Container Store CEO reveals possible bankruptcy after price hikes 'significantly impacted the company’s performance' | The US Sun

Nov 04, 2024

FALLING sales have heavily impacted The Container Store as the CEO now looks to scale back its operations.

The store has faced a decline of nearly $10million in retail sales between financial quarters, and is now facing bankruptcy.

The Container Store ended its most recent fiscal year with net sales of $847.8million, which is a 19 per cent drop from the previous year.

Sales in the retail segment dropped 10.4 per cent from $196.6million to $186.6million.

Same store sales fell nearly 20 per cent from a year ago.

A "critical point" has now been reached, as an SEC filing claims the company has been "significantly impacted" by rising prices.

The statement said: “The persistently challenging retail environment, including reduced consumer spending in the storage and organization category and increased price sensitivity, has significantly impacted the company’s performance.”

However, in more positive news, Tim Hynes, Debtwire’s global head of credit research, reportedly said that The Container Store's financing looks certain.

Tim said; "As of today, there is no reason to believe the financing from Beyond will not be complete and [the] Container Store will move forward with its partnership with Beyond".

The retailer recently announced a deal with Beyond, the parent company of Bed Bath & Beyond, Overstock and other home decor brands.

That company will invest $40million in The Container Store through a strategic partnership.

The deal is contingent on The Container Store’s ability to refinance or amend the borrowing terms with its lenders.

If additional liquidity can not be secured, they are also seeking to reach an agreement with lenders to amend its credit facilities.

Reports say that The Container Store are looking for bankruptcy protection if a pending equity deal with Beyond falls through.

In February, the company laid off 100 people in the face of persistent sales declines.

Three months after that, The Container Store faced delisting from the New York Stock Exchange when its share price fell out of compliance with average closing price requirements.

In September, the business launched a brave move - a reverse stock split.

They adopted a poison pill approach to limit the influence a stockholder had who had recently accumulated a large share.

Despite declines, Satish reaffirmed the company's progress, stating that they were continuing to see out performance in custom spaces.

CEO Satish Malhotra said in an earnings call that despite the struggles, things are improving.

Satish said: "While we are still contending with a challenging macro and industry backdrop, we are encouraged by the improvements we are seeing in our topline trends as compared to earlier this year.

“Traffic also improved, partly due to increased promotional activity, which while putting pressure on profitability, allowed us to move slower moving products.

“This also enabled us to engage more effectively with customers seeking compelling value offerings.”

Big Lots has warned that it may have to close up to 40 locations this year.

The discount retailer spoke out about its financial struggles in its recent regulatory filing.

"In 2024, we currently expect to open three stores and close 35 to 40 stores," Big Lots bosses wrote.

But questions remain about its "current cash and liquidity projections," according to the filing.

There is "substantial doubt about the company’s ability to continue as a going concern," according to the court docs.

Big Lots operates more than 1,300 stores across 48 states and it's based in Columbus, Ohio.

"The company has incurred net losses and used cash in operating activities in 2022, 2023, and the first quarter of 2024," the chain wrote.

The retailer blamed its financial problems on "ongoing negative [economic] factors" amid declining sales.

But there was hope for a turnaround by slashing costs, and growing sales.

"The company intends to vigorously pursue its plans to enhance its liquidity [and] improve the performance of the business," court docs said.

Big Lots hopes to save the firm by cashing in on some of its property, through the "outright sale, or sale and leaseback opportunities."

It also achieved another quarter of sequential improvement in general merchandise.

The CEO said that improving stock levels are further helping to stabilize business improvements.

He praised the innovation that The Container Store is delivering 'newness' across their business.