Storage solutions retailer The Container Store announced yesterday in a press release that it had purchased Closet Works. The Coppell-based retailer paid a sum of $21.5 million in the transaction, which closed on December 30.
With the transaction, The Container Store’s portfolio of subsidiaries broadens, along with its manufacturing abilities and capacity. The franchise already owns Elfa, a subsidiary that produces shelving for closets and other home spaces. Acquisition of Closet Works allows the storage giant to oversee their process, beginning with manufacturing, all the way through installation.
According to the release, Closet Works has manufacturing facilities located centrally in the U.S. that will serve The Container Store’s needs. In detail, the company, founded in 1987, owns a 60,000-square-foot manufacturing and office facility in Elmhurst, Illinois. It also has a 2,800-square-foot showroom in Chicago. The Container Store will be leveraging those facilities to produce premium wood-based storage solutions.
“As part of our effort to double our sales over time, I am thrilled to announce our strategic acquisition of Closet Works,” said President and CEO of The Container Store, Satish Malhotra. “This acquisition allows us to meet the growing consumer demand for premium wood-based spaces and expand our capabilities, in an effort to gain a larger share of the estimated six-billion-dollar custom closet market.”
Malhotra became CEO of the Coppell-based company in March. Since then, he has hired several new executives with retailing backgrounds, including Richardson-based Fossil, Dallas-based Neiman Marcus, Plano-based J.C. Penney.
Part of the acquisition deal established that Closet Works president and former co-owner Tom Happ will join The Container Store as president of Closet Works. As head of the new subsidiary, Happ will assist in the consolidation.
“We look forward to working with the talented team at Closet Works to strengthen our leadership position in [the custom closet] category,” Malhotra added.
After the company announced the acquisition, its stock price rose as the acquisition is expected to boost product offerings and increase profit. As of midday Monday, it had risen to 12.5%.
