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03/02/2012

Container Store readies move back to Arlington

Even companies like The Container Store can make mistakes, the company’s CEO says.

The company’s making up for one Saturday, when it opens a new 25,000-square-foot store in South Arlington’s Highlands shopping center, more than 10 years after leaving the city to open up in Southlake.

“We were divided internally,” Kip Tindell, the chief executive and one of The Container Store’s founders 33 years ago, said in an interview Thursday at the company’s Coppell headquarters, where The Container Store was hosting the new Arlington employees.

Some of The Container Store’s people felt customers of the old Arlington store, in the Lincoln Square Shopping Center at Interstate 30 and Collins Street, would follow the company to Southlake, Tindell said.

“They did not follow us to Southlake,” said Tindell, estimating the company has been scouting locations for a new Arlington site for about five years. “Southlake is not Arlington.”

Arlington fans are already treating the new store, set to open with a two-day benefit for the Junior League of Arlington, like customers in completely new markets, Tindell said.

The Arlington store, in a 25,000-square-foot store that Borders Books surrendered in bankruptcy,  is one of several new stores the company plans this year.

Tindell also elaborated on the company’s plans for a new store in a former Borders space in the Central Market-anchored Chapel Hill Shopping Center at Interstate 30 and Hulen Street, which the company confirmed last fall it leased for a 2013 opening.

The company plans to move from its 15,000-square-foot space in front of Hulen Mall at I-20 and South Hulen to the new space, giving the company a draw on both east-west interstates, Tindell said.

“The Fort Worth store is great,” Tindell said. “But it’s the oldest, smallest one in the chain.”

Tindell said The Container Store is doing well after seeing sales dip a total 13 percent during recession in 2008 and 2009.

But in 2010 and last year, sales in comparable stores, those open at least a year, rose about 7 percent in  each year, he said. Total sales, including ones from new stores, are now growing at 12-14 percent a year, he said.

In 2012, the company expects to surpass $700 million in sales, he said.

“If we didn’t have the Great Recession, we probably would be past $1 billion rignt now,” Tindell said.

The company, which has more than 50 stores, expects to open another 25-30 stores over the next four or five years, and currently is funding its new store growth from free cash flow, Tindell said.

“We haven’t touched our revolver in two years,” he said.

Growth over the next five years may bring the company close to capacity at its Coppell distribution center, attached to its headquarters. Tindell said the company is considering its options, and doesn’t like the idea of moving the distribution center or building a second one.

“It’s really good to have all your vice presidents with your distribution and your buyers,” he said.

The privately held company, which entered into a partnership with the Leonard Green & Partners private equity firm in 2007, is also prepared to re-examine its options if Leonard Green decides to cash out at some point, Tindell said.

Possibilities include another equity deal,  initial public offering, or sale to another company, Tindell said. More than 200 Container Store employees now own stock in the company, Tindell said.

Tindell spent much of the morning imbueing the company’s newest employees with its “foundation principles” and the concept of “conscious capitalism,” in which all stakeholders in a company can win by looking out for each other’s interests.

That includes ensuring employees are well paid (average annual salary for a fulltime retail salesperson is $50,000, Tindell said), and the company has strong relationships with its vendors (The Container Store likes to find out the low periods for its manufacturers, and then plop big orders on them, Tindell said).

Tindell also unashamedly preaches active selling in the stores.

“If you’ve got a woman in the store with a tie rack in one hand, and a shoe rack in the other, she’s clearly got a closet that needs help,” he says. “You’re not doing her a favor if she leaves the store with just those two” items.

- Scott Nishimura 

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