[Update as of Nov. 22, 2024] The Container Store has agreed with Beyond, Inc.‘s concerns about its ability to meet the financing requirements of the companies’ proposed partnership. In a Nov. 21 SEC filing, The Container Store disclosed that it “does not expect that the conditions to closing in the SPA (securities purchase agreement) will be satisfied or that the transactions contemplated by the SPA will be consummated,” offering a fairly clear indicator that the deal is likely dead. The Container Store added that its discussions with lenders are continuing, but with the goal of supporting the company’s “long-term growth and success,” presumably without any investment or participation from Beyond.
Original story from Nov. 21, 2024 begins-
Bed Bath & Beyond parent company Beyond, Inc. has raised concerns about its proposed partnership with The Container Store, saying it is worried about the latter’s ability to secure the necessary financing and that it may terminate the deal if satisfactory financing is not secured by Jan. 31, 2025.
In October, Beyond committed to invest $40 million in the struggling home goods retailer as part of a wide-reaching partnership that would combine The Container Store’s brick-and-mortar footprint with Beyond’s customer data platform, loyalty and payment programs. However, the partnership is contingent on The Container Store securing “commercially acceptable” financing, which, as part of the closing conditions, will be determined at Beyond’s sole discretion. Now, Beyond says that based on the financing proposals it’s seen, it has concerns about whether those conditions can be met.
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“When we signed the purchase agreement, we were optimistic that The Container Store would be able to secure adequate financing to support the business going forward,” said Marcus Lemonis, Executive Chairman of Beyond in a statement. “While we continue to believe in The Container Store’s brand and business fundamentals, the proposed financing terms we have reviewed to date fall short of what we believe is necessary to complete the transaction. As careful stewards of our shareholders’ capital, we must remain steadfast in ensuring that the terms of any financing package work for both The Container Store and Beyond.”
The Container Store has been under pressure for some time. Despite opening its 100th brick-and-mortar location in December 2023, by May 2024 the retailer was in danger of being delisted by the New York Stock Exchange due to its stock price falling below $1. The Container Store avoided that fate, and the October announcement of the Beyond deal sent its stock soaring, but it has since declined again to the $4 range.
Beyond said it will continue to evaluate new financing proposals from The Container Store, setting a deadline of Jan. 31, 2025 for a satisfactory arrangement to be reached. Even if the deal with The Container Store falls through, Beyond will still have a similar arrangement with home décor retailer Kirkland’s — announced just a week after The Container Store deal — to fall back on. The deal with Kirkland’s includes a $25 million investment from Beyond and will see Kirkland’s operate a series of Bed Bath & Beyond stores.
At the same time that Beyond is actively making these major external investments, the company is cutting costs internally in a bid to streamline its business. In late October, the company announced plans to lay off 20% of its workforce following declines in orders and revenue in Q3.
The Container Store did not immediately respond to Retail TouchPoints’ request for comment.
