The Container Store Group Inc. has filed for Chapter 11 bankruptcy protection amid steep losses, slumping sales and increased competition.
Business in its stores and online will continue as usual while it restructures, the Texas-based home goods, storage and custom closets chain said late Sunday. Customer deposits for in-home services will be honored, and merchandise orders will be delivered as normal.
“The Container Store is here to stay,” Chief Executive Satish Malhotra said in a statement. “Our strategy is sound, and we believe the steps we are taking today will allow us to continue to advance our business.”
The Container Store peaked in its 2021 fiscal year, when the company exceeded $1 billion in sales for the first time and posted record earnings as consumers spent heavily on home remodeling and redecorating projects during months of pandemic quarantine. A national decluttering craze, set off by organization expert Marie Kondo, also benefited the chain.
But since then, the Container Store has struggled.
Part of the company’s struggles are due to competition from rivals including Target, Walmart and Amazon, which often sell storage items that are similarly stylish at a lower price. And with housing prices and mortgage rates remaining stubbornly high, many prospective home buyers have been forced to wait on the sidelines, dampening demand for a wide range of products and services that come with outfitting a new property.
For the three months ended Sept. 28, the Container Store reported a loss of $16.1 million. Sales totaled $196.6 million, down 10.5% compared with the same quarter a year earlier. Same-store sales fell 12.5%.
Founded in 1978, the Container Store operates more than 100 stores around the country. In Los Angeles County, it has locations in Century City, El Segundo, Pasadena and Woodland Hills.
It filed for bankruptcy protection in the Southern District of Texas two weeks after the New York Stock Exchange notified the company that its shares would be suspended for failing to maintain an average global market capitalization of at least $15 million over 30 consecutive trading days.
The Container Store said it expected to confirm a plan of reorganization within 35 days and emerge from bankruptcy soon after as a private company. The company said at least 90% of its term loan lenders had pledged $40 million in new money financing.
The Chapter 11 process does not include Elfa, a separate customized closet business based in Sweden, which is owned by the Container Store.
In an email to customers Monday, Malhotra said the company had felt “the impact of the challenging macro-economic environment” but reassured them that “our obligations to you will be fulfilled as expected.”
Source: finance.yahoo.com