Home Depot rival files for bankruptcy and sparks fears of mass closures
The Container Store has filed for bankruptcy, raising fears of store closures.
The troubled household goods chain, which has been in business for 46 years, filed for Chapter 11 protection late Sunday in Texas.
The store is known for its homewares, including closet organizers and open and chrome storage bins.
Despite getting a boost from Marie Kondo’s hit Netflix show “Tidying Up” during the Covid-19 pandemic, the chain has struggled with mounting losses in recent years.
The company had $229.8 million in long-term debt in 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! Finances reported.
The company said there are no planned closures of its 102 stores in 34 states, but that could be a possibility in the future as the company goes through the reorganization process.
Sources told the outlet that if the company is unable to achieve “meaningful rent reductions” at some of its stores, it “could be forced to close a select number of locations.”
The store is known for its organizational goods for the home, including closet organizers and storage bins
The company said that for the time being, business will continue as normal across all stores and online, all customer deposits are safe and secure and there are no planned redundancies.
It said in a press release that it is filing for bankruptcy protection to “strengthen its financial position, fuel growth initiatives and improve long-term profitability.”
But the bankruptcy will come as no surprise to industry experts.
The chain, founded in 1978, was delisted from the New York Stock Exchange on December 9 after falling below the exchange’s market capitalization standard.
When it first went public in 2013, it was priced at $525 per share, but this had risen to just $0.32 per share by the market close on December 19.
As inflation has hit households hard in recent years, The Container Store has struggled to increase sales, especially as customers have postponed buying expensive items and remodeling their homes.
Instead, Americans have focused on buying essential goods from budget retailers.
On October 29, the company reported that sales were down 10.5 percent year over year.
Tim Hynes, global head of credit research at Debtwire, said earlier this month that there was “high profitability” from the company that had filed for bankruptcy.
“I don’t see a dramatic increase in holiday sales that will change the situation,” he said CNN. “They’ve come quite far.”
The Container Store also hoped to receive a $40 million lifeline from Beyond, the owner of Bed Bath & Beyond, but sources close to the matter told Yahoo! Financially it will not prosper.
The chain, founded in 1978, was delisted from the New York Stock Exchange on December 9 after falling below the exchange’s market capitalization standard.
Customers shop at a retail location in Chicago
Cleaning and organization expert Marie Kondo has worked with the store in recent years
The fate of the Container Store is also closely tied to the housing market.
Higher mortgage rates and rising real estate costs in the US have left Americans essentially locked in their homes, with very little buying or selling activity.
‘When people move, they buy a lot of things that have to do with storage and organization. Without this boost, The Container Store has struggled,” retail expert Neil Saunders said earlier this month.
“The weakening of the housing market has reduced 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 en masse.
Last week, Big Lots said it was beginning to end sales at all its U.S. stores after filing for bankruptcy in September.
In a news release Thursday, the company said it would close all of its 963 remaining locations after a sale to a private equity firm fell through.
Meanwhile, after nearly four decades as an American retail institution, Party City announced last week that it would close all of its 850 stores in the coming weeks.
Macy’s, America’s largest department store, also announced it would close 65 locations across the country before the end of the year.