We want answers and we're not getting them from The Container Store (TCS) .
That was the message sent by Goldman Sachs analysts in a Wednesday report obtained by Real Money, which 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's Stressed Out watch list, swooned as much as 9% in midday trading to $4.87, and 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 EBITDA. (EBITDA is a standard valuation metric standing for earnings before interest, taxes, depreciation and amortization.)
"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.