The Container Store filed for Chapter 11 bankruptcy protection — the latest retail chain to buckle as inflation-weary shoppers pare back discretionary spending on home remodeling.
The storage and organizational goods retailer, which has roughly 100 stores around the country, has seen demand plunge in a rough housing market, where soaring prices and elevated mortgage rates have stunted sales.
The Texas-based company, founded in 1978, said in a press release that it needed to refinance its debt to “bolster its financial position, fuel growth initiatives, and drive enhanced long-term profitability.”
The bankruptcy filing comes on the heels of Party City announcing on Friday that it was shutting down for good.
Big Lots, the discount retail chain that at one point operated some 1,420 locations in the continental United States, also announced last week that it was ceasing operations.
The Container Store reached an agreement with 90% of its term lenders to provide it with $40 million in new financing, according to Yahoo Finance, which first reported the bankruptcy filing on Sunday.
The retail chain has fallen on hard times since the end of the COVID-19 pandemic, when people spent more time at home and were more likely to remodel.
Just three years ago, The Container Store’s net sales reached $1 billion — marking a major milestone for the firm.
In 2021, its stock reached nearly $18 a share. But stiff competition from retailers such as Walmart, Amazon and Target have eaten into its bottom line.
On Dec. 9, the company was delisted from the New York Stock Exchange after it fell below the exchange’s $15 million market capitalization threshold.
At the time, the stock was trading for just pennies on the dollar — a far cry from the $525 share price at its initial public offering in 2013.
In late October, the company reported that its revenue fell 10.5% year over year to just $196.6 million in the most recent quarter while its net losses came in at $16.1 million.
Last year during the same quarter, The Container Store reported net losses of $23.7 million.
The company also reported that its debt ballooned from $173 million as of late September last year to around $232 million this year during the same period.
Same-store sales dropped 12.5% while general merchandise sales fell 18.7%.
The company warned in its most recent earnings report that there was “substantial doubt” about its “ability to continue” due to a “challenging retail environment” that was plagued by “reduced consumer spending in the store and organization category and increased price sensitivity.”
The earnings results indicated that the firm may need to “scale back” and even “discontinue certain or all of our operations to reduce costs…or seek bankruptcy protection.”
In October, The Container Store announced a strategic partnership with Beyond, owner of the now-defunct Bed, Bath and Beyond brand.
The plan called for Beyond to invest $40 million in the company through a preferred equity transaction. But sources close to the situation told Yahoo Finance that the partnership will not come to fruition in light of the bankruptcy filing.
A spokesperson for The Container Store referred The Post to a statement from the company in which it said it “will implement a recapitalization transaction that will bolster its financial position, fuel growth initiatives, and drive enhanced long-term profitability.”
“Throughout this brief process, which is expected to take less than 35 days, the Company will operate its business as usual,” the company said.
“Its stores and website will continue to operate as normal; all customer deposits and orders will be honored and delivered as normal.”
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