The Container Store Group Inc., a Texas-based retailer that’s been under pressure, is getting a multi-million dollar investment under a new partnership with online retailer Beyond to drive sales and connections with customers.
Beyond — owner of Bed Bath & Beyond, Overstock, Zulily, and other online retail brands — will invest $40 million in The Container Store through a preferred equity transaction, according to a statement released by both companies. It’s subject to terms and conditions, including an amendment or refinancing of The Container Store’s credit facilities in a way that’s commercially acceptable to Beyond.
With the deal, The Container Store, which helps shoppers organize their homes, will showcase Bed Bath & Beyond items that will be co-branded, the statement said. The agreement aims to position The Container Store to return to profitable comparable store growth with the help of Midvale, Utah-based Beyond’s intellectual property, customer data, network of brands and affiliate relationships.
Shares of The Container Store jumped about 20% to $12.80 Wednesday morning.
Under the terms of the investment, Beyond will get preferred stock that would convert to common stock at a price of $17.25, which would result in ownership of approximately 40% of The Container Store common equity.
The agreement pushes Beyond back into physical retail after focusing on e-commerce.
The Container Store has been under pressure on Wall Street and with shoppers. Last month, the company did a 15-for-1 stock split after it received a noncompliance notification from the New York Stock Exchange as its stock didn’t keep its price above $1 over roughly a month. Sales declined for two straight fiscal years while it ran net losses, and in May, the company announced it had initiated a review process to evaluate strategic alternatives, which generally includes the possible sale of the company.
“We believe (the partnership) benefits will further our strategic initiatives including deepening our relationship with customers, expanding our reach, and strengthening our capabilities while accelerating our return to positive same store sales growth and profitability,” Satish Malhotra, CEO of The Container Store, said in the statement. “This agreement will enable us to harness Beyond’s data platform and analytics to better identify and target customers at critical points in their purchase journeys.”
With the deal, Beyond will assist with expanded and renewed e-commerce platforms and strategies, the statement said.
“Through the licensing of the Bed Bath & Beyond brand, The Container Store will enhance their store format and current general merchandise offering by incorporating the most popular Bed Bath & Beyond products to drive improved financial performance while providing customers a more comprehensive product offering for their home and organizational needs,” Marcus Lemonis, executive chairman of Beyond, said in a statement.
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