A major home store is at risk of falling into bankruptcy despite celebrity deals and a Netflix boost.
The Container Store is teetering on the edge of financial collapse, despite a large boost from Marie Kondo’s hit Netflix show ‘Tidying Up.’
‘Tidying Up’ introduced a wave of sorting, throwing out, and organizing across America when it first aired in 2019.
Consumers quickly turned to the Container Store to buy staples such as storage bins, drawer organizers and shelves – especially when they were stuck at home during the pandemic.
This led to a rise in sales, and the company decided to cement its luck with a partnership with Kondo herself in 2021.
However, the magic has worn-off and the retailer’s future is now at risk.
The Container Store, which has around 100 locations across the US, has been rated as one of the most financially distressed companies in the retail industry by credit rating agencies, CNN reported.
The company will be hoping the traditional holiday shopping period currently underway before Christmas will hope to reverse its ailing fortunes.
The Container Store is at risk of falling into bankruptcy despite a pandemic-era boost
However, Tim Hynes, global head of credit research at Debtwire, said there would still be a ‘high profitability’ of the company filing for bankruptcy.
‘I don’t see any dramatic increase in holiday sales that will change the situation,’ he told CNN.
‘They are already pretty far down the line.’
Sales fell a dramatic 10.5 percent in the company’s latest earnings, and it suffered a loss of $30.8 million in the third quarter of this year alone.
The Container Store was also hoping to receive a $40 million lifeline from Beyond, the owner of Bed Bath & Beyond, but the company said the deal is in doubt because the Container Store was not reaching an agreement with its creditors.
The Container Store’s fate is also closely linked to the housing market.
With elevated mortgage rates and soaring property costs across the US, the housing market has been frozen as Americans are avoiding buying and selling their homes.
‘When people move, they buy a heck of a lot of things related to storage and organization. Without this impetus, The Container Store has struggled,’ retail expert Neil Saunders explained.
‘The weakening of the housing market has pushed down demand for most of the products The Container Store sells.’
Tidying and organization expert Marie Kondo partnered with the store in recent years
Consumers quickly turned to the Container Store to buy staples such as storage bins, drawer organizers and shelves when they were stuck at home during the pandemic
The widespread ‘retail apocalypse’ this year has seen brick-and-mortar stores struggle to combat rampant theft and increasingly tight margins.
The latest high profile chain to file for bankruptcy was discount retailer Big Lots in September.
Big Lots announced its latest round of store closures in November, as it moves through its bankruptcy proceedings.
The Ohio-based chain, which currently has around 1,100 stores, initially planned to close around 555 stores and has so far closed more than 270 of those.
The additional round of closures will affect locations in Phoenix, Arizona, Atlanta, Georgia, and Meridian, Idaho.
There are also five more California stores and three more Texas sites on the new list.
‘We continue to evaluate store closings in light of lease renegotiations and other considerations, and remain committed to keeping our customers informed as we move forward,’ Big Lots said in a statement to Nexstar.
Other stores forced to close down this year include dollar store 99 Cents Only, home improvement chain LL Flooring and furniture retailer Conn’s.
