September 18, 2018
Essendant & Staples
On September 14, Staples and Essendant entered into a definitive agreement under which Staples will acquire all of the outstanding shares of Essendant’s common stock for $12.80 per share in cash, for a transaction value of $996.0 million including net debt. The transaction follows the determination by Essendant’s board that the Staples proposal constituted a “Superior Proposal” compared to the previously announced agreement to combine with Genuine Parts Company’s (GPC) S.P. Richards business. GPC did not propose any amendments to the S.P. Richards agreement. Essendant terminated the GPC agreement, meaning GPC is entitled to a $12.0 million break-up fee, which Staples is paying as part of its agreement with Essendant. The $12.80 per share purchase price reflects a 51% premium to Essendant’s stock price on April 11, 2018, the day before it announced plans to merge with GPC’s S.P. Richards business, and a 10.3x EBITDA multiple. The transaction is conditioned upon regulatory approval. If the tender offer is consummated, it will be followed by a merger in which any shares of Essendant common stock not purchased in the offer will be converted into the right to receive the same $12.80 per share in cash. The transaction is not subject to a financing condition and is expected to close in the 2018 fourth quarter. Operations have been deteriorating, as reflected by a 63% decrease in EBITDA since 2016, while TTM EBITDA margin is only 1.7%. Furthermore the Company is highly leveraged, as reflected by the ratio of debt/TTM EBITDA, which is high at 6.1x. It should also be noted that last year’s LBO by Sycamore Partners left Staples with considerable debt, and it plans to incur more debt to fund the acquisition of Essendant.
Essendant’s agreement to be acquired by Staples could face shareholder opposition. Pzena Investment Management, Essendant’s largest shareholder with a 13% interest, said it believes the transaction doesn’t “adequately value the Company independent of the S.P. Richards transaction.” Pzena said it plans to oppose the proposal from Staples, and it favors the original agreement with S.P. Richards.
Walmart is testing a new version of an automated kiosk installation that will allow customers to pick up grocery orders placed online without requiring them to interact with employees. The new version is being tested at a Supercenter in Sherman, TX. Customers purchase and pay for groceries online, then Walmart employees pick and pack their orders and store them in bins in the 11-foot by 127-foot kiosk, which is attached to the Sherman store. The kiosk has refrigerators and freezers inside that keep the groceries fresh. When customers arrive to pick up their orders, they walk up to the kiosk and scan a barcode. Their groceries will appear within one minute, bagged and ready to load into their cars. Walmart tested its first automated grocery kiosk in Oklahoma last year. The new version is bigger and can serve five customers simultaneously.
Walmart will close three of its Neighborhood Market stores in San Antonio, TX on October 12. The three stores were all built in 2015 and combined are more than 123,000 square feet. While no details were given about the reason for the closures, a Company representative said these were isolated incidents and that its Neighborhood Market format is strong overall. All of the locations are within three miles of larger Walmart stores. After the stores close, Walmart’s Neighborhood Market format will have six locations in the San Antonio area. The Company is steering efforts toward renovations to support its grocery pickup and delivery businesses at other stores. The Company is said to be spending $277.0 million in Texas on these kinds of renovations. Grocery pickup is currently available at 24 stores in the San Antonio area, and Walmart’s online grocery delivery service was launched in San Antonio earlier this summer.
On September 13, Walmart announced the acquisition of Cornershop, Inc., an online marketplace for on-demand delivery from supermarkets, pharmacies and specialty food retailers in Mexico and Chile, for $225.0 million. Cornershop has rapidly been building scale, with the number of unique users doubling in the past 12 months. Cornershop’s three founders, CEO Oskar Hjertonsson, COO Daniel Undurraga, and CTO Juan Pablo Cuevas and their teams, will continue to lead the business. The purchase follows Walmart’s recent investment in Dada-JD Daojia in China and the strategic alliance with Rakuten in Japan.
Walmart has teamed up with Instacart to bring some Canadian customers same-day grocery deliveries. Walmart’s Canada unit said the service, which is part of a pilot program with Instacart, will be available in the Greater Toronto Area from September 13, while customers in Winnipeg will be offered the service later this month. Last November, Loblaw teamed up with Instacart to offer home delivery service in Toronto and Vancouver.
