Q4 2023 The Container Store Group Inc Earnings Call
Greetings welcome to the container stores fourth quarter and full year fiscal 2023 earnings call.
Operator: Greetings. Welcome to Container Store's fourth quarter and full year fiscal 2023 earnings call. At this time, all participants are in listen-only mode. The question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Caitlin Churchill with Investor Relations. Caitlin, you may now begin your presentation.
At this time, all participants are in listen only mode.
And answer session will follow the formal presentation.
If anyone today should require operator assistance during the conference. Please press star zero from your telephone keypad.
Please note this conference is being recorded.
At this time I'll now turn the conference over to Caitlin Churchill with Investor Relations.
Caitlin Churchill: You may now begin your presentation.
Caitlin Churchill: Good morning, everyone and thanks for joining us today for the container stores fourth quarter and full year fiscal 2023 earnings results conference call.
Caitlin Churchill: Good morning, everyone, and thanks for joining us today for the Container Store's fourth quarter and full year fiscal 2023 earnings results conference call. Speaking today are Satish Malhotra, Chief Executive Officer, and Jeff Miller, Chief Financial Officer. After Satish and Jeff have made their formal remarks, we will open the call to questions.
Caitlin Churchill: Speaking today are the teach the ultra Chief Executive Officer, and Jeff Miller, Chief Financial Officer.
Caitlin Churchill: After expertise and Jeff have made their formal remarks, we will open the call to questions.
Caitlin Churchill: Before we begin, I would like to remind everyone that certain matters discussed in today's conference call are forward-looking statements relating to future events, management's plans and objectives for the business, and the future financial performance of the company that are subject to risks and uncertainties. The actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are referred to in the Container Store's press release issued today and in our annual report on Form 10-K, filed with the SEC on May 26, 2023, as updated by our quarterly report on Form 10-Q, and other public filings with the U.S. Securities and Exchange Commission.
Before we begin I would like to remind everyone that certain matters discussed in today's conference call are forward.
Caitlin Churchill: Looking statements relating to future events mentioned plans or objectives for the business and the future financial performance of the company that are subject to risks and uncertainties.
Caitlin Churchill: Actual results could differ materially from those anticipated in these forward looking statements.
Caitlin Churchill: The risk factors that may affect results are referred to in the container store's press release issued today and in our annual report on Form 10-K filed with the FCC on May 26 2023.
Caitlin Churchill: Updated.
Caitlin Churchill: By our quarterly reports on Form 10-Q.
Caitlin Churchill: Other public filings with the U S Securities.
Caitlin Churchill: The Securities and Exchange Commission.
Caitlin Churchill: The forward-looking statements made today are as of the date of this call, and the Container Store does not undertake any obligation to update the forward-looking statement. Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call. A reconciliation schedule of the non-GAAP financial measures to the most directly comparable GAAP measures is also available in the Container Store's press release issued today. A copy of today's press release and investor deck may be obtained by visiting the Investor Relations page of the website at www.containerstore.com. I will now turn the call over to Satish.
Caitlin Churchill: The forward looking statements made today are as of the date of this call and the container store does not undertake any obligation to update the forward looking statements.
Caitlin Churchill: Finally, the speakers may refer to certain adjusted or non-GAAP financial measures on this call.
Caitlin Churchill: A reconciliation schedule of the non-GAAP financial measure to the most directly comparable GAAP measures is also available in the container struck press release issued today.
Caitlin Churchill: A copy of today's press release, and Investor deck may be obtained by visiting the Investor Relations page the website.
Caitlin Churchill: Www dot container store dot com.
Teach: I will now turn the call of participation to teach.
Satish Malhotra: Thanks, Caitlin, and thank you all for joining us. I'll begin today's discussion by addressing two company announcements made this morning, followed by a review of our fourth quarter and full year performance. Jeff will then discuss the details of our fourth quarter financial results before we open up the call to questions. First, we reported receiving a notice from the New York Stock Exchange regarding noncompliance with their trading share price listing rule.
Teach: Thanks, Caitlin and thank you all for joining us.
Teach: I'll begin today's discussion by addressing two company announcements made this morning, followed by a review of our fourth quarter and full year performance.
Teach: Jeff will then discuss the details of our fourth quarter financial results.
Speaker Change: Before we open up the call to questions.
Speaker Change: First we reported receiving a notice from the New York stock exchange regarding noncompliance with their trading share price listing rule.
Satish Malhotra: We intend to consider available options to cure this deficiency and Restore Compliance, including a reverse stock split, subject to stockholder approval, no later than our next annual meeting late this summer. Second, in our fiscal 2023 press release, we announced today that our board has initiated a formal review process to evaluate strategic alternatives for the company in an effort to ensure we are maximizing both the potential of the business and returns for shareholders.
Speaker Change: We intend to consider available options secured.
Speaker Change: Patiency.
Speaker Change: And restore compliance, including a reverse stock split.
Speaker Change: Subject to stockholder approval no later than our next annual meeting late this summer.
Speaker Change: Second in our fiscal 2023 press release.
Speaker Change: Today that our board has initiated a formal review process to evaluate strategic alternatives for the company and then asset to ensure we are maximizing both the potential of the business and returns for shareholders.
Satish Malhotra: The company's board of directors, along with the management team, do not believe the company's current market value is reflective of its intrinsic value and are committed to acting in the best interest of the company and its stockholders. The company is being advised by J.P. Morgan and Latham & Watkins, LLP. As the board evaluates potential strategic alternatives, we are suspending financial guidance. We will not be answering any questions related to these announcements at the end of the call. All available public information can be found in the press releases that were distributed this morning.
Speaker Change: The company's board of directors, along with the management team do not believe the company's current market value is reflective of its intrinsic value and are committed to acting in the best interests of the company and its stockholders.
Speaker Change: The company is being advised by J P. Morgan.
Speaker Change: And Watkins LLP.
Speaker Change: As the board evaluates potential strategic alternatives, we are suspending financial guidance.
Speaker Change: We will not be answering any questions related to these announcements at the end of the call all of the available public information can be found in the press releases that were distributed this morning.
Speaker Change: We do not intend to comment further regarding the strategic review process until disclosure is the turbine necessary or advisable.
Satish Malhotra: We do not intend to comment further regarding the strategic review process until disclosure is determined necessary or advisable. Now, turning to our fourth quarter and full fiscal 2023 results. We ended the fourth quarter with a 21.8% comp sales decline as customers continued to contend with the macroeconomic pressures affecting their consideration of spend in the home improvement and organization categories. The challenges in general merchandise remained elevated, contributing to the majority of the sales decline.
Speaker Change: Now turning to our fourth quarter and full fiscal 2023 results.
