The Container Store files for Chapter 11 bankruptcy protection

The Container Store filed for Chapter 11 bankruptcy protection — the latest retail chain to buckle as inflation-weary shoppers discourage discretionary spending on home remodeling.

The warehouse and organizational goods retailer, which has about 100 stores around the country, has seen demand plummet in a tough housing market where skyrocketing prices and high mortgage rates have hampered sales.

The Texas-based company, founded in 1978, said in a news release that it needed to refinance its debt to “strengthen its financial position, fuel growth initiatives and promote improved long-term profitability.”

The bankruptcy filing comes on the heels of Party City announcing on Friday that it is shutting down for good.

Big Lots, the discount retail chain that at one point operated about 1,420 locations in the continental United States, also announced last week that it was ceasing operations.

The Container Store reached an agreement with 90% of its long-term lenders to provide it with $40 million in new financing, according to Yahoo Financewhich first filed for bankruptcy on Sunday.

The retail chain has fallen on hard times since the end of the COVID-19 pandemic, when people spent more time at home and were more likely to remodel.

Just three years ago, The Container Store’s net revenue reached $1 billion – marking a major milestone for the company.

By 2021, the stock reached nearly $18 per share. But fierce competition from retailers like Walmart, Amazon and Target has eaten away at the bottom line.

On December 9, the company was delisted from the New York Stock Exchange after it fell below the exchange’s $15 million market capitalization threshold.

At the time, the stock was trading for pennies on the dollar — a far cry from the $525 share price at its 2013 IPO.

In late October, the company reported that its revenue fell 10.5% year over year to just $196.6 million in the most recent quarter, while its net loss came in at $16.1 million.

Last year in the same quarter, The Container Store reported a net loss of $23.7 million.

The company also reported that its debt rose from $173 million at the end of September last year to about $232 million this year during the same period.

Same-store sales fell 12.5%, while general merchandise sales fell 18.7%.

The company warned in its latest earnings report that there was “significant doubt” about its “ability to continue as a going concern” due to a “challenging retail environment” that was plagued by “reduced consumer spending in the store and organizational category and increased price sensitivity.”

The earnings results indicated that the firm may need to “scale back” and even “discontinue some or all of our operations to reduce costs … or seek bankruptcy protection.”

In October, The Container Store announced a strategic partnership with Beyond, owner of the now-defunct Bed, Bath and Beyond brand.

The plan called for Beyond to invest $40 million in the company through a preferred stock transaction. But sources close to the situation told Yahoo Finance that the partnership will not materialize in light of the bankruptcy filing.

Posten has sought a comment from The Container Store.