Walmart is relaunching Jet.com two years after it purchased the Company. The relaunch will include a new shopping experience tailored to specific needs of urban areas, starting with New York City, where the site has a new fulfillment center that will be completed this fall. New York-based customers will soon be able to have groceries delivered within three hours, enabled by Parcel, a logistics company Walmart acquired last year.
German retailer Metro AG plans to sell its struggling Real hypermarkets, which could potentially sell for $1.20 billion and attract interest from possible suitors, including Amazon. Foreign companies have been hesitant to enter the German grocery space because of strong players like Aldi and Lidl dominating market share. Walmart took a loss of $1.00 billion in Germany before pulling out in 2006. Investors might be interested in the real estate value of the 65 hypermarkets that Real owns, while a sale of parcels of stores to other chains is also possible.
Focus Brands (FBI) announced it has completed its purchase of Jamba Juice for about $200.0 million. Jamba has more than 800 locations worldwide. With the completion of the deal, Jamba is now a wholly-owned subsidiary of FBI and ceased trading prior to market opening on September 13. It will no longer be listed on NASDAQ.
PGA Tour Superstore
PGA Tour Superstore recently unveiled a cloud-based platform, called Salesforce Commerce Cloud, to optimize online and mobile shopping experiences. The platform allows customers to discover products, get recommendations and trends based on their interests, and make purchases directly through their phone or tablet. PGA Tour Superstore continues to grow its presence both in-store and online. The Company has tripled its store count over the past eight years, now operating 33 stores nationwide. The Company plans to grow its brick-and-mortar business by 50% over the next three years. Last year, online comps increased 42%.
Party City entered into an agreement to acquire a master franchise group representing 21 franchise stores in Minnesota, North Dakota and Texas. The purchase price of $22.9 million represents a fully synergized multiple of EBITDA of approximately four times. In 2017, this franchise operator reported sales of $33.5 million. Prior to the acquisition, the Company’s retail operations included 839 Company-owned Party City stores and 118 franchise stores.
Publix Super Markets announced it will open the fifth store under its revamped organic and natural foods store concept, GreenWise Market, in Marietta, GA; the opening date is still to be determined. Last year, Publix announced it planned to reignite and revamp the concept, which it introduced in 2007. The first location featuring the new format will open in October in Tallahassee, FL. Other previously announced future GreenWise locations include Mount Pleasant, SC, and Lakeland and Boca Raton, FL. Publix said it continues to look for additional GreenWise sites throughout its operating areas. Publix currently operates three older-format GreenWise stores, with the last one opened in 2008. Publix plans to share additional details related to the new GreenWise format shortly.
Yesterday, Supervalu (SVU) announced it has entered into a definitive agreement to sell 19 of its 36 Shop 'n Save grocery stores, primarily located in the St. Louis, MO area, to Schnuck Markets. The transaction is planned to occur with a staggered close process that is currently expected to finish by late October, subject to customary closing conditions. As part of the acquisition, SVU and Schnucks will also enter into an agreement for SVU to serve as the primary supplier for nine of Schnucks’ existing stores located across northern Illinois, Iowa and Wisconsin. As part of the deal, Schnucks will acquire 15 in-store pharmacy locations and one standalone pharmacy (16 in total), which will remain open, and prescription files at 10 other Shop ‘n Save pharmacy locations that will be transferred to other Schnucks pharmacies in the area. Schnucks will also acquire four of Shop ‘n Save’s seven fuel centers.
Yesterday, Supervalu also closed the last Rainbow foods stores, a banner that was once one of the largest grocery chains in Minnesota. The Rainbow chain peaked with more than 40 stores in the state. The chain’s owner, Roundy’s, exited the market in 2014, when there were 27 Rainbow locations left. It sold 18 of the 27 stores to a consortium led by Supervalu, including the one in Maplewood that just closed. Supervalu is remodeling a Cub Foods Maplewood store less than a block from the Rainbow store, as well as Chanhassen and St. Paul Midway locations. It is also closing a Cub Foods in St. Paul on September 26.
In July, United Natural Foods (UNFI) agreed to acquire Supervalu for $2.90 billion. UNFI has pledged to exit the retail grocery business, leaving the future of about 80 Cub locations up in the air; they are expected to be sold, likely by January 2019.