Satish Malhotra: However, we saw relative strength in custom spaces, particularly in our premium lines, and remain encouraged by the slightly positive comp our premium lines delivered in Q4. We closed the year with $6.9 million in positive free cash flow. This past year, we navigated headwinds, which pressured both sales and profitability. However, we still made important progress in positioning the container store for long-term success through executing our strategic initiatives of deepening our relationship with customers, expanding our reach, and strengthening our capabilities.
Speaker Change: We ended the fourth quarter with a 21, 8% comp sales decline.
Speaker Change: Customers continue to contend with the macro economic pressures affecting the consideration of spend and the home improvement and organization categories.
Speaker Change: The challenge is in general merchandise remained elevated contributing to the majority of the sales decline.
Speaker Change: However, we saw relative strength in cotton.
Speaker Change: Spaces, particularly without premium lines and remain encouraged by the slightly positive comp our premium lines delivered in Q4.
Speaker Change: We closed the year with $6 9 million in positive free cash flow.
Speaker Change: This past year, we navigated headwinds, which pressured both sales and profitability.
Speaker Change: However, we still made important progress in positioning the container store for long term success through executing our strategic initiatives of deepening our relationship with customers expanding our reach and strengthening our capabilities.
Satish Malhotra: In addition, we were extremely disciplined on the cost front, exercising tight expense control and taking difficult but necessary actions to reduce overhead costs against a declining sales trend. We asked for tremendous support from our teams this past year, and I'd like to thank each and every team member for their many contributions toward furthering our goal.
Speaker Change: In addition, we were extremely disciplined on the cost front.
Speaker Change: Exercising tight expense control and taking difficult, but necessary actions to reduce overhead costs against a declining sales trends.
Speaker Change: We asked for tremendous support from our teams this past year.
Speaker Change: And I'd like to thank each and every team member for their many contributions towards furthering our goals.
Satish Malhotra: I'd also like to thank our incredible vendor partners for their unwavering support and commitment to our partnership. Together, we are ensuring that the container store is poised to capitalize on the significant opportunities during a more normalized backdrop. I also want to emphasize that the consumer need for the container store and the comprehensive solution-oriented offerings we provide remain strong. In a recent survey we conducted of 2,000 homeowners in the United States,
Speaker Change: I'd also like to thank our incredible vendor partners for their unwavering support and commitment to our partnership.
Speaker Change: Together, we are ensuring that the container stories poised to capitalize on the significant opportunities during a more normalized backdrop.
Speaker Change: I also want to emphasize that the consumer need for it.
Speaker Change: The container store and the comprehensive solution oriented offerings, we provide remained strong.
In a recent survey we conducted a 2000 homeowners in the United States.
Satish Malhotra: Forty percent shared that they are afraid of facing the clutter in their homes, and more than 70% feel overwhelmed when their homes are untidy. We are uniquely equipped with the expertise, solutions, and services to solve the challenges these potential customers have across all areas of the home. With this in mind, we made significant progress towards helping our customers realize the many benefits of living an organized life. Highlights from the past fiscal year include, first, enhancing our custom spaces offering to give customers more solutions for their homes with innovative additions like integrated European lighting, new on-trend finishes, and mesh door inserts to our premium wood-based Preston line, and diversifying our alpha offering with the soft launch of Garage Plus.
Speaker Change: 40% share that they are afraid of facing the cloud or in their home.
Speaker Change: More than 70% feel overwhelmed when their homes or untidy.
Speaker Change: We are uniquely equipped with the expertise solutions and services to solve the challenges these potential customers have across all areas of the home.
But this in mind, we made significant progress towards helping our customers realize the many benefits of living an organized life.
Satish Malhotra: Second, developing our in-home design service to make it convenient for customers to transform their spaces with more than 100 highly trained designers. These designers are focused on selling premium spaces and drove 87% of premium space sales for the year. Third, delivering newness and innovation across our assortment with the introduction of compelling new brands and discovery categories like Cadence, which offers original magnetic travel capsules; CalPAC, which has brought modern luggage options to our assortment; and Fortessa, known for its innovative brake-resistant bar weight.
Speaker Change: Highlights from the past fiscal year include.
Speaker Change: First enhancing our custom spaces offering to give customers more solutions for their home with innovative additions like integrated European lighting, new entre and finishes and mesh Dorian sets to our premium wood base question line.
Satish Malhotra: These new brands and categories have resonated well with customers and complement our core offerings, so customers don't have to go anywhere else to complete their spaces. Fourth, we are strengthening our internal product sourcing and development capability. This enhancement enables us to create supply chain efficiencies and supports the expansion of our Everything Organizer collection, which complements our Alpha Custom Spaces line. And lastly, expanding our accessibility through the opening of five new small format stores, including our 100th store located in Princeton, New Jersey, a milestone for our company.
Speaker Change: And diversifying alpha offering with the soft launch of garage plus.
Speaker Change: Second developing our in home design service to make it convenient for customers to transform their spaces with more than 100 highly trained designers.
Speaker Change: These designers are focused on selling premium spaces and drove 87% a premium spaces sales for the year.
Speaker Change: Good delivering newness and innovation across our assortment with the introduction of compelling new brands and discovery categories like cans, which offers the original magnetic travel capsules.
Speaker Change: Calpac, which has brought modern luggage options to our assortment and for Tessa known for its innovative break resistant barware.
Speaker Change: These new brands and categories has resonated well with customers.
Speaker Change: Complement our core offerings, so customers don't have to go anywhere else to complete their spaces.
Speaker Change: Fourth strengthening our internal product sourcing and development capabilities.
Speaker Change: This enhancement enables us to create supply chain efficiencies and support the expansion.
Speaker Change: And we think organize their collection, which complements our elfa custom spaces line.
Speaker Change: Yeah.
Speaker Change: And lastly, expanding our accessibility to the opening of five new small format stores, including our 100 store location in Princeton, New Jersey and milestone for our company.
Speaker Change: The positive progress we made on deepening our connection with our customers and expanding our reach is demonstrated by strong net promoter scores across all areas of the business, including existing and new stores custom spaces purpose and e-commerce.
Satish Malhotra: The positive progress we made on deepening our connection with our customers and expanding our reach is demonstrated by strong net promoter scores across all areas of the business, including existing and new stores, custom spaces, office, and e-commerce. In addition, we made impactful improvements to our site, and saw strength in our B2B business throughout the fiscal year. On our site, we enhance product detail pages with AI-driven content to streamline the browsing and shopping experience, resulting in a 9% increase in add-to-cart rates.
Speaker Change: In addition, we made impactful and improvements to our site and saw strength in our b to b business throughout the fiscal year.
Speaker Change: On our sites, we enhanced product detail pages with AI, driven content to streamline browsing and shopping experience, resulting in a 9% increase in AD to cockpits.
Speaker Change: And online appointment schedule feature was introduced the customer space design appointments empowering customers to book directly online.
