By Daily Mail (U.S.) | Created at 2024-12-23 14:36:31 | Updated at 2024-12-25 18:33:34
2 days ago
The Container Store has filed for bankruptcy, sparking fears of store closures.
The struggling home goods chain, which has been around for 46 years, filed for Chapter 11 protection in Texas late on Sunday.
The store is known for its home organizational goods, including closet organizers and storage bins.
Despite receiving a boost from Marie Kondo's hit Netflix show 'Tidying Up' during the Covid-19 pandemic, the chain has been weighed down by mounting losses in recent years.
The company had $229.8 million in long-term debt as of the quarter ended September 28.
CEO Satish Malhotra, a former Sephora executive who took over the top spot at the chain in 2021, said he is confident The Container Store is 'here to stay' despite the filing, Yahoo! Finance reported.
The company said there are no planned closures of any of its 102 stores across 34 states, but that may be a possibility in the future as the company goes through the reorganization process.
Sources told the outlet that if the company is not able to achieve 'meaningful rent reductions' at some of its stores, it may be 'forced to close a select few locations.'
The store is known for its home organizational goods, including closet organizers and storage bins
The company said business would continue as normal across all stores and online for now, all customer deposits are safe and protected, and there are no planned layoffs.
It said in a press release that it is filing for bankruptcy protection in order to 'bolster its financial position, fuel growth initiatives, and drive enhanced long-term profitability.'
But the bankruptcy will not come as a surprise to industry experts.
The chain, which was founded in 1978, was delisted from the New York Stock Exchange on December 9 after it fell below the exchange's market cap standard.
When it first went public in 2013, it was priced at $525 per share, but this had spiraled to just $0.32 per share as of market close on December 19.
As inflation has hit households hard in the last several years, The Container Store has struggled to drive revenue, especially as customers have put off buying big-ticket items and remodeling their homes.
Instead, Americans have focused on buying essential goods from budget retailers.
On October 29, the company reported that revenue had fallen 10.5 percent year-over-year.
Tim Hynes, global head of credit research at Debtwire, said earlier this month that there was a 'high profitability' of the company filing for bankruptcy.
'I don't see any dramatic increase in holiday sales that will change the situation,' he told CNN. 'They are already pretty far down the line.'
The Container Store was also hoping to receive a $40 million lifeline from Beyond, the owner of Bed Bath & Beyond, but sources close to the matter told Yahoo! Finance it will not come to fruition.
The chain, which was founded in 1978, was delisted from the New York Stock Exchange on December 9 after it fell below the exchange's market cap standard
Customers shopping at a store location in Chicago
Tidying and organization expert Marie Kondo partnered with the store in recent years
The Container Store's fate has also been closely linked to the housing market.
With elevated mortgage rates and soaring property costs across the US, Americans have been effectively locked into their homes, with very little buying or selling activity.
'When people move, they buy a heck of a lot of things related to storage and organization. Without this impetus, The Container Store has struggled,' retail expert Neil Saunders said earlier this month.
'The weakening of the housing market has pushed down demand for most of the products The Container Store sells.'
It comes as a widespread 'retail apocalypse' this year has seen major companies file for bankruptcy and brick-and-mortar stores close in their droves.
Last week, Big Lots said it was beginning 'going out of business' sales at all its stores across the US, after filing for bankruptcy in September.
In a press release Thursday, the company said it was closing all its 963 remaining locations, after a sale to a private equity firm fell through.
Meanwhile after nearly four decades as a US retail institution, Party City announced last week it would close all of its 850 stores in coming weeks.
Macy's, America's top department store, also announced it would shutter 65 locations across the country before the end of the year.
