Container Store surges 35% as earnings paired with layoffs and restructuring
The Container Store Group Inc. stock rocketed more than 20% higher Tuesday afternoon after the retail chain revealed a massive earnings beat and a restructuring plan that will include layoffs. The Container Store said it had net income of $8.4 million, or 17 cents a share, on sales of $221 million for the fiscal fourth quarter. Analysts on average expected earnings of 9 cents a share on sales of $213 million, according to FactSet. The company, which has struggled mightily on Wall Street this year, said that it would go ahead with a four-part "optimization" plan that includes "sales initiatives, certain full-time position eliminations at TCS, organizational realignment at Elfa and ongoing savings and efficiency efforts." Container Store did not disclose the number of jobs that will be eliminated in the release nor a filing with the Securities and Exchange Commission, though it said it expects "the elimination of certain full-time positions at the company's stores, corporate office and distribution center" will save $7 million in expenses while costing $2 million in severance. Overall, it expects the plan to cost $9 million to $11 million in fiscal 2017, which began April 2, while providing savings of $12 to $15 million, adding 3 cents to 5 cents to the company's per-share earnings for the year. Container Store shares, which have plunged 34.7% so far this year as the S&P 500 index has gained 6.9%, reached $5.60 in after-hours trading following a close at $4.15.
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