Kroger
Kroger will close another underperforming Pick ‘n Save store (part of its Roundy’s subsidiary) in the Milwaukee, WI area on June 23. It is the latest planned closure for Roundy’s, which said earlier this month it would shutter stores in New Berlin and Pewaukee this summer. Over the past year, the grocery chain has closed stores in Milwaukee, Kimberly and Madison as its competitors, which include Sendik’s Food Market, Meijer and Fresh Thyme Farmers Market, have increased their presence and are adding more locations in southeastern Wisconsin. Roundy’s reportedly said that it will invest more than $50.0 million to renovate about 24 Milwaukee-area Pick ‘n Save stores in 2017. Around 15 to 20 stores outside of Roundy’s major metropolitan markets will also receive minor remodels.
With roughly 4,000 major retail chain store closings last year and up to another 10,000 expected in 2017, brick-and-mortar retailers are scrambling to remain relevant. Our 20-page Store Activity and Retailer Health Analysis report includes a list of retailers adding and closing stores in 2017 and provides insight into companies expanding into new markets. Click here for more information.
PetSmart
On May 31, PetSmart announced that it had completed its acquisition of Chewy, Inc. an online retailer of pet products. Chewy will continue to operate as an independent subsidiary. The transaction was financed with $1.35 billion of 5.875% Senior First Lien Notes and $650.0 million of 8.875% Senior Notes plus $1.00 billion of Sponsor Equity.
Albertsons Companies
Albertsons Companies announced that it recently acquired MedCart Specialty Pharmacy, a Livonia, MI-based provider of pharmacy services for people with complex diseases. MedCart will operate as a new business unit under the Albertsons Companies Pharmacy team structure, with the current MedCart leadership team remaining in place. MedCart has two facilities in Michigan, a specialty pharmacy operations center and a local pharmacy. Financial terms were not disclosed.
Yesterday, subsidiaries of Albertsons, including New Albertson’s and Safeway, commenced separate tender offers to purchase for cash up to a total of $500.0 million of various debt securities. The offers are scheduled to expire on July 5, unless extended or terminated.
The Michaels Companies
The Michaels Companies reported first quarter sales were essentially flat at $1.16 billion, as sales from a net 12 stores added over the last year were offset by a comp decline of 1.2%. Profit rose 2% to $72.2 million. During the quarter, the Company opened three new Michaels stores and closed one underperforming Michaels store and five Aaron Brothers stores, ending with 1,225 Michaels stores, 104 Aaron Brothers stores and 35 Pat Catan’s stores. CEO Chuck Rubin commented, “I am encouraged with the improving trend in customer transactions this quarter, especially given the headwinds we faced as we anniversaried last year’s coloring trend.”
Tops Friendly Markets
Late last month, Tops Friendly Markets acquired the Shurfine Grocery Store in Angola, NY. This acquisition brings Tops Markets’ overall store count to 173, in addition to five franchise stores. Terms of the deal were not disclosed. The Company said significant renovations are expected to be made to the 20,600 square-foot location including a refreshed interior, as well as increased product selection. Following the renovations, the store will reopen on June 11. Tops is expected to report results for its 2017 first quarter tomorrow after market close.
Five Below
Five Below’s first quarter sales jumped 20.8% to $232.9 million, and comps were up 2.6%. Profit rose 15.5% to $4.7 million. The Company opened 31 new stores and ended the quarter with 553 stores in 32 states, an increase of 20.7% from the prior-year period. CEO Joel Anderson stated, “Sales, comps and earnings came in above expectations, and we could not be happier with the results of our initial entry into California in late April.” As a result, the Company raised its guidance for the year, now expecting fiscal 2017 sales of $1.227 billion – $1.242 billion, up from previous guidance of $1.21 billion – $1.23 billion. Net income is expected to be $88.4 million – $91.1 million, up from prior expectations of $86.0 million – $89.5 million.
