The Container Store files for bankruptcy; company ‘here to stay,’ says CEO
The Container Store Group, Inc. has filed for bankrutpcy.
The 46-year-old retailer of organizing solutions and custom space has filed for Chapter 11 protection in the Bankruptcy Court for the Southern District of Texas. In a statement, The Container Store said the filing will help it “bolster its financial position, fuel growth initiatives, and drive enhanced long-term profitability.”
The company said that it has negotiated and solicited support for a prepackaged plan of reorganization and expects the entire process to take less than 35 days. The Container Store's 102 locations and website will remain open for business during the process.
“The Container Store is here to stay,” said Satish Malhotra, CEO and president of The Container Store. “Our strategy is sound, and we believe the steps we are taking today will allow us to continue to advance our business, deepen customer relationships, expand our reach, and strengthen our capabilities. We intend to maintain our strong workforce and remain committed to delivering an exceptional experience for our customers while we execute this recapitalization and for many years to come.”
The weeks leading up to Christmas has been rough for retail, with both Party City and Big Lots announcing plans to shut down all their locations.
According to court documents, the Container Store has about $230 million in debt and just $11.8 million in cash on hand. It has entered into an agreement to receive $40 million in fresh financing.
The filing comes two weeks after the struggling retailer was delisted by the New York Stock Exchange. It also comes after the the Container Store’s deal with Beyond, parent company of Bed, Bath & Bath and other online brands, fell apart.
As part of the deal, which was announced in October, Beyond would invest $40 million in The Container Store in exchange for a 40% equity stake. The investment came five months after The Container Store, whose net sales fell, said it was launching a strategic review of the business.
However, in late October, Beyond said it was not moving forward with its planned investment in The Container Store since the company has been unable to secure new financing on terms commercially acceptable to Beyond.
The Container Store has been caught in a sales slump amid increased — and lower-priced — competion, a sluggish housing market and a pullback in discretionary spending. Sales fell fell 10.5% to $196.6 million in the company’s second quarter, which ended Sept. 28. Comparable store sales were down 12.5%. Net losses came in at $16.1 million.
The Container’s Store bankruptcy filing does not include the company’s Elfa business in Sweden, which continues to operate as usual.
