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Company provides update on Fiscal Q3 2020 financial performance
The Container Store Group, Inc. (NYSE:TCS) (the "Company"), today announced that Satish Malhotra, an experienced retail executive, will succeed Melissa Reiff as CEO and President on February 1, 2021. Effective March 1, 2021, Ms. Reiff will retire from the Company, while retaining her position as Chairwoman of the Board of Directors until the annual meeting of shareholders in late summer 2021.
Melissa Reiff, Chairwoman and Chief Executive Officer commented, "The Board and I have spent months preparing for my planned retirement and, after a thorough and exhaustive search, we are thrilled to announce the appointment of Satish Malhotra as our next CEO and President. Satish is a seasoned retail executive, with decades of diverse and valuable experience, who I believe will be a great fit for our organization. The timing of this leadership transition could not be better, with our company enjoying the success of the multi-year sales and profit revitalization efforts that have driven, and are expected to continue to drive our performance. We have an extraordinarily talented team that I have been privileged to lead, a unique and differentiated business and a long runway for growth ahead. I am delighted to welcome Satish and look forward to watching the continued success of The Container Store under his leadership."
Mr. Malhotra said, "I have long admired The Container Store and the leadership position they have developed in the storage and organization niche, as well as their quest for custom closet domination that I believe is well underway. The innovation, creativity and culture of the organization are truly extraordinary and I am thrilled to become a part of this and lead the company into its next chapter of growth."
Malhotra most recently served as the Chief Retail and Operating Officer for Sephora. He was one of the first executives to join Sephora in its debut to the U.S. retail landscape and, in his 21 years with the company has grown and supported the business in various leadership roles. Prior to his current role, Mr. Malhotra served as Chief Operating Officer for Sephora and was responsible for Technology, Supply Chain, Store Development, Legal, Strategy and Partnerships, including the Sephora inside JCPenney (SiJCP) business which now operates over 600 stores. He also spent several years overseeing Sephora’s expansion into Canada and Latin America. Before joining Sephora, Mr. Malhotra was a Transaction Services Senior Associate at PwC and is a Certified Public Accountant (inactive). Mr. Malhotra and his family will be relocating to Dallas, Texas.
Fiscal Third Quarter Update
Results for the fiscal third quarter 2020 are tracking well ahead of the expectations the Company shared on their October 21, 2020 fiscal second quarter 2020 earnings call. As a result, the Company currently expects fiscal third quarter 2020 sales to increase in the high teens range compared to the prior year period, with adjusted earnings per diluted share to be in the $0.35 to $0.40 range versus $0.05 in the prior year period.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this press release that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our management transition, future opportunities; our goals, strategies, priorities and initiatives; sales trends and momentum and our anticipated financial performance.
These forward-looking statements are based on management’s current expectations. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, the following: the outbreak of COVID-19 and the associated impact on our business, results of operations and financial condition; our ability to continue to lease space on favorable terms; costs and risks relating to new store openings; quarterly and seasonal fluctuations in our operating results; cost increases that are beyond our control; our inability to protect our brand; our failure or inability to protect our intellectual property rights; overall decline in the health of the economy, consumer spending, and the housing market; our inability to source and market new products to meet consumer preferences; failure to successfully anticipate consumer preferences and demand; competition from other stores and internet-based competition; vendors may sell similar or identical products to our competitors; our and our vendors’ vulnerability to natural disasters and other unexpected events; disruptions at our Elfa manufacturing facilities; deterioration or change in vendor relationships or events that adversely affect our vendors or their ability to obtain financing for their operations, including COVID-19; product recalls and/or product liability, as well as changes in product safety and other consumer protection laws; risks relating to operating two distribution centers; our dependence on foreign imports for our merchandise; our reliance upon independent third party transportation providers; our inability to effectively manage our online sales; effects of a security breach or cyber-attack of our website or information technology systems, including relating to our use of third-party web service providers; damage to, or interruptions in, our information systems as a result of external factors, working from home arrangements, staffing shortages and difficulties in updating our existing software or developing or implementing new software; our indebtedness may restrict our current and future operations, and we may not be able to refinance our debt on favorable terms, or at all; fluctuations in currency exchange rates; our inability to maintain sufficient levels of cash flow to meet growth expectations; our fixed lease obligations; disruptions in the global financial markets leading to difficulty in borrowing sufficient amounts of capital to finance the carrying costs of inventory to pay for capital expenditures and operating costs; changes to global markets and inability to predict future interest expenses; our reliance on key executive management, and the impact of changes in management; employee furloughs and uncertainty about their ability to return to work; our inability to find, train and retain key personnel; labor relations difficulties; increases in health care costs and labor costs; violations of the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery and anti-kickback laws; impairment charges and effects of changes in estimates or projections used to assess the fair value of our assets; effects of tax reform and other tax fluctuations; and significant fluctuations in the price of our common stock; substantial future sales of our common stock, or the perception that such sales may occur, which could depress the price of our common stock; risks related to being a public company; our performance meeting guidance provided to the public; anti-takeover provisions in our governing documents, which could delay or prevent a change in control; and our failure to establish and maintain effective internal controls.
These and other important factors discussed under the caption "Risk Factors" in our Annual Report on Form 10‑K filed with the Securities and Exchange Commission, (the "SEC") on June 17, 2020 and our other reports filed with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements made in this press release. Any such forward-looking statements represent management’s estimates as of the date of this press release. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change. These forward-looking statements should not be relied upon as representing our views as of any date subsequent to the date of this press release.
About The Container Store
The Container Store Group, Inc. (NYSE:TCS) is the nation’s leading retailer of storage and organization products and solutions – a concept they originated in 1978. Today, with locations nationwide, the retailer offers more than 11,000 products designed to help customers accomplish projects, maximize their space and make the most of their home. The Container Store also offers a full suite of custom closets designed to accommodate all sizes, styles and budgets.
Visit www.containerstore.com for more information about store locations, the product collection and services offered. Visit www.containerstore.com/blog for inspiration, tips and real solutions to everyday organization challenges, and www.whatwestandfor.com to learn more about the company’s unique culture.
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Farah Soi/Caitlin Churchill
The Container Store Group, Inc.
Felipe Avila, 972-538-6674