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The Container Store Group's (TCS) CEO Kip Tindell on Q4 2015 Results - Earnings Call Transcript

Q4 2015 Earnings Conference Call

April 25, 2016 05:00 PM ET

Executives

Anne Rakunas - Investor Relations

Kip Tindell - Chairman and CEO

Melissa Reiff - President and COO

Jodi Taylor - CFO

Analysts

Seth Sigman - Credit Suisse

Chris Horvers - JPMorgan

Steven Forbes - Guggenheim Securities

Matthew Fassler - Goldman Sachs

Daniel Binder - Jefferies & Company

Denise Chai - Bank of America Merrill Lynch

Anne Rakunas

Good afternoon everyone and thanks for joining us today for a pre-recording of management remarks pertaining to The Container Store’s Fourth Quarter and Fiscal 2015 Earnings Results.

Speaking today are Kip Tindell, Chairman and Chief Executive Officer, Melissa Reiff, President and Chief Operating Officer, and Jodi Taylor, Chief Financial Officer. In addition to posting a press release with our Fourth Quarter and Fiscal Year 2015 results to our Web site, we have posted a written transcript of management’s prepared remarks on our Web site as well. A live Q&A session will follow today at 5pm Eastern time, and a replay of the Q&A session can be accessed at containerstore.com later this evening.

Before we begin, I need to remind you that certain comments made during this recording may constitute forward-looking statements and are made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from such statements. Those are referred to in The Container Store’s press release issued today. The forward-looking statements made today are as of the date of this call and The Container Store does not undergo any obligation to update their forward-looking statements.

Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation schedule showing the GAAP versus the non-GAAP financial measures is available in The Container Store’s press release issued today. If you do not have a copy of today’s press release, you may obtain one by visiting the Investor Relations page of the Web site at containerstore.com.

And with that, I’ll turn the call over to Kip. Kip?

Kip Tindell

Hello. Thanks to all of you for joining us for our pre-recorded remarks on The Container Store’s fourth quarter and 2015 fiscal year, prior to our live Q&A. Fiscal 2015, an investment year for The Container Store, was met with both success, and challenge.

I’m proud of what we accomplished this year, with a key callout being on our on-time rollout of the single biggest and most innovative initiative in our Company’s history, TCS Closets. We also conducted an exhaustive analysis of our cost structure, which is expected to drive substantial SG&A savings in fiscal 2016.

With the heavy lifting we did in fiscal 2015, we believe we’ve strategically positioned our Company to succeed long-term amidst an evolving retail landscape. Now, specific to the fourth quarter: We exceeded our stated expectations on total consolidated fourth quarter sales and delivered earnings in line with our previously provided outlook.

From a comp store sales standpoint, we performed much better than we projected for the fourth quarter ending up 0.2% comp store sales versus stated guidance of down 3% to down 5%, marking the third consecutive quarter of positive comp store sales.

Importantly, we saw improved and positive comp store sales across non-TCS Closets and non-Elfa areas of the store during the last two months of the fiscal year for the first time since the fourth quarter of 2014.

Our TCS Closets initiative was again a key driver of fourth quarter performance, providing a 140 basis point lift to overall comp store sales. Specifically, consolidated net sales for the fourth quarter of fiscal 2015 were $232.1 million, up 3.5% compared to the fourth quarter of fiscal 2014, after converting the Elfa International AB portion of consolidated net sales from Swedish krona to U.S. dollars.