The Container Store says outlets to operate as usual after bankruptcy filing
Long Island shoppers may see few immediate changes after the bankruptcy filing of The Container Store, the home and office organizing retailer.
The Texas-based company, which operates locations at the Gallery at Westbury Plaza in Uniondale and the Huntington Shopping Center along with about 100 others nationwide, will continue to operate as it restructures but is grappling with mounting losses and cash flow shortages.
It also faces increasing competition from retailers like Target and Walmart and demand for its goods affected by a rough housing market where soaring prices and elevated mortgage rates have stunted sales.
The company said Sunday it had filed for bankruptcy protection in Texas, just a day after Party City announced it would “wind down” its retail and wholesale operations as it prepares to shutter nearly 700 stores nationwide. Discount chain Big Lots also said this month it would start going-out-of-business sales at its remaining locations after a sale of the company didn’t materialize.
The Container Store did not respond to a request for comment, but said in a statement Sunday that company stores would remain "open for business with no impact on customers; store operations, online sales, and in-home services will continue as normal."
The bankruptcy capped a difficult year for the retail sector, said John Mercer, head of global research for Manhattan-based research and advisory firm Coresight Research. Home retailers, in particular, have been "squeezed by the sluggish housing market and constraints on discretionary spending."
Coresight tracked 7,327 store closures and 5,919 openings. It was the highest number of closures tracked by the firm since 2020, the year the pandemic hit.
A number of major retailers are hampered by debt servicing costs, said Mercer, who also pointed to competitive threats beyond big-box stores: China-based online superstores like Temu and Shein that are notching $100 billion in sales annually. "That is being sapped from traditional retailers," Mercer said.
Those superstores can sell the organizing materials that are The Container Store's stock-in-trade cheaply and efficiently from cross-border hubs, Mercer said. "It's not food, it's not perishable or super-bulky," he said.
A pandemic-era shift in buying habits may also be eating into Container Store sales and brick-and-mortar stores more generally, said Stacey Finkelstein, a Stony Brook University business professor. "Consumers got used to buying goods online," she said. "If they're not shopping in-store, the likelihood of their making impulse purchases goes down."
While Container store CEO was adamant in Sunday's statement that the company was "here to stay,"
Hofstra University business and finance professor Andrew Spieler said that for some retailers facing bankruptcy, closing physical stores but growing an online presence offered a path forward. Should that happen with The Container Store's Long Island locations, the impact on the retail environment would probably be negative, he said. "It makes it less desirable for other tenants. It depresses the landscape and consumer enthusiasm."
The Container Store's 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.
Earlier this month, ratings agency S&P Global warned of “mounting challenges amid weak sales and profitability prospects, compounded by increased refinancing risks with its debt” as it downgraded its outlook for the company. S&P analysts said Container efforts to rejuvenate sales by improving products and introducing new items had not reversed its slide, and that promotional activities to attract traffic would probably put pressure on profit margins.
Last month, The Container Store said 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.
In an October SEC filing, The Container Store said consolidated net sales for fiscal second quarter were down 10.5% compared to second quarter of fiscal year 2023. Comparable store sales fell by 12.5% in that period and online sales fell 13.7%.
A manager of the Huntington location declined to comment Monday afternoon as a half dozen shoppers lined up to make purchases or pick up orders while others pushed shopping carts through fully stocked isles.
Outside, Marie-Annette Carter said she was “sorry to hear” of the bankruptcy. She said she had recently purchased bins and other items to help her organize her garage.
“It’s a great store," Carter, of Huntington, said. "They have a lot of useful things in there … to help people stay neat and organized.”
With Associated Press
Updated now Human remains found at Smith Point ... Congestion pricing lawsuit ... Excelsior scholarship open enrollment ... Container Store bankruptcy
Updated now Human remains found at Smith Point ... Congestion pricing lawsuit ... Excelsior scholarship open enrollment ... Container Store bankruptcy