The Container Store(US:TCS)2021-08-04 01:52Financial Data and Key Metrics Changes - The company achieved consolidated net sales of $245.3 million, growing nearly 62% year-over-year and 17% compared to Q1 2019 [8][28] - Operating profit margin reached 10.8%, with adjusted EPS of $0.36, an improvement of $0.68 compared to last year [9][37] - Consolidated gross margin for Q1 was 59.6%, compared to 51.6% last year [32] Business Line Data and Key Metrics Changes - Net sales for the Container Store retail business were $228.7 million, a 64.1% increase compared to $139.4 million last year [29] - Custom Closets sales increased by 58.6% year-over-year, contributing 29.1% to the overall sales increase [29] - Other product categories saw a 69.5% increase in Q1, contributing the remaining 35% of the net sales increase [29] Market Data and Key Metrics Changes - The online channel decreased by 50.7% year-over-year, but increased by 44.1% compared to Q1 2019 [30] - Website-generated sales represented 22.5% of net sales in Q1, down from 67.5% last year [30] Company Strategy and Development Direction - The company is focusing on deepening customer relationships and expanding its reach through new product lines and store formats [18][24] - A new smaller format store was opened in Annapolis, Maryland, with plans for further expansion in 2022 [25] - The company aims to strengthen its capabilities through technology improvements, including a mobile point of sale solution [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued growth, driven by strategic initiatives and customer engagement [18][45] - The company expects Q2 consolidated sales growth of approximately 4% compared to last year, with an EPS of approximately $0.28 [40] Other Important Information - The company ended the quarter with $10.5 million in cash and $166.3 million in net debt [38] - Free cash flow used during the quarter was $3.8 million, compared to $21.7 million generated last year [39] Q&A Session Summary Question: Additional context around productivity initiatives - Management highlighted ongoing focus on driving productivity through store transformations and the introduction of greeters and specialists [49][50] Question: Anticipated cadence of unit growth - Management is actively working on expansion plans and testing smaller store formats, with a focus on a Hub and Spoke model [53] Question: Second quarter outlook regarding unearned revenue - Management clarified that not all unearned revenue would flow through in Q2, as there would be a balance carried over [57][58] Question: Gross margin leverage and promotional management - Management noted that lower promotions and a return to brick-and-mortar sales contributed to improved gross margins [61][62]