Office Depot
Office Depot reached an agreement to sell its business in mainland China to Shanghai M&G COLIPU Office Supplies Co., Ltd. The Company previously disclosed its intention to sell all of its international businesses under a process that began last year. The transaction is subject to regulatory approval and is expected to close within the next several months.
ALDI
ALDI recently opened a new store in Utica, NY, in a former Rite Aid that was vacated in 2010. ALDI operates nearby stores in Yorkville, New Hartford, Rome and Ilion.
Destination Maternity
Destination Maternity and Orchestra-Premaman S.A. announced they continue to make progress toward their merger, which remains on track to close during the third quarter. The companies are currently preparing both U.S. and French regulatory paperwork for the transfer of Orchestra’s shares to Destination Maternity shares upon completion of the merger. Orchestra expects to file its financial statements for the year ended February 28 by June 30. The merger still requires shareholder approval, but the companies are confident the deal will be closed. As previously announced on December 20, 2016, the companies’ respective boards approved the merger, under which each Destination Maternity shareholder will receive 0.515 of an Orchestra share in the form of American depositary shares, which will be listed on the Nasdaq. After closing, Destination Maternity shareholders will own 28% of the combined business.
Wegmans
Wegmans has pushed back the opening of its Brooklyn, NY location. The store, Wegmans’ first planned New York City location, was first announced in 2015. Originally, the Company planned to open the store in 2017 but pushed that back to late 2018. Now, a job posting on Wegmans’ website says the Brooklyn Navy Yard’s Wegmans is “set to open in mid-late 2019.” The new supermarket will be 74,000 square feet, on the smaller side of the Company’s 75,000 to 140,000 square-foot store range.
Synnex
SYNNEX announced a definitive agreement to acquire Datatec’s Westcon-Comstor Americas business and become a minority shareholder in Datatec’s Westcon EMEA and APAC businesses. The Company will pay $100.0 million in cash at closing and buy $500.0 million in Datatec’s stock for Westcon, and it will pay $30.0 million for a 10% ownership of the EMEA and APAC businesses. Approximately $115.0 million in net debt will be assumed and refinanced with the close of the transaction. For the fiscal year ended February 28, Westcon Americas generated $2.20 billion in revenue and $89.0 million in EBITDA. The transaction, slated to close during the third quarter, is expected to be mildly accretive during the first year and then accelerate in the second year.
Woodman's Food Market
The development of a Woodman’s Food Market in Lakemoor, IL took a big step forward last week after receiving village approvals for the 240,000 square-foot grocery store, gas station, car wash and lube facility. The Company expects to break ground this summer with an expected opening in April 2018. Woodman’s also plans to open a nearby store in Buffalo Grove in 2018. The Company currently operates 16 stores in total: three in Illinois and 13 in Wisconsin.
ShopRite
A ShopRite store in West Haven, CT, will close on July 29, resulting in 148 layoffs, according to a notice filed with the state Department of Labor. The store is owned by Garafalo Markets, which owns four other area ShopRite stores in East Haven, Hamden, Orange and Stratford.
Conn's
Conn’s reported first quarter sales dropped 8.6% to $355.8 million. Retail sales decreased 12.4% to $279.4 million, primarily due to a comp decline of 15.2%, partially offset by new store openings. By segment, furniture and mattress comps decreased 14%, home appliance comps were down 11.3%, consumer electronics comps fell 17.6%, and home office comps plummeted 27%. Net loss narrowed 73.5% to $2.6 million. During the first quarter, the Company opened three new Conn’s HomePlus stores, two in North Carolina and one in Virginia, bringing the total store count to 116. The Company does not intend to open any additional stores during the year.
Wendy's
On May 31, through a series of transactions, a subsidiary of NPC International, Inc., a Wendy’s franchisee, acquired 140 Wendy’s restaurants, primarily in Maryland, Virginia and Washington, D.C. As part of the transaction, NPC has agreed to remodel 90 acquired restaurants in the “Image Activation” format by the end of 2021 and build 15 new Wendy’s restaurants by the end of 2022. Prior to finalizing the transaction, seven restaurants located in these markets were closed.
