The Container Store has filed for Chapter 11 bankruptcy protection – the latest retail chain to collapse as inflation-weary shoppers cut back on discretionary home improvement spending.
The storage and organization retailer, which has about 100 stores nationwide, has seen demand plummet in a tough housing market, where soaring prices and high mortgage rates have dampened sales.
The Texas-based company, founded in 1978, said in a press release that it needed to refinance its debt to “strengthen its financial position, fuel its growth initiatives and improve its long-term profitability.”
The bankruptcy filing follows Party City’s announcement Friday that it would permanently close.
Big Lots, the discount retail chain that at one point operated some 1,420 stores in the continental United States, also announced last week that it was ceasing operations.
The Container Store has 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 been facing a tough time since the end of the COVID-19 pandemic, when people spent more time at home and were more likely to renovate.
Just three years ago, The Container Store’s net sales reached $1 billion, marking a major milestone for the company.
In 2021, its stock reached almost $18 per share. But stiff competition from retailers such as Walmart, Amazon and Target has eaten into its bottom line.
On December 9, the company was delisted from the New York Stock Exchange after falling below the $15 million market capitalization threshold.
At the time, the stock was trading at pennies on the dollar – a far cry from the $525 share price when it went public in 2013.
In late October, the company announced that its revenue fell 10.5% year-over-year to just $196.6 million in the most recent quarter, while its net losses totaled $16.1 million dollars.
Last year in the same quarter, The Container Store reported net losses of $23.7 million.
The company also reported that its debt increased from $173 million at the end of September last year to about $232 million this year during the same period.
Same-store sales fell 12.5% while general merchandise sales fell 18.7%.
The company warned in its latest earnings report that there were “substantial doubts” about its “ability to continue” due to a “challenging retail environment” that was plagued by “reduction in consumer spending in the stores and organizations category and increased price sensitivity.” »
The findings indicate that the company may need to “reduce operations” and even “discontinue some or all of its 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 stock transaction. But sources familiar with the matter told Yahoo Finance that the partnership will not materialize given the bankruptcy filing.
The Post has requested comment from The Container Store.
