NEW YORK (Real Money) -- Overstored, overstored and overstored. That's what we are discovering about retail this winter, and the hits just keep coming with today's twin downgrades of The Container Store (TCS) from Stifel Nicolaus and Merrill Lynch.
The Container Store came out of the chute with high hopes, in part because the "smart set" likes to shop there. Container Store's bloodlines make it feel like Costco (COST) meets Starbucks (SBUX) -- and then merged with Whole Foods (WFM), as one of the company's major claims to fame is its treatment of associates. The company is considered one of the better places to work. On Valentine's Day, Container Store set up an emergency fund for its employees to help them through disasters and serious medical issues.
This stock came public at $18 and immediately more than doubled, and then proceeded to trade up to $47. But it's been downhill ever since that November floatation.
Part of the problem is that TCS came out when housing sales were still strong and the higher U.S. Treasury interest rates had not yet impacted the numbers. But more important, it came out before the polar vortex. This harsh winter has cut into the company's sales all over the nation, but especially in the warmer climes like Texas, where TCS has a huge number of stores relative to its entire store base.
But the bigger issue remains that any retailer attempting to expand right now -- and this is one of them -- is hard-pressed for traffic. We don't have enough shoppers going out, and when you look at the Amazon (AMZN)-like overlap it's not pretty.