Satish Malhotra: An online appointment scheduler feature was introduced for custom space design appointments, empowering customers to book directly online for in-home or in-store consultations or request a callback for assistance, and our online store local pages will rebound to improve local SEO performance and drive engagement with local events, leading to an almost 15 percent rise in customers reaching these pages via natural search. Additionally, Custom Spaces appointment bookings surged 275% from these new pages.
Speaker Change: Home or install consultations or request a callback for assistance.
Speaker Change: And our online store local pages will rebound to improve local SCO performance and drive engagement with local events, leading to an almost 15% rise in customers, reaching these pages via natural search.
Speaker Change: Additionally, custom spaces appointment booking so it's 275% from these new pages.
Speaker Change: And finally as it relates to <unk> business, we saw operational sales increased almost 5% over the last fiscal year.
Satish Malhotra: And finally, as it relates to our B2B business, we saw operational sales increase by almost 5% over the last fiscal year. While we have achieved significant progress against our initiative, we've also gained valuable insights during the past fiscal year that we have incorporated into our planning. For example, we found through testing different promotional durations and messaging that customers engage more when there is a sense of urgency, and we continue to implement this learning in our future promotions.
Speaker Change: While we have achieved significant progress against our initiatives. We've also gain valuable insights over the past fiscal year that we have incorporated into our planning.
Speaker Change: For example, we found through testing different promotional durations and messaging customers engage more when there was a sense of urgency and we continue to implement this learning in our future promotions.
Satish Malhotra: We also acknowledge that in today's challenging economic climate, there is increased price sensitivity with opportunities to pass savings on to our customers on certain items, as we benefit from decreased costs in raw materials and frames. While we have made steadfast improvements in our custom spaces assortment, we recognize the importance of delivering custom designs more quickly and within the budget expectations of our customers. Lastly, during a challenging year with constrained marketing budgets, we focused on immediate conversion efforts, rather than long-term brand awareness; we reduced full-funnel marketing activities, which resulted in decreased awareness about Custom Spaces, a segment that typically requires a longer consideration period. This, along with inconsistent messaging between general merchandise and custom spaces, further weakened our marketing effectiveness, with these key insights in mind.
Speaker Change: We also acknowledge that in today's challenging economic climate. There is increased price sensitivity, we see opportunities to pass savings on to our customers on certain items as we benefit from decreased cost in raw materials and freight.
Speaker Change: While we have made steadfast improvements in our custom spaces assortment, we recognize the importance of delivering custom designs more quickly.
Speaker Change: And within the budget expectations of our customers.
Speaker Change: Lastly, during a challenging year with constrained marketing budgets, we focused on immediate conversion efforts rather than long term brand awareness.
Speaker Change: We reduced full funnel marketing activities, which resulted in decreased awareness tobacco spaces business a.
Speaker Change: A segment that typically requires a longer consideration period.
Speaker Change: This along with inconsistent messaging between general merchandise and custom spaces further weekend down marketing effectiveness.
Speaker Change: With these in key insights in mind.
Satish Malhotra: The long-term market share potential within the over $20 billion home storage and organization category remains as compelling as when we first outlined our growth objective two years ago, even considering the current economic challenges. We remain committed to delivering on our long-term objectives of driving growth in custom spaces to better capitalize on the $6 billion custom spaces total addressable market, as well as stabilizing our general merchandise business. As I discussed on our last earnings calls, we still believe we can grow custom spaces from 40% of sales to 60% of sales over time by expanding our assortment, continuing to build and strengthen our in-home and in-store design services, and increasing the focus of our marketing efforts to drive brand awareness for our solution-oriented offerings.
Speaker Change: Our long term market share potential within the over 20 billion home storage and organization category.
As compelling and so when we first outlined our growth objective two years two years ago.
Speaker Change: Even considering the current economic challenges.
Speaker Change: We remain committed to delivering on our long term objectives of driving cost down.
Speaker Change: Growth in custom spaces to better capitalize on the $6 billion custom spaces total addressable market as well as stabilizing our general merchandise business.
Speaker Change: As I discussed on our last earning calls we still believe we can grow custom spaces from 40% of sales to 60% of sales over time through expanding our assortment continues to build and strengthen our in home and in store design services and increasing the focus of our marketing efforts to drive brand awareness for <unk> Solutia.
Speaker Change: <unk> oriented offerings.
Speaker Change: As it relates to custom spaces, we expect fiscal 'twenty 'twenty four to be a big year for alpha.
Satish Malhotra: As it relates to custom spaces, we expect fiscal 2024 to be a big year for Alpha. A marketing launch of Garage Plus kicked off in April, aligned with an Alpha sale campaign. And we're gearing up to the soft launch of our new Decaux Plus line, also by Alpha. Our new DecorPlus line enhances our offering with features such as fully enclosed drawers and integrated lighting, delivering exceptional value through a modular component-based system.
Speaker Change: Our marketing launch a garage plus kicked off in April aligned with an alpha sale campaign, and we're gearing up to the soft launch of our new to core plus line also by Alpha.
Speaker Change: And new to core plus line enhances our offering with features such as fully enclosed grows and integrated lighting delivering exceptional value through a modular component based system.
Speaker Change: Additionally, there is continued innovation and newness coming to a premium priced in line and we are committed to enabling our design is to drive meaningful improvements in their conversion rates, an area, where we see significant opportunity to.
Satish Malhotra: Additionally, there is continued innovation and newness coming to our premium Preston line, and we are committed to enabling our designers to drive meaningful improvements in their conversion rates, an area where we see significant opportunity. To start, we have initiated training for our designers on our centralized 3D design tool, enabling them to deliver designs to customers more quickly. We've also refined the compensation structure to better incentivize existing talent, while also attracting new designers to the container store. And we aim to increase the number of in-home designers by over 50% by the end of fiscal 2024.
Speaker Change: We have initiated training for our designers are now centralized three D design tool, enabling them to deliver designs to customers more quickly.
Speaker Change: We've also refined the compensation structure to better incentivize the existing talent, while also attracting new designers to the container store and we aim to increase the number of in home designers my older 50% by the end of it.
Speaker Change: Fiscal 2024.
Speaker Change: Yeah.
Speaker Change: Turning next to our plans for general merchandise for fiscal 2024.
Satish Malhotra: Turning next to our plans for general merchandise for fiscal 2024. As I noted, our goal is to stabilize performance in this area of the business, which has seen a greater impact from the macro environment and changes in customer spending behavior throughout fiscal 2023. The Container Store has always stood for the best selection and quality, and that will not change.
Speaker Change: Our goal is to stabilize performance in this area of the business, which has seen a greater impact from the macro environment and changes in customer spending behavior throughout fiscal 2023.
Speaker Change: The container store has always stood for the best selection and quality and that will not change.
