The Container Store made a name for itself providing organizational solutions to customers, but the retailer now finds itself in need of reorganization, seeking Chapter 11 bankruptcy protection.
The troubled chain filed papers in the Southern District Court of Texas on Dec. 22 to begin the bankruptcy process.
The Container Store ranks No. 406 in Digital Commerce 360’s Top 1000 Database of the largest North American online retailers. There, it falls under the Housewares & Home Furnishings category. Digital Commerce 360 projects that The Container Store’s online sales will reach $192.66 million in 2024.
The Container Store web sales by year
The Container Store files for bankruptcy
Despite The Container Store’s bankruptcy filing, its CEO vowed that the chain will continue its operations and that the process will allow The Container Store to emerge stronger.
“The Container Store is here to stay,” said Satish Malhotra, the retailer’s president and CEO. “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.”
Prior to helming The Container Store, Malhotra spent over 20 years in various leadership positions at beauty product retailer Sephora.
Malhotra says the company will operate its business as usual without disruption throughout the bankruptcy process. Its stores and website will continue to operate as normal. In addition, all customer deposits and orders will be honored and delivered as normal.
“The Company has filed a motion with the Bankruptcy Court that will allow it to make timely payments to vendors, suppliers, and other trade creditors in full under normal terms for goods and services delivered both before and after the filing,” Malhotra said in a released statement.
Aftermath of The Container Store’s failed Beyond deal
The Container Store was set to enter into a financial partnership with Beyond Inc. that would have infused $40 million in cash into the company. The arrangement would have paved the way for Beyond’s products to be sold at The Container store’s 100 locations. Nevertheless, The Container Store’s finances grew shakier in November. At that point, Beyond Inc. pulled out of the deal. Subsequently, The Container Store moved forward with its bankruptcy filing.
“After Beyond Inc., backed out of the deal, The Container Store reached a point of no return,” said Juan Pellerano-Rendón, digital sales expert and chief marketing officer of Swap, an ecommerce platform focused on returns.
Pellerano-Rendón has been watching the struggles of The Container Store and said that despite the CEO’s optimistic statements, he believes the outlook for The Container Store is anything but certain.
The company reported $243 million in debt at the time of its filing, a sign of some of the struggles it has had to navigate.
The Container Store’s future
“Now, The Container Store will need to significantly reduce its footprint to make itself viable for a sale,” Pellerano-Rendón said. “Demand is simply not there when many consumers’ home essentials have moved online to competitors like Beyond, and Amazon,” Pellerano-Rendón said.
He also says that while Beyond pulled out of investing in The Container Store, the story between the two businesses may not be over.
“It’d be interesting to see if Beyond takes a look at it in a sale situation now, where they’d likely be able to acquire the business at a similar price point to what they had planned to invest in it,” he noted.
Whatever The Container Store’s future is, it’ll need to focus more on their digital direction, Pellerano-Rendón explained, adding that the retailer was built as a brick-and-mortar business and will need to evolve.
“They will need to completely reinvent their approach to ecommerce to have a viable business moving forward,” he assessed. “In the interim, they could try to join forces with Amazon or others through a third-party online or wholesale offering. This would at least immediately open new revenue streams that could be attractive to potential buyers.”
The Container Store was founded in Dallas in 1978 and remains headquartered in the area. Its bankruptcy filing follows other merchants in the Top 1000 in 2024, including Big Lots, Conn’s, Party City and Tupperware Brands.
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