EXECS of the popular home goods retailer The Container Store has filed for bankruptcy.
The chain, founded in 1978, has seen a dip in sales, and bosses are scrambling to clear debts of more than $240 million.
Bosses at The Container Store have filed for bankruptcy[/caption]
It is the second chain to file for bankruptcy in days (stock)[/caption]
The Container Store filed for bankruptcy days after Party City bosses revealed all of its remaining stores would close.
But, its CEO Satish Malhotra, formerly the Chief Retail Officer and Chief Operating Officer at Sephora Americas, has issued a defiant warning.
“The Container Store is here to stay,” Malhotra, who joined the company in 2021, said.
“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.”
The process is expected to take around 35 days, and no store closures are expected at the moment.
But, bosses have not ruled out the prospect of future closures.
“If they do not achieve meaningful rent reductions, they may be forced to close a select few locations,” a source told Yahoo Finance.
This is because the company will be going through a period of reorganization.
Officials also revealed that no workers are expected to be laid off.
The Container Store is one of the retailers that have struggled post-pandemic.
It has been unprofitable for the past two years, having reported losses of around $10 million at the end of September 2024.
In 2024, revenue took a 10.5% fall compared to last year, and store sales have plunged by around 12.5%.
This is despite Malhotra’s initiatives to drive growth and profitability.
He wants to double the company’s sales, and under his watch, an app has been created, and three small-format stores have opened.
Retail experts explained customers have been watching what they spend and not investing in pricier luxury goods.
Rumors had been swirling about the chain’s future for several weeks.
How does bankruptcy work?
Bankruptcy is a specific legal process that helps companies eliminate debt they can’t repay.
The process allows businesses to start fresh and gain access to new credit.
Supervised by federal courts, bankruptcies allow a company to sell off its assets more easily to pay off creditors, according to Investopedia.
Chapter 11, a common process for companies, is used to restructure a business with the goal of remaining open – even if it means selling off most of the company’s properties.
Chapter 7, on the other hand, sells all of a company’s assets, putting it out of business.
Chapter 15, alternatively, allows for collaboration between American and foreign courts to conduct bankruptcy proceedings with “parties of interest involving more than one country,” per the United States Courts.
Tim Hynes of Debtwire told CNN there was a “high probability” the chain would file for bankruptcy.
Analysts have also revealed the high interest rates and mortgage rates also had an impact on the company.
“When people move, they buy a heck of a lot of things related to storage and organization,” Neil Saunders, an analyst at GlobalData Retail, told the outlet.
“Without this impetus, Container Store has struggled.”
In the US, the average rate of a 30-year-fixed-rate mortgage hit 6.72%.
US braces for ‘45,000 store closures’
Some 45,000 bricks-and-mortar stores could close in the next five years, experts have warned.
Several major retailers have announced store closures or gone out of business altogether in recent years.
Chains such as Foot Locker, Sally Beauty, Tuesday Morning, Shore City, Z Gallerie, and Mitchell Gold + Bob Williams have all gone out of business.
Bed Bath & Beyond has closed all of its brick-and-mortar stores and is now an online-only retailer.
The most affected retailers have been clothing, consumer electronics, sporting goods, hobby, book, music, and home furnishing stores since the start of 2019.
UBS has predicted the total number of retail stores will drop by 45k from 958k to 913k.
Despite that, the report says that certain stores should thrive while others decline.
It said retailers such as Walmart, Costco, Home Depot, and Target, could be among the winners.
Mortgage rates have hovered between six and seven percent over the past year.
Chiefs at the Container Store filed for bankruptcy – just days after Party City bosses announced all of its remaining stores would close.
The crafts retailer, which has 850 stores nationwide, has filed for bankruptcy for the second time within a matter of years.
Party City bosses only exited bankruptcy in September 2023.
The process helped the chain clear around $1 billion in debt.
CEO Barry Litwin told executives that the company would be winding down its operations.
Liquidation sales are already being held at stores.
Outlets are expected to remain open for between eight and 12 weeks.
The prices of items have been cut by at least 50% as bosses rush to clear the last remaining stock.
Workers told The U.S. Sun that staffers would be completing balloon orders until New Year’s Eve.
But, they warned that staffing couldn’t be guaranteed in the new year.