Yesterday, Amazon opened a new checkout-free Amazon Go store in Chicago, IL. It is the Company’s fourth location and first outside of its hometown of Seattle. The first store opened in January, with the other two opening over the past few weeks. The latest 2,000 square-foot store is on the first floor of the complex where Amazon’s Chicago office is located. Amazon Go carries grab-and-go sandwiches, salads and snacks you might find at a grocery store, along with packaged convenience store fare. Some fresh prepared items, delivered daily, are made by Amazon off-site, and some are prepared by local companies. There is no hot prepared food, in part because of the focus on eliminating lines, but there are ready-to-heat items and two microwaves onsite. There’s also a section with two-person meal kits designed to be prepared in about 30 minutes, aimed at people who want to pick up dinner on the way home from work. Other than the addition of local food vendors, little has changed from the original Seattle store. Amazon confirmed plans to open an Amazon Go store in New York City; however, the Company did not provide a timetable or details.
Amazon rolled out the Prime delivery service of natural and organic products such as meat and seafood, fresh produce and staples from Whole Foods in 10 more cities, including New Orleans, Oklahoma City, Charlotte, Las Vegas, Memphis, Nashville, Phoenix, Raleigh, Seattle and Tucson. It now offers the service in 38 cities.
Amazon is adding a fourth pick-up and returns center in the Chicago Loop business district. The new center is run by Amazon staff, but there are self-help kiosks as well. Amazon’s pick-up outlets offer free same-day delivery and no minimum order amount.
In other news, Amazon has launched ‘Amazon Storefronts,’ a collection of small and medium-sized U.S. businesses. ‘Amazon Storefronts’ is accessible from the Amazon.com homepage and directs shoppers to nearly 20,000 American firms located across 50 states. Online customers can search for goods through 25 product categories.
Meanwhile, Amazon plans to open its second large-scale facility in Stockton, CA. Other Amazon fulfillment facilities in Central and Northern California are located in Fresno, Newark, Patterson, Sacramento, Tracy and Vacaville.
Amazon will also reportedly lease a new 106,000 square-foot warehouse in Sterling, VA, slated for completion later this year. Amazon has another facility in Sterling, for which the Company filed a WARN notice back in March indicating 67 employees would be laid off. The fate of the existing facility remains unclear; however, earlier this year Amazon said it was “transitioning to a different format to support customer fulfillment.”
Natural Grocers by Vitamin Cottage
Natural Grocers by Vitamin Cottage will close a store in Tulsa, OK by November 9, the Company’s first closure since its founding in 1955. According to Natural Grocers, the decision “reflects that store’s financial performance and the Company’s ongoing efforts to enhance operating efficiencies across its store base.” No additional closures are planned. Natural Grocers operates another nearby location, about eight miles away. The Company operates 148 stores in 19 states.
Giant Eagle will open its seventh GetGo convenience store in Zionsville, IN by the end of the year. Averaging 4,500 square feet, GetGo is a step above a typical convenience store, with a kitchen for made-to-order items, and traditional grab-and-go offerings alongside fresh and prepared foods such as salads and wraps. There is also a self-checkout kiosk.
Meanwhile, Giant Eagle plans to build a GetGo gas station at the site of the former Toys “R” Us store in Center Township, PA. In August, the Company purchased the site at an auction for $3.75 million. Giant Eagle might subdivide the property and could lease or sell a portion to an entity that would want to occupy the former Toys “R” Us building.
Rouses Markets opened a store in Calcasieu Parish, LA on September 12, bringing its store count to 57. The new store includes expanded prepared foods along with Rouses’ signature offerings.
Dave & Busters
Dave & Busters plans to test a new fast-casual format called TNT Tacos. It will open in a converted special-event/functions room at a Dave & Buster’s restaurant in Dallas, TX, where it is headquartered.
Golub Corporation recently closed a Price Chopper in Hudson, NY, blaming it on “economic decline” in the surrounding area. The Price Chopper location will be the site of a new ShopRite, replacing another nearby ShopRite. The store will be 6,000 square feet larger than the unit it is replacing, allowing ShopRite to add a pharmacy.
On September 12, SpartanNash re-bannered two Econofoods stores to Family Fare Supermarkets, another one of its banners, in Northfield and Red Wing, MN, following renovations. The Company invested $3.0 million in the Northfield store, and $500,000 in the Red Wing store. The Litchfield location also is in the process of a similar renovation and re-bannering, scheduled to be completed in October. Some of the renovations include a more modern look, expanded prepared foods and café offerings, and its Fast Lane click-and-collect program. With the above three stores re-bannered to Family Fare, the Company will only have three remaining Econofoods.
