Bed Bath & Beyond owner to invest $40 million in The Container Store
Beyond is giving a lifeline to The Container Store — and is expanding its presence in brick-and-mortar.
The owner of Bed Bath & Beyond, Overstock and Zuilly and other online brands will invest $40 million (through a preferred equity transaction) in the struggling storage and organizing products retailer as part of a strategic partnership. The investment comes five months after The Container Store, whose net sales fell, said it was launching a strategic review of the business and would stop providing financial guidance as it evaluated alternatives.
“The companies intend for the partnership to position The Container Store to return to profitable comparable store growth over time by utilizing and benefitting from Beyond’s intellectual property, customer data, network of brands and affiliate relationships,” the two companies said in a release.
As part of the agreement, The Container Store will showcase a co-branded assortment of Bed, Bath & Beyond products for kitchen, bath and bedroom in its stores. (In September, Beyond launched a global licensing program that included product licensing agreements to sell Bed Bath & Beyond branded textile goods through other retailers, including mass market, off-price and online marketplaces.)
“Through the licensing of the Bed Bath & Beyond brand, The Container Store will enhance their store format and current general merchandise offering by incorporating the most popular Bed Bath & Beyond products to drive improved financial performance while providing customers a more comprehensive product offering for their home and organizational needs,” said Marcus Lemonis, executive chairman of Beyond.
In addition, Beyond will offer a global loyalty program, multiple payment solutions and ancillary insurance and protection products through The Container Store’s brick-and-mortar locations and website to capitalize on the whitespace opportunity for its high-margin, proprietary custom spaces offering and increase conversion of design leads to drive growth through the vertically integrated model. The custom spaces offering, including its Elfa and Preston product lines, will be integrated across Beyond’s portfolio of e-commerce banners as well as other ventures where Bed Bath & Beyond future licensed stores exist globally.
“Partnerships like this further support the value of iconic brands leveraging each other’s assets and core competencies while improving customer conversion and retention, enhancing margins, and optimizing marketing expenses which are the principal drivers in delivering value creation and profitable growth," said Lemonis.
Also as part of the agreement, The Container Store will join Beyond’s growing data platform and both companies will benefit from enhanced customer analytics that The Container Store will use to improve conversion, drive traffic, and reduce both customer acquisition and retention costs.
“This agreement will enable us to harness Beyond’s data platform and analytics to better identify and target customers at critical points in their purchase journeys and enhance communications with new and existing customers,” said Satish Malhotra, CEO of The Container Store. “It will allow us to expand our reach across our combined network and position us to leverage Beyond’s e-commerce expertise to further our own omni-channel tools and capabilities. Beyond’s enthusiasm for this collaboration is reflected in the investment they plan to make in The Container Store that will strengthen our financial position, allow us to continue to execute on our growth strategy, and deliver a best-in-class experience for our customers.”
Latham & Watkins LLP served as legal counsel to The Container Store and JP Morgan served as their financial advisor. King & Spalding LLP served as legal counsel to Beyond and Goldman Sachs served as their financial advisor.