Satish Malhotra: But we also recognize the need to have various price points across our core storage and organization assortment. To deliver this, we plan to expand our private label office and more closely collaborate with our vendor partners. By leveraging our newer product innovation and sourcing capabilities, we believe we are better positioned to effectively compete in general merchandise categories without compromising our reputation that is synonymous with quality, and also continue to provide complementary solutions that complete our custom spaces offering.
Speaker Change: But we also recognize the need to have various price points across our core storage and organization and solve it.
Speaker Change: To deliver this we plan to expand our private label offering.
Speaker Change: More closely collaborate without vendor partners.
Speaker Change: By leveraging our new product innovation and sourcing capabilities. We believe we are better positioned to effectively compete in general merchandise categories without compromising our reputation that is synonymous with quality and also continued to provide complementary solutions that complete our custom spaces offering.
Speaker Change: Connecting custom spaces in general merchandise leads me to our marketing plans.
Satish Malhotra: Connecting Custom Spaces and General Merchandise leads me to our marketing. As I mentioned earlier, we have tremendous untapped potential on the brand awareness front, especially as it relates to our custom space capabilities. Building this awareness is an important area of focus for us this year. We're excited to launch a new marketing campaign that more comprehensively and effectively showcases the transformative power of organization, highlighting why we at The Container Store are uniquely positioned to unleash it.
Speaker Change: I mentioned earlier, we have tremendous untapped potential on the brand awareness front, especially as it relates to our customer base these capabilities.
Speaker Change: This awareness is an important area of focus for us this year.
Speaker Change: We're excited to launch a new marketing campaign that more comprehensively and effectively showcases the transformative power of organization highlighting why we at the container store are uniquely positioned to unleash it.
Speaker Change: Our campaigns will focus on three key elements of our solution based offering for our organization, namely custom spaces complementary product offerings and organizational tips.
Satish Malhotra: Our campaigns will focus on three key elements of our solution-based offering for organizations, namely Custom Spaces, Complementary Product Offering, and Organizational Tips. Our MakeSpace 4 Full Funnel Marketing Campaign will focus on connecting custom spaces and general merchandise and launches this month in five key markets.
Speaker Change: Our make space for full funnel marketing campaign will focus on connecting custom spaces and general merchandise and launches this month in five key markets.
Speaker Change: As we always do we will be testing and closely measuring results to determine the best approach for expanding into other markets.
Satish Malhotra: As we always do, we will be testing and closely measuring results to determine the best approach for expanding into other markets. We've also identified opportunities in our stores to help with awareness of our custom spaces. Our Alpha line will now have permanent fixtures in the front of the store as part of our campaign feature area, which is what the customer sees first when they walk through our doors. The displays will be brought to life with complementary general merchandise rotated during each campaign and help reduce store workload since the displays themselves will remain in place year-round.
Speaker Change: We have also identified opportunities in our stores to help with awareness of our custom spaces offering.
Speaker Change: Our Alpha line will now have permanent fixtures in the front of the store as part of our campaign feature area, which is what the customer sees first when they walk through our doors.
Speaker Change: The displays will be brought to life with complementary general merchandise rotated during each campaign and help reduce store workload since the displays themselves will remain in place year round.
Speaker Change: Another component of our awareness driving efforts will include Buzzworthy partnerships to support key initiatives throughout the year. These partnerships that are designed to help us reach new customers through their audiences and we will be amplifying them through PR and our owned and operated channels as well.
Satish Malhotra: Another component of our awareness-driving efforts will include buzzworthy partnerships to support key initiatives throughout the year. These partnerships are designed to help us reach new customers through their audiences, and we will be amplifying them through PR and our own and operated channels as well. One Media partnership with Hearst is slated to go live later this month, featuring an incredible, relatable garage transformation for the editor-in-chief of Esquire magazine with a new Garage Plus line.
Speaker Change: One media partnership with Hearst is slated to go live later this month, featuring an incredible debatable garage transformation for the editor editor in Chief of Esquire magazine, with a new garage plus line.
Speaker Change: As it relates to new stores, we expect to open four new smaller format stores in fiscal 2024 in line with our previously communicated plans.
Satish Malhotra: As it relates to new stores, we expect to open four new smaller format stores in fiscal 2024, in line with our previously communicated plan. These stores will be built to suit, with design and construction meeting our specifications before we take possession, and therefore requiring less capital expenditure. In summary, as we navigate the current challenging environment with discipline, we remain laser-focused on the long-term opportunity of our business and brand. We intend to continue executing on the key initiatives that will best position us to capitalize on this long-term opportunity while maintaining strong expense and capital discipline.
These stores will be built to suit the design and construction meeting asbestos occasions, before we take possession, and therefore, requiring less capital spend.
Speaker Change: In summary, as we navigate the current challenging environment with discipline.
Speaker Change: We remain laser focused on the long term opportunity of our business and brand.
Speaker Change: We intend to continue executing on the key initiatives that will best position us to capitalize on this long term opportunity.
Speaker Change: Maintaining strong expense and capital discipline.
Speaker Change: We also continue to work with our financial partners on the future refinance of our credit facility.
Satish Malhotra: We also continue to work with our financial partners on the future refinance of our credit facility. As always, thank you for your interest in The Container Store and our great growth story. And now, I'll turn the call over to Jeff to discuss our financial results in more detail.
Speaker Change: As always thank you for your interest in the container store and a great growth story.
Speaker Change: And now I'll turn the call over to Jeff to discuss our financial results in more detail.
Speaker Change: Jeff.
Jeffrey A. Miller: Thank you <unk> good afternoon, everyone.
Jeffrey A. Miller: Thank you, Satish, and good afternoon, everyone. As Satish reviewed, our fourth quarter results saw relative strength within custom spaces while general merchandise continued to weigh on performance. In addition, we maintain disciplined expense management given the challenging top-line trend. For the fourth quarter, consolidated net sales decreased 20.7% year-over-year to $206 million, by segment. Net sales for the container store retail business were $195.3 million, a 20.4% decrease compared to $245.5 million last year.
Jeffrey A. Miller: As it takes reviewed our fourth quarter results saw relative strength within custom spaces, while general merchandise continued to weigh on performance and.
Jeffrey A. Miller: In addition, we maintain disciplined expense management, given the challenging topline trends.
Jeffrey A. Miller: The decrease is inclusive of a comp store sales decrease of 21.8%, driven primarily by the 26.7% decline in our general merchandise category, which negatively impacted comp store sales by 1,620 basis points. Custom Spaces comp store sales declined 14.2% compared to last year and negatively impacted comp store sales by 560 basis points. However, as Satish mentioned, we remain encouraged by the slightly positive comp sales our premium lines delivered in Q4.
Jeffrey A. Miller: For the fourth quarter consolidated net sales decreased 27% year over year to $206 million by.
Jeffrey A. Miller: By segment.
