]. - The company reported a net loss of $6.4 million for the thirteen weeks ended December 30, 2023, compared to a net income of $4.2 million for the same period in 2022[88]. - Adjusted EBITDA for the thirteen weeks ended December 30, 2023, was $12.8 million, down from $22.2 million in the same period of 2022[94]. - Net sales for the thirty-nine weeks ended December 30, 2023 decreased by $145,800, or 18.5%, totaling $641,742[109]. - TCS net sales decreased by $36,786, or 15.4%, with comparable store sales down 16.8%, including a 26.3% decrease in online sales[100]. - Gross profit for the thirteen weeks ended December 30, 2023 decreased by $18,224, or 12.7%, while consolidated gross margin increased to 58.3% from 56.9%[101]. Expenses and Costs - Selling, general, and administrative expenses for the thirty-nine weeks ended December 30, 2023, were $332.5 million, a decrease of 8.2% from $362.1 million in the same period of 2022[88]. - Selling, general, and administrative expenses (excluding depreciation and amortization) increased to 52.0% of net sales from 48.2% year-over-year, reflecting higher operational costs[89]. - The company incurred impairment charges of $23.4 million for the thirty-nine weeks ended December 30, 2023, which were not present in the prior year[88]. - A non-cash goodwill impairment charge of $23,447 was recorded in the thirty-nine weeks ended December 30, 2023, compared to zero in the same period of 2022[114]. - Interest expense for the thirty-nine weeks ended December 30, 2023, increased to $15.4 million from $11.4 million in the previous year, reflecting a rise of 35.5%[88]. Store Operations - The company operates 100 stores as of December 30, 2023, with an average size of approximately 24,000 square feet[83]. - The number of stores at the end of the period remained stable at 100, unchanged from the previous year[89]. - The company opened two new stores during the third fiscal quarter of 2023 and plans to open two additional small format stores and four new stores in fiscal 2024[123]. Cash Flow and Capital Expenditures - Net cash provided by operating activities was $26,673 for the thirty-nine weeks ended December 30, 2023, compared to $18,856 for the same period in 2022[126]. - Total capital expenditures for the thirty-nine weeks ended December 30, 2023 were $33,376, with $16,700 allocated for store investments and $12,078 for technology[132]. - The company generated negative free cash flow of $6,703 for the thirty-nine weeks ended December 30, 2023, an improvement from negative free cash flow of $27,702 in the prior year[140]. - The company expects total capital expenditures to be in the range of $40,000 to $45,000 for technology infrastructure and new store development in fiscal 2023[121]. Debt and Credit Facilities - As of December 30, 2023, the company had $75,980 of unused borrowing availability under the Revolving Credit Facility[125]. - The aggregate principal amount in outstanding borrowings under the Senior Secured Term Loan Facility was $160,185 as of December 30, 2023[142]. - The aggregate principal amount of the Revolving Credit Facility is $100,000, with borrowings accruing interest at 1.25% plus SOFR[146]. - The Revolving Credit Facility allows for swing line advances of up to $15,000 and the issuance of letters of credit of up to $40,000[147]. - As of December 30, 2023, the company was in compliance with all covenants under the Revolving Credit Facility, with no Event of Default occurring[150]. Future Strategies - Future strategies include focusing on market expansion and new product development to enhance overall performance and mitigate losses[91].