Why Container Store's Founder Is Quitting CEO Job
The Container Store’s tcs founder Kip Tindell is stepping down as CEO this summer, ending a long run that saw him take the company public but then face sluggish sales and plummeting profits that slammed the one-time Wall Street darling’s stock.
Tindell, 63, has been at the helm of the storage products company since he founded it in 1978 and will leave as CEO July 1 but stay on as chairman. He will be succeeded by Melissa Reiff, currently Container Store’s operations chief and a 21-year veteran of the company. His wife, Sharon, will stay on as chief merchant and will take on the additional title of president.
Container Store offers items like selling bins, boxes, clothing racks, and shelves to help people organize their office spaces, kitchens, and closets. When the retailer went public in November 2013, its shares priced at $18 and instantly doubled when trading began, making it one of the hottest IPOs that year.
But since then, the chain’s fortunes have turned. In 2015, comparable sales were flat, an improvement over the dip the year before, but certainly a far cry from the 7%-plus gains of only four years ago. (Total annual sales came to $795 million last year.)
On Monday morning, shares were trading at just over $6, down 84% from their all time high in late 2013.
Tindell, who was a college roommate of Whole Foods Market wfm co-founder John Mackey at the University of Texas, has tried to foster a progressive culture. In the prospectus aimed at investors ahead of its IPO, he called Container Store’s work environment “yummy” as opposed to “yucky.”
Indeed, Container Store has landed on Fortune’s Best Place to Work list 17 years in a row and pays its employees nearly $50,000 per year, on average. But with a fleet of only 79 stores, the chain is tiny compared to its major rivals. (At the time of its IPO, the retailer said it saw room for 300 locations eventually. It plans to open eight this year.)
But Container Store has struggled to adjust to a tough retail environment amid more aggressive moves by rivals like Walmart wmt , Staples spls , and Ikea, as well as e-commerce’s incursion into its product category. The chain only introduced free shipping on orders over $75 a year ago, which is crimping its cost-reduction efforts along with its recent automation overhaul of its distribution center.
Container Store’s net income fell to $5.1 million last year, a 77.5% drop from $22.7 million the year before.
“Traffic continues to be somewhat challenging from most or much of the entire retail industry,” Tindell told Wall Street analysts last month.