By ANNE D’INNOCENZIO
NEW YORK (AP) — The Container Store has filed for bankruptcy protection as the storage and organizational goods retailer with roots dating back to the 1970s grapples with mounting losses and cash flow shortages.
The Texas company has faced increasing competition from retailers like Target and Walmart at the same time that demand for its goods is under strain in a rough housing market, where soaring prices and elevated mortgage rates have stunted sales.
Under Chapter 11 protection, The Container Store will continue to operate while it restructures.
The company said Sunday that it had filed for bankruptcy protection in Texas. The filing arrives two weeks after the trading of company shares was suspended by the New York Stock Exchange. The Container Store Group Inc. failed to maintain an average market capitalization of at least $15 million in accordance with NYSE rules.
Last month, The Container Store said that it was in advanced discussions with lenders to provide additional capital as it aimed to turn around sagging earnings and sales, according to a regulatory filing.
The company has struggled to raise cash, and last month an agreement with the owner of Bed Bath & Beyond, Overstock and Zulily that would have come with a $40 million cash infusion fell apart. The Container Store said in a regulatory filing that it did not believe that it could match the financing requirements of the partnership with Beyond Inc.
The Container Store was founded in 1978 by Garrett Boone, Kip Tindell and investor John Mullen, who opened the doors of The Container Store’s first location in Dallas, according to the company. Neither of the men, Boone with a master’s degree in history and Tindell who was an English major, expected a career in retail. Yet both were driven by the idea of creating a store devoted entirely to storage.
The chain had its skeptics when Boon and Tindell opened their first 1,600-square-foot location. Yet the chain expanded to more than 100 stores ranging from 12,000 to 20,000 square feet, according to the company.
In 1999, The Container Store purchased one of its vendors, Elfa International. In 2021, it acquired Chicago’s Closet Works and launched its premium, wood-based line Preston shortly thereafter.
In its most recent quarter the company reported losses of $16 million, and comparable store sales, a good barometer of a retailer’s health, dropped 12.5%.