Jeffrey A. Miller: Net sales for the container store retail business were $195 3, million% to 24% decrease compared to $245 5 million last year.
Jeffrey A. Miller: The decrease is inclusive of a comp store sales decrease of 21, 8%.
Jeffrey A. Miller: Driven primarily by the 26, 7% decline in our general merchandise categories, which negatively impacted comp store sales by 620 basis points.
Jeffrey A. Miller: Custom spaces comp store sales declined 14, 2% compared to last year and negatively impacted comp store sales by 560 basis points.
Jeffrey A. Miller: However, as <unk> mentioned, we remain encouraged by the slightly positive comp sales are premium lines delivered in Q4.
Jeffrey A. Miller: Sales from new stores benefited total TCS net sales by 140 basis points. For the fourth quarter of fiscal 2023, our online channel decreased 30.8% year over year, and our website generated sales, which includes curbside pickup, decreased 24.5% compared to last year. Website generated sales represented a total of 22.8% of TCS net sales in Q4, which is slightly lower than Q4 last year. Unearned revenue decreased to $14.4 million in Q4 this year versus $15.7 million last year, which is reflective of the decline in overall sales.
Jeffrey A. Miller: Sales from new stores benefited total Tcs net sales by 140 basis points.
Jeffrey A. Miller: For the fourth quarter fiscal 2023, our online channel decreased 38% year over year, and our website generated sales, which includes curbside pickup decreased 24, 5% compared to last year.
Jeffrey A. Miller: Website generated sales represented a total of 22, 8% of Tcs net sales in Q4, which is slightly lower than Q4 last year.
Jeffrey A. Miller: Unearned revenue decreased to $14 4 million in Q4, this year versus $15 7 million last year, which is reflective of the decline in overall sales.
Jeffrey A. Miller: Elfa third party net sales up $10 7 million decreased 24, 6% compared to the fourth quarter of fiscal 2022, excluding.
Jeffrey A. Miller: Alpha third-party net sales of $10.7 million decreased 24.6% compared to the fourth quarter of fiscal 2022. Excluding the impact of foreign currency translation, Alpha third-party net sales decreased 25.3% year over year, primarily due to a decline in sales in Nordic markets. From a profitability standpoint, our consolidated gross margin for Q4 increased 50 basis points to 59.4% compared to 58.9% last year. The 50 basis point increase in gross margin was primarily driven by a higher mix of custom space sales this year, by segment.
Jeffrey A. Miller: Excluding the impact of foreign currency translation Elfa third party net sales decreased 25, 3% year over year, primarily due to better client.
Jeffrey A. Miller: Client and sales and Nordic markets.
Jeffrey A. Miller: From a profitability standpoint, our consolidated gross margin for Q4 increased 50 basis points to 59, 4% compared to 58, 9% last year. The 50 basis point increase in gross margin was primarily driven by a higher mix of custom space sales this year.
Jeffrey A. Miller: By segment.
Jeffrey A. Miller: TCS gross margin increased 60 basis points compared to last year, primarily due to freight tailwinds, which were partially offset by product and service mix headwinds driven by general merchandise, as well as the impact from increased promotional activity in Q4 of this year. Alpha gross margin decreased 980 basis points compared to last year, primarily due to unfavorable NICs partially offset by price increases to customers. Consolidated SG&A dollars decreased $17.3 million, or 13.9%, to $107 million, compared to $124.3 million in Q4 last year, which reflects the impact of cost management actions taken this year, including our most recent actions in the fourth quarter.
Jeffrey A. Miller: Tcs gross margin increased 60 basis points compared to last year, primarily due to freight tailwind, which were partially offset by product and service mix headwinds driven by general merchandise as well as the impact from increased promotional activity in Q4 of this year.
Jeffrey A. Miller: Elfa gross margin decreased 980 basis points compared to last year, primarily due to unfavorable mix, partially offset by price increases to customers.
Jeffrey A. Miller: Consolidated SG&A dollars decreased $17 3 million or 13, 9% to $107 million compared to $124 3 million in Q4 last year, which reflects the impact of cost management actions, taking this year, including our most recent actions in the fourth quarter.
Jeffrey A. Miller: As a percentage of net sales SG&A increased 400 basis points year over year to 51, 9%. The increase is primarily due to deleverage of fixed cost associated with lower sales in the fourth quarter of fiscal 2023.
Jeffrey A. Miller: As a percentage of net sales, SG&A increased 400 basis points year-over-year to 51.9%. The increase is primarily due to deleverage of fixed costs associated with lower sales in the fourth quarter of fiscal 2023. In the fourth quarter, we conducted an annual impairment test of our trade names balance as of January 1, 2024 and an interim assessment as of March 30, 2024 due to indicators identified during the fourth quarter of fiscal 2023, which resulted in a $63.8 million non-cash impairment of the TCS trade name and a $10.1 million non-cash impairment of the Alpha trade name.
Jeffrey A. Miller: In the fourth quarter, we conducted an annual impairment test of our trade names balance as of January one 2024, and an interim assessment as of March 30 of 2024 due to indicators identified during the fourth quarter of fiscal 2023, which resulted in a $63 8 million noncash impairment of the <unk>.
Jeffrey A. Miller: S trade name and a $10 1 million noncash impairment of the Alpha trade name.
Jeffrey A. Miller: Also in the fourth quarter, we recorded $4 8 million of other expenses of which $3 1 million is related to a previously disclosed legal settlement and.
Jeffrey A. Miller: Also, in the fourth quarter, we recorded $4.8 million of other expenses, of which $3.1 million is related to a previously disclosed legal settlement and related legal fees, and $1.7 million is severance expense associated with a reduction in force. Our net interest expense in the fourth quarter of fiscal 2023 increased to $5.3 million compared to $4.8 million last year. The year-over-year increase is primarily due to higher year-over-year interest rates on our term loan during Q4, as well as higher borrowings on our revolving credit facility.
Jeffrey A. Miller: And related legal fees and $1 7 million of severance expense associated with a reduction in force.
Jeffrey A. Miller: Our net interest expense in the fourth quarter of fiscal 2023 increased to $5 3 million compared to $4 8 million last year.
Jeffrey A. Miller: The year over year increase is primarily due to higher year over year interest rates on our term loan during Q4 as well as higher borrowings on our revolving credit facility.
Jeffrey A. Miller: The effective tax rate for the quarter was 25, 3% compared to a negative one 7% in the fourth quarter last year.
Jeffrey A. Miller: The effective tax rate for the quarter was 25.3%, compared to a negative 1.7% in the fourth quarter of last year. The increase in the effective tax rate was primarily related to the impact of the non-cash goodwill impairment charge recorded in the fourth quarter of fiscal 2022.
Jeffrey A. Miller: The increase in the effective tax rate was primarily related to the impact of the noncash goodwill impairment charge recorded in the fourth quarter of fiscal 2022.