Ahold Delhaize’s Giant Foods-Carlisle division has opened a fuel station on the same road as its store in Lititz, PA. The fuel station, which has nine pumps, is part of a $22.0 million investment in Lancaster County announced earlier this summer. Other projects include the launch of a new e-commerce hub for its Peapod delivery service at a former Giant store in Lancaster later this year, lower prices that have been in place across its stores, and completion of four store remodels in June. Giant Food has more than 170 locations in Pennsylvania, Maryland, Virginia and West Virginia.
Tesco will unveil a new discount format this week in the U.K., the first of which will open in eastern England on September 19. There could be as many as 60 of the new format stores, all of which would be converted from existing Tesco stores that are underperforming or might have greater potential if they offer deeper discounts. The move is the Company’s latest effort at fending off competition from Aldi and Lidl.
As it prepares for the launch, Tesco is also reportedly planning to close up to 30 poorly performing Metro stores.
Whole Foods will open its first two 365 stores in Georgia later this year, located in Decatur and Buckhead. The stores will include partnerships as part of the “Friends of Whole Foods Market” program and feature an onsite restaurant and a coffee shop. The 35,000 square-foot stores will compete with Sprouts, Earth Fare and Trader Joe’s in the area. Publix is also bringing its GreenWise Market (discussed above) to Atlanta. The initial roll out in the metro area could include three to five stores.
Starbucks opened its second Princi Bakery in the U.S. in Chicago, IL. The first opened in Seattle, WA this past summer, and a third is slated to open in New York this fall. The counter-service restaurant menu includes coffee but also meals, changing from breakfast to lunch to an early evening bar. The Chicago location is actually three concepts in one: Princi, Starbucks Reserve and Bar Mixato. The announcement comes shortly after the opening of the first Starbucks in Italy, with the Milan Roastery shop. Milan is also home to Princi, where there are six locations. The world’s largest Starbucks is scheduled to open in Chicago on Michigan Avenue in the former four-story Crate & Barrel building next year.
Starbucks is partnering with UberEats to test delivery in more than 100 locations in the Miami, FL area. The Company had tested delivery with Postmates a few years ago and has experimented with other means for delivery, but nothing has gained enough traction to get any sort of rollout.
Recently, Starbucks also announced a partnership with Alibaba with delivery services beginning in Beijing and Shanghai next month. By the end of fiscal 2018, the Company expects to roll out the service to 2,000 stores across 30 cities in China.
Walgreens & Sprint
Walgreens and Sprint announced an expansion of the collaboration they had announced earlier this year, which will include 80 new locations. All of the new Sprint Express at Walgreens stores will be throughout Chicagoland and the Dallas-Ft. Worth metro area, and are planned to open by the end of the year. This is just another example of how Walgreens is relying on partnerships to expand its offerings. Last week, it was announced that retail clinics operated by Norton Health will open in eight Walgreens stores in the Louisville, KY area.
Camping World is expanding its Greenville, NC Overton’s showroom with a multi-branded superstore, combining Overton’s, Gander Outdoors, and Camping World outdoor products and services with Gander RV Sales. This is the first multi-bannered store to house substantially all of Camping World’s offerings under one roof. The expanded store is expected to be open by year end; it will also serve as a customer call center and an e-commerce fulfillment center for online purchases.
On September 14, L Brands announced that its 23 Henri Bendel stores (see below for Store Concentration Map) would be closing after 123 years in business, effective January 2019. The Company, which acquired the luxury brand in 1985, said it wants to focus on larger brands with more growth potential. The Company estimates that Henri Bendel’s 2018 revenues and operating loss, excluding closing costs, will be approximately $85.0 million and $45.0 million, respectively. The Company is in the process of estimating the costs associated with closing the business.
RH unveiled its largest store to date, a 90,000 square-foot store in Manhattan’s Meatpacking District. Entire floors are dedicated to interiors, modern products, outdoor, baby & child, and teen. It has also integrated its interior design firm services into its retail experience. The store features a barista bar and rooftop restaurant complete with an outdoor wine terrace. Next year, the Company’s foray into hospitality will continue with its first RH GuestHouse boutique hotel, which will open across the street from the Meatpacking location.