Amazon
Amazon has reportedly received a patent for a new kind of shipping label that has “a built in parachute to help packages make a soft landing when dropped out of the air by drone or other airborne craft.” According to documents from the U.S. Patent and Trademark Office, “The parachute label could look and act just like any other shipping label, but underneath is a system of cords, a parachute, a breakaway cover and possibly a harness to keep everything in place. The package could also be loaded with sensors to make sure the package hits its landing zone and a shock absorber in case the cargo is coming in a little too hot.”
In other news, Amazon plans to open its first fulfillment center in Fresno, CA. The 855,000 square-foot fulfillment center will handle smaller-sized items such as books, electronics and toys. It will be Amazon’s fifth fulfillment center in California’s Central Valley, with three in operation in Tracy and Patterson, and a fourth under construction in Sacramento.
The Company will also open a fulfillment center in Jefferson, GA, its second in Jackson County and fourth in the state. The 850,000 square-foot facility will handle large items, including household furniture, sporting equipment and gardening tools.
Earlier today, Amazon announced customers participating in a growing list of government assistance programs can now access Amazon Prime at a discounted monthly price. The cost is $5.99 per month for one year, compared to the normal price of $10.99 monthly or $99 annually.
Sherwin-Williams/Valspar
Sherwin-Williams announced on June 1 that it completed its acquisition of The Valspar Corporation. Under the terms of the agreement, Valspar shareholders received $113.00 per share in cash. In connection, Valspar common stock ceased trading prior to market open on June 1 and was delisted from the NYSE. On March 19, 2016, Sherwin-Williams and The Valspar Corporation entered into a definitive agreement under which Sherwin-Williams would acquire Valspar for $113.00 per share in an all cash transaction, or a value of approximately $9.50 billion and assumption of Valspar’s debt. Valspar will operate as a wholly-owned subsidiary of Sherwin-Williams.
Meijer
Meijer will open its smallest urban store in Grand Rapids, MI later this year, under a new name, Bridge Street Market. Construction will begin next month on the 30,000 square-foot store, which is slated to open in early fall 2018. Bridge Street Market is being marketed as a “first-of-its-kind in the region and a unique retail model intended to deliver a convenient, fresh neighborhood grocery option for those who live, work and play in the area.” The store will anchor a $60.0 million block-long development by Meijer’s longtime contractor, Rockford Construction.
Mills Fleet Farm
Mills Fleet Farm is launching a growth effort that could double its current store count of 36 stores in five to six years. The Company opened six stores in the last 10 years. Looking ahead, Mills Fleet expects to first add stores in the four states where it currently operates, Wisconsin, Minnesota, Iowa and North Dakota, and then expand to neighboring states. Coinciding with its expansion plans, the Company is building a $65.0 million 1.1 million square-foot distribution center in Chippewa Falls, WI. Mills Fleet is looking at several possible sites for new stores in Wisconsin, where it currently operates 18 stores. The Company also indicated there is a strong possibility it will expand into Illinois, which would bring it into competition with Blain’s Farm & Fleet, which sells some of the same types of merchandise. In terms of competition, the two chains operate in different parts of Wisconsin; Mills Fleet’s stores are located in eastern and central Wisconsin, and Blain’s stores are in southern and southwestern Wisconsin, so Mills’ potential expansion into northern Illinois would bring the two chains into contact with each other. Mills’ newer stores are typically 185,000 square feet or larger, while Blain’s stores are typically 169,000 square feet. Mills Fleet Farm was purchased by private equity firm KKR & Co. in February 2016; KKR also owns Toys “R” Us and Academy Sports + Outdoors.
The most recent Mills Fleet Farm store opening was in Duluth, MN in 2016. There are four competing home center businesses within 10 miles of the store, with Menards, Fastenal and Home Depot each operating a location within two miles.