Jeffrey A. Miller: Net loss for the quarter on a GAAP basis was $61 4 million or $1 24 per share as compared to a GAAP net loss of $189 3 million or $3 85 per share in the fourth quarter of last year adjust.
Jeffrey A. Miller: Net loss for the quarter on a gap basis was $61.4 million, or $1.24 per share, as compared to a gap net loss of $189.3 million, or $3.85 per share, in the fourth quarter of last year. Adjusted net loss was $2 million, or $0.04 per share, as compared to last year's adjusted net income of $8.8 million, or $0.18 per diluted share. Our adjusted EBITDA decreased to $15.4 million in the fourth quarter this year, compared to $29.2 million in Q4 last year.
Jeffrey A. Miller: Adjusted net loss was $2 million or <unk> <unk> per share as compared to last year's adjusted net income of $8 8 million or 18 cents per diluted share.
Jeffrey A. Miller: Our adjusted EBITDA decreased to $15 4 million in the fourth quarter this year compared to $29 2 million in Q4 last year.
Speaker Change: Turning to our balance sheet, we ended the quarter with $21 million in cash $176 8 million and total debt and total liquidity, including availability on our revolving credit facilities of $112 3 million. Our current leverage ratio is three two times.
Jeffrey A. Miller: Turning to our balance sheet, we ended the quarter with $21 million in cash, $176.8 million in total debt, and total liquidity, including availability on our revolving credit facilities of $112.3 million. Our current leverage ratio is 3.2 times.
Speaker Change: We ended the quarter with consolidated inventory down seven 2% compared to the fourth quarter last year. The decline reflects a concerted effort to tightly manage inventory in the current environment and is primarily the result of lower freight costs and fewer inventory units year over year.
Jeffrey A. Miller: We ended the quarter with consolidated inventory down 7.2% compared to the fourth quarter last year. The decline reflects a concerted effort to tightly manage inventory in the current environment and is primarily the result of lower freight costs and fewer inventory units year-over-year. At TCS, on a unit basis, on-hand inventory was down approximately 4.8% year-over-year, driven by general merchandise.
Speaker Change: At Tcs on a unit basis on hand inventory was down approximately four 8% year over year driven by general merchandise.
Speaker Change: Capital expenditures were $39 9 million in fiscal 2023 versus $64 2 million in fiscal 2022, which reflects the planned pullback in capital spending in fiscal 2023, we're continuing to prioritize investments in our stores and technology.
Jeffrey A. Miller: Capital expenditures were $39.9 million in fiscal 2023 versus $64.2 million in fiscal 2022, which reflects the planned pullback in capital spending in fiscal 2023. We are continuing to prioritize investments in our stores and technology. Pre-cash flow generated for fiscal 2023 was $6.9 million versus a use of $4.9 million in fiscal 2022.
Speaker Change: Free cash flow generated for fiscal 2023 was $6 9 million versus a use of $4 9 million in fiscal 2022.
Speaker Change: As you saw in our press release.
Jeffrey A. Miller: As you saw in our press release and as Satish mentioned at the outset of the call, we are not issuing a financial outlook given the company's announcement of evaluating strategic alternatives. However, I will share some qualitative commentary on our quarter-to-date trends thus far, as well as initial thoughts on how we are reviewing the remainder of the fiscal year. First quarter 2024 to date, we have seen an improvement in sales trends versus the prior year when compared to the fourth quarter of fiscal 2023.
Speaker Change: And <unk> mentioned at the outset of the call we are not issuing financial outlook given the company's announcement of evaluating strategic alternatives. However, I will share some qualitative commentary on our quarter to date trends, thus far as well as initial thoughts on how we're viewing the remainder of the fiscal year.
Speaker Change: First quarter 2024 to date, we have seen an improvement in sales trends versus prior year when compared to the fourth quarter of fiscal 2023, our performance continued to be driven by relative strength in our customer space business with year over year growth in our alpha and Preston product lines.
Jeffrey A. Miller: Our performance continues to be driven by relative strength in our custom spaces business, with year-over-year growth in our alpha and Preston product lines. However, our general merchandise category remains challenged, resulting in double-digit year-over-year total sales declines, though not of the magnitude reported for the fourth quarter of fiscal 2023. This year, we expect to benefit from lower freight costs, disciplined promotional activity, and continued favorable business mix, which should result in a stable to modestly expanding consolidated gross margin.
Speaker Change: Our general merchandise category remains challenged.
Speaker Change: Hoelting in double digit year over year total sales declines, though not at the magnitude reported for the fourth quarter of fiscal 2023.
This year, we expect to benefit from lower freight cost disciplined promotional activity and continued favorable business mix, which should result in stable to modestly expanding consolidated gross margins.
Jeffrey A. Miller: On the SG&A front, we executed meaningful cost actions in fiscal 2023 and expect to remain extremely disciplined in our SG&A spend in fiscal 2024. Capital expenditures are expected to be approximately $20-25 million, primarily related to the four new and one relocation build-to-suit store openings expected in fiscal 2024, as well as investments in technology and manufacturing infrastructure. This concludes our prepared remarks. I'll now turn it over to the operator to begin the Q&A session for questions regarding fiscal 2023 performance. As stated earlier, we'll not be discussing the potential strategic alternatives process that is underway or the financial outlook.
Speaker Change: On the SG&A front, we executed meaningful cost actions in fiscal 2023 and expect to remain extremely disciplined in our SG&A spend in fiscal 2024.
Speaker Change: Capital expenditures are expected to be approximately $20 million to $25 million, primarily related to the four new and one relocation and build to suit store openings expected in fiscal 2024, as well as investments in technology and manufacturing infrastructure.
Speaker Change: This concludes our prepared remarks, I'll now turn it over to the operator to begin the Q&A session for questions regarding fiscal 2023 performance as stated earlier, we will not be discussing the potential strategic alternatives process that is underway or financial outlook.
Operator: Thank you if you'd like to ask a question today. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
Operator: Thank you. If you'd like to ask a question today, please press star 1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Operator: You May press Star two if you like to remove your question from the kit for.
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Operator: One moment, please, while we poll for questions. Thank you. Our first question is from the line of Christopher Horvers with J.P. Morgan.
Operator: One moment. Please we poll for questions. Thank you.
Christopher <unk>: Our first question is from the line of Christopher <unk> with Jpmorgan. Please proceed with your question.
Christopher Michael Horvers: Please proceed with your question. Bye. Bye.
Christopher <unk>: Thanks. Good morning, guys. So my first question is reflecting on the quarter to date improvement.
Christopher Michael Horvers: Thanks. Good morning, guys.