Crate & Barrel
Crate & Barrel is opening a full-service restaurant in its Oakbrook, IL store next spring. The move follows in the footsteps of home furnishings retailer RH (fka Restoration Hardware), which now operates five restaurants within its stores (see story below for the most recent opening). Crate & Barrel’s restaurant is a partnership with Chicago’s Cornerstone Restaurant Group. CEO Neela Montgomery indicated the Company does not have concrete plans at this time for additional restaurants but is always exploring new ways to drive traffic.
Busy Beaver opened its newest location in New Castle, PA. This is the chain’s third new store this year, following stores that opened in Grove City and Greenville, PA. The 40,000 square-foot New Castle store features an expanded seasonal department, a drive-thru lumber yard, a farm and ranch department, and a designated contractor service center. Busy Beaver was founded in 1962, when the Company started with a few lumberyards in the Pittsburgh area. It now has 21 locations and more than 350 employees across western Pennsylvania, eastern Ohio, and northern West Virginia. The Company has opened six stores since 2013 and also renovated half of its original stores. In 2015, it joined the True Value co-operative.
Kroger’s second quarter identical store (ID) sales (excluding fuel) remained positive, as the Company posted a 1.6% ID sales increase, excluding fuel. However, competitive forces compelled the Company to sacrifice gross margin, which fell 40 basis points. Management attributed the decline to price investments, rising transportation costs, and growth of the specialty pharmacy business; shrink rate continued to improve during the second quarter. As a result, EBITDA dropped 11% for the quarter, to $1.17 billion, on just a 1% increase in sales. Management noted that its efforts to rearrange store layouts and move brands around to focus on its own labels, part of its previously announced Restock Kroger initiative, took a toll on same-store sales during the second quarter. The Company expects the negative effects to lessen in the back half of the year.
On the news, Kroger’s stock fell 9.9% to close at $28.58 Thursday. However, it remains well above its 52-week low of under $20.
In its latest effort to cut costs, Kroger is reportedly consolidating Roundy’s Wisconsin and Mariano’s Chicago divisions into a single unit in Milwaukee, WI. The new unit will be led by Michael Marx, who headed Roundy’s following its acquisition by Kroger. As a result, Mariano’s President Don Rosanova, VP of Merchandising Don Fitzgerald, and VP of Operations John Boyle will leave the Company. Mr. Rosanova will retire September 29, while Mr. Fitzgerald and Mr. Boyle will remain as strategic advisers until January.
Last week, the Kroger Mid-Atlantic division announced employees working at 22 Kroger stores have ratified a new labor agreement with UFCW Local 400. This agreement covers more than 3,200 associates in the Richmond, Hampton Roads, Virginia Beach and Norfolk areas. The agreement raises wages and improves health benefits and contributions to a pension fund.
In other news, this week the Company is rolling out Dip, a new style brand, to its 300 Fred Meyer and Marketplace format stores. The Dip collection offers clothing for all ages and more than 80% of the offerings are $19 or less.
Dollarama’s second quarter sales increased 6.9% to $868.5 million, driven by continued organic sales growth fueled by 2.6% comp growth and a net addition of 53 stores over the past year. Comp growth consisted of a 3.1% increase in average transaction size and a 0.5% decrease in the number of transactions. Sales were impacted by management’s decision to minimize price increases and lower sales of Canada Day seasonal and related souvenir products. Operating income was $206.7 million, compared to $191.9 million last year. Net earnings increased 7.6% to $141.8 million, a result of sales growth, sustained gross margin, and lower SG&A as a percentage of sales.
The Company revised its fiscal 2019 guidance and now expects comp growth of 2.5% – 3.5%, down from 4% – 5%, based on sales results for the first half of the year and minimal price increases. However, EBITDA margin is expected to be 23.5% – 25%, compared to previous guidance of 22.5% – 24%. The Company continues to expect to open 60 – 70 new stores, and capex is expected to be $190.0 million – $200.0 million.
