Boxed Files for Chapter 11 Bankruptcy

Boxed in-house robot cart feature

Boxed, purveyor of essential home products in bulk that likened itself to an online Costco, has filed for Chapter 11 bankruptcy protection after failing to find a buyer and enduring sustained weak revenue and earnings, a far cry from the promise of its SPAC-based IPO in December 2021.

At the same time, Boxed said in its SEC filing it was negotiating a sale of software-as-a-service offering Spresso to an affiliate of the company’s first lien holder. Listed creditors included Wilmington Savings Fund Society and U.S. Bank.

Last week, Boxed began winding down its retail business, entering into a purchase agreement for remaining inventory at fulfillment centers in Dallas and Las Vegas. It expected to ceased operations from those FCs as of April 3, continuing to accept orders through a third facility at its headquarters in Union, NJ.

“This was an incredibly difficult decision, and one that we reached only after carefully evaluating and exhausting all available options,” said Boxed CEO Chieh Huang, who co-founded the company in 2013, in a statement to Reuters.

The company said in an 8k filing last month that it had most of its cash and liquidity tied in in the failed Silicon Valley Bank, but its issues ran far deeper than that. In 2018, Boxed rejected a $400 million buyout offer from Kroger, and was also courted at the time by Amazon, Target and Costco.

Even in the heady days of the 2020 lockdowns, when e-grocery took off like a shot and online became a lifeline for most, Boxed struggled and didn’t see significant growth in its $49-a-year subscription program. The company faced fierce competition from major grocers with their own e-grocery and fulfillment operations, such as Kroger and Albertson’s, grocery delivery startups like Instacart and DoorDash, and of course Amazon, Target and Walmart.

In the end, Boxed was never able to peel off enough loyal shoppers from popular price clubs like BJ’s, Costco and Sam’s Club, its main opposition, all of which launched their own ecommerce operations. The return of store-based grocery after the pandemic also took a significant toll on Boxed and its business prospects.

For the most recently reported quarter ended Sept. 30, Boxed had retail revenue of $41.58 million, an 8.9% increase from the prior year. But software sales dropped from $10.82 million to $73,000, for an overall revenue decline of 15%. The net loss more than quadrupled, from $5.9 million to $26.4 million.