Christopher Michael Horvers: So, my first question is, reflecting on the quarter-to-date improvement, do you think it's – I guess to what extent is it just like the comparisons are just much easier, and we're getting further along into it, understanding that you have a lot of newness going on on the custom spaces side, but I guess maybe trying to drill down into the GenMerch performance. Are you seeing any sort of less worsening there because of the comparisons? Overall, or is that still tough?
Christopher <unk>: Do you think it's I guess to what extent is just like the comparisons are just are just much easier and we're getting further along into it understanding that you have a lot of newness going on on the on the custom spaces side, but I guess, maybe trying to drill down into Gen. Merch performance are you seen any sort of less worsening.
Speaker Change: There because of the comparisons.
Speaker Change: Overall or is that or or is that still tough.
Jeffrey A. Miller: Hey, Chris This is Jeff.
Jeffrey A. Miller: Hey Chris, this is Jeff. You know, just looking at the business quarter to date, as we stated, we are seeing improved trends overall, but as it relates to general merchandise, it's still pretty challenged. You know, from what we've seen, what we saw in Q4, we are pleased to see that we are seeing growth in the Alpha and Presta product lines. The premium product lines continue to perform well for us. In the areas that we're investing in business, we're excited to see some traction on that front.
Jeffrey A. Miller: Just looking at the business quarter to date as we've stated.
Jeffrey A. Miller: We are seeing improved trends overall, but as it relates to general merchandise, it's still pretty challenged.
Jeffrey A. Miller:
Jeffrey A. Miller: No.
Jeffrey A. Miller: From what we've seen what we saw in Q4, we are pleased to see that we are seeing growth in the alpha impressive product lines.
Speaker Change: Premium product lines continued to perform well for us in the areas that we're investing in business. We're excited to see some traction on that front.
Christopher Michael Horvers: Got it. And then just on the alpha side, I know sometimes you move the sales around. Are there any year-on-year promotion or sales shifts related to the alpha business in the TCS stores?
Speaker Change: Got it and then just on the Alpha side was I know, sometimes you move the the sales around or is there any year on years promotion or sales shifts.
Speaker Change: Related to the alpha business and the Tcs stores.
Speaker Change: Now Theres no notable change in the year over year timing the promotional cadence for the alphabet.
Jeffrey A. Miller: Now, there's no notable change in the year-over-year timing or the promotional cadence for the Alpha event.
Speaker Change: Yeah.
Speaker Change: Understood and then on the on the gross margin outlook.
Christopher Michael Horvers: understood. And then on the gross margin outlook, it would seem like just based on cadence and how freight might come through that, that expansion, you know, stable to up, is more weighted to the first part of the year. And I guess how are you contemplating, you know, your interest and willingness and being more promotional and putting more back into price to try to, you know, compel the consumer to change?
Speaker Change: It would seem like just based on cadence and how freight might come through that that expansion in a stable to up is more weighted to the to the first part of the year and I guess how are you. How are you contemplating you know your interest and willingness and being more promotional and putting more back end up.
Speaker Change: <unk> to try to compel the consumer.
Speaker Change: To convert.
Chris Jeff: Yeah, Chris I'll take that this institution.
Christopher Michael Horvers: Yeah, Chris, I'll take that. This is Satish.
Satish Malhotra: You know, as you know, we learned a lot last quarter in terms of—or the first quarter of Fiscal 23 in terms of our promotional cadence and the intensity of it with our customers. And so through Q2 through 4 of Fiscal 23, and as we look into Fiscal 24, we continue to be much more disciplined in our promotional activities. And what I will tell you is that
Chris: You know we learned a lot last quarter in terms of the first quarter of fiscal 'twenty three in terms of our promotional cadence and the intensity of it with our customers and so through Q2 through four of fiscal 'twenty, three and as we look into fiscal 'twenty four we continued to be much more disciplined.
Speaker Change: <unk> in our promotional activities.
Speaker Change: And what I would tell you is that.
Satish Malhotra: You know, we acknowledge that in today's challenging economic climate, there is a lot more price sensitivity. And so, with the support of our vendor partners. We see opportunities to pass savings along on certain general merchandise items to our customers. Additionally, by strengthening our internal product sourcing capabilities, we believe we can expand our private label general merchandise offerings across various price points and categories so that we can cater to those needs while still preserving our gross margin rates.
Speaker Change: We acknowledge that.
vendor partners: Challenging economic climate, there is a lot more price sensitivity and so with the support of our vendor partners we.
Speaker Change: We see opportunities to pass savings along to answer in general merchandise items to our customers. Additionally, by strengthening our internal product sourcing capabilities.
Speaker Change: We believe we can expand our private label general merchandise offerings across various price points and categories. So that we can cater to those needs while still preserving our gross margin rate.
Speaker Change: Understood best of luck.
Christopher Michael Horvers: understood. Best of luck.
Speaker Change: Thank you.
Speaker Change: Our next question is from the line of Kate Mcshane with Goldman Sachs. Please proceed with your question.
Operator: Our next question is from the line of Kate McShane with Goldman Sachs. I'll be pleased to answer your question.
Speaker Change: Hi, good morning, Thanks for taking our questions.
Katharine Amanda McShane: Hi, good morning.
Speaker Change: We just curious you know with regards to general merchandise, what you may be seeing in the competitive environment I know with Chris's last question with regards to promotions. There is a focus on conveying more value, but how would you assess maybe the competitive environment.
Katharine Amanda McShane: Thanks for taking our questions. We just were curious, you know, with regard to general merchandise, what you're maybe seeing in the competitive environment. I know with Chris's last question, with regard to promotions, there is a focus on conveying more value, but how would you assess the competitive environment with regard to price, how you're positioned, and what you're offering?
Speaker Change: With regards to price, how you're positioned and what you're offering.
Jeffrey A. Miller: Yes, I can take that first part and then let Jeff add some more color.
Satish Malhotra: Yeah, I can take that first part and then let Jeff add some more color. Look, the current macro environment continues to be very competitive. [inaudible] at www.containerstore.com. You know, let's not forget that the need for the container store continues to be incredibly strong, especially when we just launched our survey recently where there are so many consumers out there contending with the stress of clutter in their homes, and we are uniquely equipped to help them to reclaim their lives and their spaces. So the more that we can tell that story, the better we can help our customers overcome their current constraints.
Jeff: Look the kind of macro environment continues to be very competitive.
Jeff: <unk> customers are contending with elevated interest rates and inflation and so we recognize their value conscious consumers out there and won the deal what we have found is when.
Jeff: When we can create a sense of urgency through testing various promotional model.
Speaker Change: Campaigns, our customers engage more with us.
Speaker Change: When we are able to tell a more comprehensive and integrated story, where we can couple of custom spaces without general merchandise completing completion products plus organizational tips, we find that that ends up being a stronger message for them to engage with us.