Hudson's Bay Company (HBC)
HBC’s second quarter sales decreased 2% to C$2.16 billion, and comps were down 0.4%. By banner, Saks Fifth Avenue comps increased 6.7%, while DSG (Hudson’s Bay, Lord & Taylor and Home Outfitters) comps decreased 3.8%, and Saks OFF 5th comps were down 7.6%. During the quarter, the Company committed to selling its controlling interest in HBC Europe and to form a strategic partnership for its European businesses; as a result, HBC Europe was classified as a discontinued operation and was excluded from results. Gross margin improved 240 basis points to 39.9%, with higher margins driven by improved full-price selling margin rates and increased penetration of full-price selling versus clearance sales. SG&A expenses decreased 1.8% to $870.0 million due primarily to savings from the Company’s restructuring programs and a reduction in one-time restructuring charges. Driven by gross margin improvement, adjusted EBITDA was C$33.0 million, up significantly from C$3.0 million in the prior-year period. During the quarter, HBC closed two Home Outfitters stores in Quebec City and St. Bruno, Quebec, ending with 350 stores in operation.
Claire's Stores, DIP
Claire’s Stores, DIP reported second quarter sales decreased 0.7% to $314.4 million, negatively impacted by the effect of Company-operated and concession store closures, partially offset by a favorable foreign currency translation effect, an increase in new and same-store Company-operated store sales, and increased franchisees sales. Excluding the effect of foreign translation, sales would have decreased 1.9%. Comps inched up 0.1%, with North America comps up 4.4% and Europe comps down 6.3%. Gross margin increased 180 basis points to 50.8%, consisting of a 100 basis-point decrease in occupancy costs and an 80 basis-point increase in merchandise margin. As a result of improved margins, adjusted EBITDA rose 14.3% to $54.2 million. The Company ended the quarter with 2,471 Company-operated stores, 687 franchise locations and 6,631 concession stores.
AutoZone’s fourth quarter sales increased 1.3% to $3.56 billion, and domestic comps were up 2.2%. Gross margin increased to 53.6% from 52.8% in the prior-year period due to higher merchandise margins, partially offset by higher supply chain costs. Operating expenses increased primarily due to charges related to the termination of its pension plans. As a result, operating income decreased 16.4% to $591.2 million. During the quarter, the Company opened 78 new stores and relocated four existing stores in the U.S., opened 28 stores in Mexico and four in Brazil. As of August 25, the Company had 5,618 stores in the U.S. and Puerto Rico, 564 stores in Mexico and 20 stores in Brazil.
Tailored Brands’ second quarter sales decreased 3.2% to $823.4 million. Retail sales also decreased 3.2%, primarily from a $26.9 million decline in rental services revenue due to the 53rd week last year (compared to 52 weeks this year), the earlier prom season, and a shift in demand for weddings to the third quarter. This was partially offset by an increase in retail clothing sales, which drove comps up 1.7%. Corporate apparel sales dropped 3.9%, primarily due to lower sales in the U.K., partially offset by the impact of a stronger British pound this year. The Company now expects corporate apparel sales to decrease by a low single-digit percentage in fiscal 2018 due to recent trends in the U.K. business. Comps by banner increased 1% at Men’s Wearhouse, 2% at Jos. A. Bank, 3.5% at K&G, and 3.7% at Moores. Gross margin fell 180 basis points to 44.8%, primarily from the decrease in sales. As a result, operating income declined 18.9% to $88.0 million. At quarter end, the Company operated 1,469 stores, including 719 Men’s Wearhouse, 487 Jos. A. Bank, 49 Men’s Wearhouse and Tux, 126 Moores, and 88 K&G locations.
New York & Co.
New York & Co. announced it is changing its name to RTW Retailwinds to reflect “the ability to grow the portfolio of lifestyle brands into new categories and markets.” The name change, expected to occur in October, is part of the Company’s strategy to drive sales to over $1.00 billion. It includes new initiatives such as expanding the Company’s plus-size brand, Fashion to Figure, introducing a lingerie lifestyle brand, and debuting a Kate Hudson casual lifestyle collection. In addition, the Company plans to accelerate growth of its core namesake brand through ongoing celebrity partnerships. During the second quarter of 2018, the Company reported its fourth consecutive quarter of comp growth, its highest gross margin rate achieved since 2005; it is on track to generate adjusted EBITDA of $35.0 million – $37.0 million for the fiscal year, up from $30.5 million in fiscal 2017. New York & Co. has 425 physical stores, a digital presence that represented 30% of 2017 sales, 13 million customers on file, and approximately 165 million annual visits online and in stores. The Company’s loyalty member base represents 43% of total sales.