The Container Store, founded in Dallas in 1978 as the original storage and organization store, may be put up for sale after years of trying to grow the business.
The Coppell-based retailer hasn't reported a full-year profit since 2021, when sales topped $1 billion for the first time. Over the past year, sales have plummeted to $847.8 million.
The 102-store chain said its board of directors had begun a formal review process to evaluate strategic alternatives, which typically includes a potential sale of the company, adding that “at current market value “We do not believe that this reflects its essential value,” he said.
The company announced Tuesday that it received notice from the New York Stock Exchange that it is no longer in compliance with continued listing rules.
The Coppell-based retailer's stock has not maintained an average closing price above $1 over the last 30 consecutive trading days. The company said in a filing that it is considering all options, including a reverse stock split.
Container Store stock will continue to trade on the NYSE during the six-month remediation period. The stock closed at 88 cents per share on Monday, giving the retailer a market cap of $46.5 million. The stock is trading at the low end of its 52-week trading range of 83 cents to $3.71 per share.
“The Container Store Board and management team are committed to maximizing value for our stakeholders and to that end we have begun a comprehensive process to consider potential strategic alternatives for the business. ” said Lisa Klinger, Chairman. “We have established a Transactions Committee to help oversee processes that ensure we maximize both our business potential and the returns to our stakeholders.”
Container Store has retained JPMorgan Securities as financial advisor and Latham & Watkins as legal support, and there is no deadline for the strategic review process.
Competition has increased in recent years, not only in online retail, but also among Walmart, Target, and even the storage and organization departments of supermarkets.
The company's sales have been on the decline, and on Tuesday it announced that its fiscal fourth quarter sales, which ended March 30, fell 20.7% to $206.04 million. Net loss was $61.37 million, an improvement from $189.25 million in the same period last year. Same quarter a year ago.
For the year, The Container Store posted a loss of $103.3 million on sales of $847.8 million. In comparison, the previous year he posted a loss of $158.9 million on sales of $1.05 billion. The company added five new stores last year.
CEO Satish Malhotra said the year ended with “continued pressure on general merchandise assortment,” but the custom closet business performed well.
He thanked employees across the company for “exercising strong cost discipline, resulting in positive free cash flow for the fiscal year and providing excellent customer service.”
Challenges in general merchandise are expected to continue, he said. Mr. Malhorta has served as CEO since February 2021.
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