That was the message sent by Goldman Sachs analysts in a Wednesday report obtained by Real Money. The report sent shares of the Dallas-based specialty retailer into a tailspin. Goldman analysts also cut their price target on the firm's stock by $2 to $5.50.
Shares of The Container Store, a member of Real Money'sStressed Out watch list, swooned as much as 9% in midday trading to $4.87.
Goldman analysts continue to maintain a neutral rating on the stock. About 40% of the company's market cap has disappeared so far in 2016, highlighting investor concerns over the highly levered retailer, which booked about $338 million of debt in its most recent quarter vs. just $66 million of trailing 12-month earnings before interest, taxes, depreciation and amortization, a standard valuation metric.
"We cut our same-store-sales forecast to reflect guarded color from the company, and guarded comments from many soft-home competitors through the past number of weeks," the analysts said. "All in, we stand well below the company's full-year guidance, driven by our lower top line, with FY16 revenues of $809 million, vs. guidance of $830 to $845, as we expect pressure on same-store sales to persist, driving our estimate to -3.3% vs. guidance of -1.5% to 0.5%."
The analysts added that leverage continues to appear "quite elevated," at about 6.8x, adjusted for rent.
Editor's Note: This article was originally published on Real Money at 1:15 p.m. on Oct. 12.
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