BJ's Wholesale Club
BJ’s Wholesale Club opened a new 87,000 square-foot club in Summerville, SC over the weekend. The location is its 215th across 16 states and completes its presence in every state on the East Coast.
Both Walmart’s Sam’s Club and Costco already operate in the nearby Charleston market and are eyeing expansion there. Both are looking at new sites in Summerville.
Dollar General
Dollar General reported first quarter sales growth of 6.5% to $5.61 billion. Comps increased 0.7%, primarily due to an increase in average transaction, partially offset by a decline in traffic. Same-store sales were driven by positive results in the consumables and apparel categories, partially offset by negative results in the home and seasonal categories. Net income fell 5.3% to $279.5 million, impacted by a charge related to the early retirement of long-term debt obligations. During the quarter, the Company opened 293 new stores and remodeled or relocated 301.
In April 2017, the FTC approved the Company’s proposed purchase of 322 store locations in 36 states from Dollar Express. The transaction is expected to close this month. The store sites are anticipated to be converted to the Dollar General banner by the end of November. The acquisition is expected to be incremental to the Company’s 2017 new store growth by approximately 290 new stores over the prior guidance of 1,000 new stores for fiscal 2017. The Company anticipates sales from the acquired sites to impact fiscal 2017 net sales by approximately 100 basis points. The acquisition will be modestly accretive to EPS for the fiscal year.
Looking ahead at fiscal 2017, and including the anticipated closing of the transaction discussed above, the Company expects EPS of $4.25 – $4.50; sales growth of 5% – 7%, higher than its previous forecast of 4% – 6%; and capex of $715.0 million – $765.0 million, compared to prior guidance of $650.0 million – $700.0 million. The Company’s comp growth is unchanged from the prior guidance range of slightly positive to 2%. An estimated $0.02 per-share charge is forecasted in the second quarter, primarily related to lease termination costs for a small number of overlapping store locations as well as ancillary costs related to the pending store locations.
Meanwhile, on June 3, Dollar General opened a new distribution center in Janesville, WI. It invested about $100.0 million in the one million square-foot facility, which serves 800 stores in nine states in the upper Midwest. It is the Company’s 14th DC; it has another under construction in Jackson, GA, and one planned for Amsterdam, NY.
Ignite Restaurant Group, Inc. (DIP)
Today, Ignite Restaurant Group, Inc., DIP DBA Joe's Crab Shack and Brick House Tavern + Tap filed a voluntary Chapter 11 petition in the United States Bankruptcy Court in the Southern District of Texas. The proceedings have been designated as case number 17-33550 and has been assigned to the Honorable David Jones.
According to the bankruptcy filing, the Company had total assets of $153.4 million and debts of $197.4 million as of April 30, 2017.
The Debtor stated that funds will be available for distribution to unsecured creditors.
On June 5, 2017 the Debtors entered into an asset purchase agreement for $50.0 million with KRG Acquisitions Co, LLC, as a stalking horse purchaser. KRG is an affiliate of Kelly Investment Group. The agreement contemplates the sale of substantially all of the Debtors’ assets.
Click here to request a list of the Top 30 Creditors.
Boot Barn
Boot Barn reported net sales increased 9% to $163.0 million driven by an extra week of sales in the fourth quarter, 11 net store openings, and slightly offset by comparable same store sales declining 0.9%. Management noted that oil states’ (North Dakota, Wyoming, Colorado and Texas) comps improved towards the end of the fourth quarter and continued into the first quarter of fiscal 2018. However, the conversion of sheplers.com to a new e-commerce platform negatively impacted comps towards the end of the fourth quarter and also impacted first quarter comps of fiscal 2018 by mid-single digits. During the fourth quarter, the Company opened two new stores, relocated one and closed one Boot Barn location, ending with 219 stores in 31 states. For fiscal 2018, Boot Barn is planning to open 12 stores. The average store size of these openings is approximately 10,000 square feet.
