The Container Store Group Inc (TCS) Third Quarter 2014 Earnings Call Transcript

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Matt Nemer, Wells Fargo
Okay. Then just lastly on Contained Home and TCS Closets, you mentioned the average ticket for those products, I am wondering if you would be willing to comment on the potential frequency of sales of those items that are selling one or two times per day per store. Can you put any parameters around that? Then, are the early customers for those product sets new to file or are those existing customers? Thanks.

Melissa Reiff, President, COO and Director
We are not getting real specific on for the answer to your first question, but they are both new customers and existing customers.

Jodi Taylor, CFO, The Container Store
Matt, this is Jodi. I realize I misspoke and I need to clear up something. I believe I just said that our guidance was low mid single digits. That is not what we said. I misspoke. It is low single digits.

Matt Nemer, Wells Fargo
Understood. Thanks so much.

Melissa Reiff, President, COO and Director, The Container Store
Thanks.

Operator
Thank you. Our next question comes from the line of Aram Rubinson with Wolfe Research. Please go ahead with your question.

Aram Rubinson, Wolfe Research LLC
Hey, good afternoon. Thanks for taking my question. I wanted to ask you a little bit more about the change you seem to be embracing. First of all, can you help us qualify the degree of change that you are looking under all these rocks and turning over rocks? Are we talking about a 5 degree turn of the wheel for the Company? Are we talking about a 15 degree turn of the wheel? If you can help us with that, and then I had a follow-up.

Melissa Reiff, President, COO and Director, The Container Store
It is Melissa. I do not know if it is five to 15, I do not know the answer to that. I can just tell you that, as I mentioned in my remarks, we have really looked at — picked up a lot of efficiencies in the back of house in our stores. We have refined our scheduling even more to optimize the business and to have happy employees and happy customers. We have made some great improvements with our delivery partner. We are touching 30% of our customers more often. We are working on branding opportunities to really continue to communicate to our customers the promise of an organized life.

During this elfa sale, we have done incredible follow-up in our stores with our customers. For example, during our shelving sale, we had many customers purchase spaces, and we followed back up with them to see if they would like to do another space. We have also followed up with customers who have designs in our Custom Design Center but they are not sold. We followed up with them. We have done better than ever in the 20 years I have been with the Company in training everyone in our store that you can be an elfa salesperson. Even if you are not necessarily an elfa designer in the Custom Design Center you can be an elfa salesperson and sell the concept of elfa in tag team.

That is just a few of the many, many rocks and efficiencies that we are always looking at. I do not know what the ultimate impact of all that is going to be, but I know it is going to be strong. We are also doing some more specific marketing towards the end of the elfa sale this year. As expected, I am encouraged and optimistic but those are some of the many rocks that we have turned.

Aram Rubinson, Wolfe Research LLC
One thing you did mention that I found as interesting is that opening price points are often kind of needed to make traffic happen. I did not hear in your litany of rocks that you turned over that maybe kind of doing more opening price point instead of the better-best-exceptional doing the more traditional good-better-best. Then is turning over rocks going to be a foundational principle of the firm?

Melissa Reiff, President, COO and Director, The Container Store
Okay, you will take the first?

Aram Rubinson, Wolfe Research LLC
That was a joke.

Melissa Reiff, President, COO and Director, The Container Store
I was just going to say, okay. [Laughter] I thought you were being funny on that second question. Jodi, you want to…?

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