One of the most successful Texas-born and bred companies of the 2000s could be in trouble after a potentially life-saving deal could fall through. Last week, Beyond Inc. provided an update on its attempted investment in The Container Store, Inc., and it doesn’t look very good.
On October 15, Beyond Inc., formerly Overstock.com, which acquired bankrupt retailer Bed, Bath & Beyond, announced a $40 million securities deal with The Container Store, Inc., founded in 1978 and headquartered in Dallas. A sales contract was concluded. It is located in Coppell, about 32 miles northwest of Dallas.
Under the terms of the agreement, The Container Store was required to come up with a financial plan, but Beyond said Wednesday it was concerned about the company’s proposal.
“When we signed the purchase agreement, we were optimistic that The Container Store would have sufficient capital to support future operations,” said Marcus Lemonis, Executive Chairman of Beyond, Inc. “While we continue to believe in the fundamentals of The Container Store brand and business, the proposed financing terms we have reviewed to date are below what we believe would be necessary to complete the transaction.”
Beyond has given The Container Store until January 31, 2025, to come up with an acceptable financing plan. Either party may then terminate the contract. But Coppell is pessimistic about its chances of meeting the deadline, according to Thursday’s Securities and Exchange Commission filing reported by the Dallas Morning News.
“While these agreements remain in effect, based on recent developments, including Beyond’s November 20, 2024 press release, we do not currently believe that the conditions to the SPA will be satisfied or that the SPA is “We do not anticipate that the transaction will occur and that it is expected to close on previously disclosed terms,” the filing said. “We remain focused on successfully executing our strategic initiatives.”
The Container Store, which specializes in home storage and organization, has been steadily growing for 40 years, until the post-COVID-19 world hit hard times. Garrett Boone and John Mullen co-founded the company and opened the first store in Dallas in 1978 with Kip Tindell. Ten years later, the company opened its second store in Houston, and by 1998, 18 container stores had opened in multiple states.
A private equity firm acquired The Container Store in 2007 and opened dozens of stores. But despite opening 100 stores and hitting $1 billion in sales in recent years, business has struggled since its peak in 2021. In October, the business revealed significant losses, according to industry website Retail Dive, saying it was feeling challenged by “lower customer spending and increased price sensitivity in the storage and organization sector.” Ta.
But at the time, Container Store CEO Satish Malhotra said he was encouraged by several data points in the Q2 2024 report. Mr. Malhotra also expressed excitement about the potential partnership with Beyond.