Speaker Change: Don't forget that the need for the container store continues to be incredibly strong, especially when we just launched a survey recently, where there's so many consumers out there contending with the stress stress of clutter in their homes and we are uniquely equipped to help them to reclaim their lives and in their space, it's back to them.
Speaker Change: More that we can tell that story and the better we can that help our customers overcome the current constraints.
Speaker Change: Yeah.
Speaker Change: Okay. Thank you and you know I know there was an effort or there is an effort to that tied to general merchandise more into the custom closet sales as well I wondered if that was partially what's driving the sequential improvement that you.
Katharine Amanda McShane: Okay, thank you. And, you know, I know there was an effort, or there is an effort to tie the general merchandise more into the custom closet sales as well. I wondered if that was partially just driving the sequential improvement that you were seeing or, you know, where we are in that effort in trying to drive general merchandise sales along with the custom closet space.
Speaker Change: You were seeing or you know, where we are in that effort and trying to try if general merch sales along with the custom closet space.
Speaker Change: Yeah, I would say look when we look at our general merchandise.
Satish Malhotra: Yeah, I would say, look, when we look at our general merchandise, we know we are looking to stabilize the general merchandise business. We're doing it, as I mentioned earlier, through our exclusive private label offering, our push, and expanding our Everything Organizer collection, which pairs beautifully with our Alpha solutions, as well as delivering private label opportunities at various price points. But also, we see strength in our discovery categories, and we mentioned that in our prepared remarks.
Speaker Change: We we know we are looking at stabilizing and the general merchandise business, we're doing it as I mentioned earlier through our exclusive private label offering.
Speaker Change: Push and.
Speaker Change: And expanding out everything organize their collection, which paired beautifully without alpha solutions.
Speaker Change: As well as delivering private label opportunities in various price points.
Speaker Change: But also we see strength in our discovery categories, we mentioned that on our prepared remarks, great success with on the go travel solutions home fragrance is still believe we have significant growth there.
Satish Malhotra: Great success with on-the-go travel solutions and home fragrances. Still believe we have significant growth there, as well as growth through our expanded premium assortment, which, as you mentioned, really allows us to complement our premium custom spaces. So, in any way we can engage our customers through value or through a differentiated assortment, we continue to do that, while still leaning in in significant ways with our custom space business, which you heard us mention continues to do well, in particular in the premium offering.
Speaker Change: As well as growth through our expanded premium assortments, which as you mentioned.
Speaker Change: Really allows us to complement our premium custom spaces.
Speaker Change: So in any which way we can engage our customers through value or through a differentiated assortment. We continue to do that while still.
Us: Leaning in in significant ways without Hudson space business, which you heard US mentioned continues to do well in particular in the premium.
Us: Offering and as you know we've invested a significant amount this past fiscal year and our custom spaces business, whether that's expanding our premium assortment within Preston.
Satish Malhotra: And as you know, we've invested a significant amount this past fiscal year in our custom spaces business, whether that's expanding our premium assortment within Preston or increasing the number of highly trained in-home designers who now have access to our 3D design tool, or even allowing customers to now make appointments online through our online scheduler, plus with the addition of two new additions to our Garage Plus line from Alpha and Decor Plus line with Alpha. So, this renewed conviction and focus around our assortment of custom spaces ends up creating a halo effect that we look to really engage with in our general merchandise business as well.
Speaker Change: Increasing the number of highly trained in home designers, who now have access to actually design tool.
Us: Or even allowing customers to now.
Us: Make appointments online through our online scheduler plus with the addition of two new additions of.
Us: Our garage plus line from Alpha and the core plus line with Alpha. So this renewed conviction and focus around our assortment of accustomed spaces.
Us: Ends up creating a halo effect that we look to really engage with on our general merchandise business as well.
Us: Thank you and just my last question you know I know there was a lot of cost cutting in fiscal year 'twenty three are there any buckets or any areas in which you've identified that there could be additional room.
Katharine Amanda McShane: Thank you. And just my last question, you know, I know there was a lot of cost cutting in fiscal year 23. Are there any buckets or any areas that you've identified that there could be, you know, additional room to improve on the cost side in 2024?
Us: To improve on the cost side in 2024.
Speaker Change: We're always we're always looking at opportunities and efficiencies within the business.
Jeffrey A. Miller: We're always, Kate, we're always looking at opportunities and efficiencies within the business to reduce costs, improve efficiency, and effectiveness without impacting the overall customer experience in our stores and online. So we're continuously looking for that. We did, as I mentioned on the call, we took a couple of large actions in Fiscal 23, one being announced during our call, one happening during the first quarter, the second happening in the latter half of the fourth quarter in anticipation of Fiscal 2024. And so we'll continue to look for opportunities to remain extremely disciplined around our SG&A as we move through 2024. Yeah, I would just add to that, look, while we take
Speaker Change: To reduce costs improve efficiency effectiveness without impacting the overall customer experience in our stores and online. So we're continuously looking for that we did.
Us: As I mentioned on the call we did take.
Speaker Change: A couple of large actions in fiscal 'twenty, three one being announced during our one.
Speaker Change: One happening during the first quarter the second happening at the latter half of the fourth quarter in anticipation of fiscal 2024, and so we will continue to look for opportunities to remain extremely disciplined around our SG&A as we move through 2024.
Satish Malhotra: Yeah, I would just add to that, look, while we take a very prudent approach towards our cost actions, it's also important that we continue to invest in our business, and particularly as it relates to marketing. And I think that's one where we realized in fiscal 23, we were too constrained there. And so in fiscal 24, as we look to really build upon the green shoots of custom spaces, you know, we're actually investing quite diligently as it relates to our marketing campaigns, in particular around our full funnel marketing efforts.
Speaker Change: Yeah, I would just add to that a look while we take a very prudent approach towards our cost actions. So it's important that we continue to invest in our business and particularly as it relates to marketing and I think that's one where we realized in fiscal 'twenty we were.
Speaker Change: Two constrained there and so in fiscal 'twenty four as we look to really build upon the green shoots of custom spaces, we're actually investing.
unknown: Quite diligently as it relates to our marketing campaigns in particular around our full funnel marketing assets and so as we mentioned we have five key markets. We are looking to drive increased awareness.
Satish Malhotra: And so, as we mentioned, we have five key markets; we are looking to drive increased awareness of how the container store is uniquely positioned to unleash our transformative power of organization on customers who continue to struggle with clutter.
Speaker Change: Of how the container store is uniquely positioned to unleash.
Speaker Change: Transformative power of organization to customers that continue to struggle with clutter.
Speaker Change: Thank you.
Speaker Change: Thank you.
Operator: Thank you. This will conclude our question and answer session, and also this will conclude today's conference. Thank you for your participation, and have a wonderful day, everyone.
Speaker Change: We will conclude our question and answer session and also this will conclude today's conference. Thank you for your participation and have a wonderful day.