Ollie's Bargain Outlet
Ollie’s first quarter sales jumped 17.5% to $227.6 million, driven by 1.7% comp growth and increased store count. The Company opened five stores in the quarter, bringing its total count to 239, compared to 208 at the end of last year’s first quarter. Net income was $19.0 million, compared to $11.7 million last year.
Looking ahead at fiscal 2017, Ollie’s expects sales of $1.03 billion – $1.04 billion, representing growth of 15% – 16% over 2016, and net income in the range of $73.0 million – $74.5 million, representing growth of 22% – 25% over 2016. Guidance assumes comp growth of 1% – 2% and takes into account the extra week that fiscal 2017 will have with respect to 2016. It plans to open 33 – 35 new stores and has no planned closures. Capex is expected to be $18.0 million – $20.0 million, compared to $16.4 million in fiscal 2016.
Lululemon
Lululemon Athletica announced plans to close about 40 of its 55 ivivva branded stores and convert about half of the remaining 15 stores to Lululemon branded stores. It will also close all of its ivivva branded showrooms and other temporary locations. Going forward, the Company will operate ivivva, an activewear brand for girls, as a primarily e-commerce business, with a select number of stores continuing to operate in key communities across North America. The closures and restructuring are anticipated to be substantially complete by the end of the third quarter of fiscal 2017. The Company expects to recognize pre-tax costs totaling $17.7 million in connection with the restructuring.
For the first quarter, sales increased 5% to $520.3 million, while comps were down 1%. Profit fell 31.1% to $31.2 million. The Company ended the quarter with 411 stores in operation. CEO Laurent Potdevin said, “I’m excited to see the positive trends that materialized late in Q1 continuing into Q2. Our current outlook for the remainder of 2017 is strong, and I’m energized by the growth strategies taking shape. I’m also confident in our plans to restructure ivivva and believe they are the best means to optimize this part of the business.” For fiscal 2017, the Company now expects sales of $2.53 billion – $2.58 billion, down from previous guidance of $2.55 billion – $2.60 billion. EPS is projected to be $1.97 – $2.07, down from $2.26 – $2.36, reflecting the impact of the ivivva restructuring.
Express
Express’ first quarter sales decreased 7.1% to $467.0 million, and comps were down 10%. E-commerce sales jumped 27% to $97.6 million, representing about 21% of total sales. The Company recorded a net loss of $4.5 million, compared to a profit of $12.9 million in the same quarter last year; results were negatively impacted by a $6.3 million charge related to the exit of Canada. During the quarter, the Company opened five U.S. outlet stores and closed nine underperforming retail stores, ending with 652 stores in operation. CEO David Kornberg stated, “We are pleased with the recent trends in our business and believe that our initiatives are gaining traction in a challenging retail environment. E-commerce sales accelerated in the first quarter, increasing 27%, and are on track for another record year. Store performance is also showing sequential progress. This led to a comparable sales improvement as we moved through the first quarter, a trend that has continued into the second quarter.”
Future Retail Store Closings
AggData monitors upcoming retail store closings throughout the day and maintains an active database of store locations and anticipated closing dates. Here is a sample of recently announced store closings.
Please contact AggData to request a full future store closing list.
2017 Mergers & Acquisitions Report
After three consecutive years of increases, 2016 global merger and acquisition (M&A) activity fell to $3.840 trillion, from the 2015 record high of $4.660 trillion. Analysts are predicting 2017 will keep pace, as companies and investors remain receptive to building scale. The Merger & Acquisition Activity report includes a list of all significant M&A activity including notable asset sales within the retail / wholesale food, convenience store, foodservice, retail / wholesale drug, casual dining / restaurant, mass merchandise, electronics / office products, home improvement / building materials, sporting goods, department stores / apparel / footwear / jewelry, and e-commerce sectors. Click here for more information.
