Beyond Inc. invests $40 million in 103-unit retail chain

Beyond Inc. has forged a financial partnership with a specialty retail chain that will give the company’s Bed Bath & Beyond nameplate a presence in the physical retail space.

MIDVALE, Utah and COPPELL, Texas – Beyond Inc. has forged a financial partnership with a specialty retail chain that will give the company’s Bed Bath & Beyond nameplate a presence in the physical retail space.

Beyond Inc. has agreed to invest $40 million in The Container Store through a preferred equity transaction subject to certain terms and conditions, including an amendment or refinancing of The Container Store’s credit facilities in a manner commercially acceptable to Beyond. Once approved, the deal will give Beyond Inc. a 40% stake in the 103-store retail chain.

“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,” said Marcus Lemonis, executive chairman of Beyond Inc.

Key components of the deal include:

The Bed Bath & Beyond brand will launch an “appropriately sized” space in The Container Store featuring bedbathandbeyond.com‘s assortment of kitchen, bath and bedroom products. The co-branded spaces are designed to drive traffic to The Container Store.
Beyond will integrate The Container Store’s proprietary Custom Spaces offering, including its Elfa and Preston product lines, across its e-commerce banners. Beyond may integrate Custom Spaces into future licensed Bed Bath & Beyond stores globally.
Beyond will assist The Container Store with expanded and renewed e-commerce platforms and strategies to improve the customer experience, customer conversion, traffic monetization and profitability.
The Container Store will join Beyond’s data platform, enhancing customer analytics for both companies.
Beyond will offer a global loyalty program, multiple payment solutions and ancillary insurance and protection products through The Container Store’s brick-and-mortar locations and website.

An equity investment, not an acquisition

Lemonis described the partnership as a operating under a “management and conversion model.”

The Container Store will issue approximately 40,000 shares of a newly created series of its preferred stock to Beyond for an aggregate purchase price of $40,000,000.

Following a refinancing or amendment of The Container Store’s credit facilities and the approval by shareholders, the preferred stock 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 by Beyond.

Shareholders are expected to vote on the matter in Q4 2024 or Q1 2025.

Satish Malhotra, CEO of The Container Store, said the partnership with Beyond Inc. should help deepen its relationship with customers, expand its reach, and strengthen its capabilities.

“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 and enhance communications with new and existing customers,” Malhotra added.

During the first quarter, ended June 29, The Container Stores’ net sales fell 12.2% to $181.9 million, with online sales tumbling 25.6% and comp sales dropping 13.7%.

The company, which has been evaluating strategic alternatives to reverse the decline, saw its net loss widen to $14.7 million compared with a net loss of $11.8 million in last year’s Q1. Its long-term debt rose nearly 17% year over year to $214.5 million.

The Container Store will announce its Q2 results on Oct. 29. Beyond Inc. will announce its Q3 results on Oct. 24.