The Container Store, a Northwest Dallas, TX-based specialty Retail Company has averted a Texas bankruptcy this month in what financial experts are calling a rare comeback. The company was able to cut borrowing costs and extend a term loan helping to bolster its market price and avoid having to consider a Texas bankruptcy filing. Investors are applauding the due diligence of the company in a time where the retail sector is plagued by bankruptcies as online retailers continue to batter traditional brick and mortar operations.
Retail Sector Bankruptcies
After the Texas bankruptcy of A’Gaci this year, along with many other US Chains such as Claire’s and Toys R Us filing Chapter 11 bankruptcy, financial analysts haven’t been optimistic about the finical strength of specialty retail companies. In fact, many predicted the demise of Container Store Group Inc. (TCS) that operates 80 Container Stores across the US. Not only has the Texas-based company had to compete with cheaper options found at Home Depot and Bed Bath & Beyond but has also faced increasing pressure to hit its sales forecast from large e-commerce players.
How the Container Store Bounced Back
In a combined effort, The Container Store has been able to renegotiate a $292.5 million term loan and extend its maturity date until 2023. The decreased cost of servicing the loan has provided costs savings that should benefit the company’s bottom line. Additionally, the company plans to focus more intensely on product design and initiatives towards optimizing its pricing.
Future Retail Chapter 11 Bankruptcies
While smaller retail companies have been able to avoid Chapter 11 bankruptcy, some of the larger chains such as Pacific Sunwear, which filed bankruptcy in 2009 is seeking help from a merger to avoid a second Chapter 11 due to struggling sales and upcoming term loan maturity. Additionally, other well-known brick and mortar companies such as Sears Holding Corp., Stein Mart, and Vince Holding Corp. continue to be at high risk for default.