Openings, Closings, & Other Key Industry Highlights

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April 15, 2020


Today Best Buy announced that it has retained approximately 70% of its sales compared to last year, supported by its curbside service model, despite the closure of its domestic stores. Domestic online sales are up over 250% and half of those sales are from customers selecting curbside pick-up. 

Other actions the Company is taking include:

  • Furloughing 51,000 domestic hourly store employees effective April 19th;
  • Furloughed employees retain health benefits at no cost to them for a minimum of three months;
  • Retaining 82% of its full-time employees, including most of its In-Home Advisors and Geek Squad Agents, on its payroll, though it has suspended these services for the time being ;
  • Salary reductions including a 50% cut for the CEO and Board of Directors through at least September 1, 2020;
  • Executives reporting to the CEO will take a 20% cut in base salary through at least September 1, 2020;
  • Company is also lowering inventory receipts, requesting extended payment terms with key vendors, reducing marketing and promotional spend, lowering capex, and suspending its 401K match;
  • Partnered with founder, Dick Schulze, to create $10.0 million employee assistance fund;

According to reports, Pier 1 Imports anticipates receiving a bid from CSC Generation that would keep fewer than 100 of the Company’s approximately 900 locations open. Founded in 2016, CSC Generation is a joint venture of entrepreneur Justin Yoshimura and China Science & Merchants Investment Management Group. CSC has purchased the intellectual property of bankrupt companies, including Bon-Ton Stores Inc. and home décor chain Z Gallerie. In 2017, it bought DirectBuy, a home furnishings store, with a stated objective of ultimately creating a home-goods platform by acquiring Pier 1 and other brands.

The hearing to consider approval of the Disclosure Statement was adjourned until April 28. The hearing was originally scheduled for April 7. Click here for more information.


Fresh Thyme closed as many stores as it opened in 2019, likely due to the same issues (mainly a shift in demand to traditional grocers from organic and natural operators) that plagued its peers, Earth Fare and Lucky’s Market, which both filed for Chapter 11 protection earlier in 2020. However, we suspect Fresh Thyme is a bit better positioned, at least since it is backed by Meijer and is currently benefiting from the COVID demand, factors which will help limit near-term risk. Click here for a sample list of future openings/closings.


On April 8, Nordstrom announced it priced an offering of $600.0 million of its 8.75% Senior Secured Notes due 2025. Net proceeds will be used for fees and expenses, and for general corporate purposes. The closing is expected to occur on or about this Thursday (April 16). The Company’s 380 stores in 40 states have been closed since March 17, while online order pickup and curbside services remain available at its full-line locations. A portion of corporate employees have been furloughed since April 5. The Company drew down $800.0 million on its revolving credit facility.

In an April 8 filing with the SEC, Nordstrom stated that its financial situation could become distressed if its stores stay dark for much longer and that the pandemic has had a “substantial impact” on its business. It expects results for the quarter ending May 2 to be “adversely impacted in a significant manner.” The Company said it continues to generate sales and clear excess inventory by fulfilling customer online orders from both its physical stores and fulfillment centers. 


Ahold Delhaize provided an update on 1Q20 results and FY20 guidance. Regarding preliminary Q1 results, which will be reported in full on May 7, Frans Muller, president and CEO, said, “Due to COVID-19, demand across our multichannel network in the Eastern U.S. and Europe increased significantly in Q1. As a result, we expect Group net sales growth of approximately 15% in Q1, or 13% in constant currency. Comparable sales growth excluding gasoline is expected to be 14% in the U.S., and 10% in Europe in Q1. In the U.S., we saw customers begin stockpiling in March, and experienced 34% comparable sales growth excluding gasoline in the month.”

Regarding the FY20 outlook, management noted that COVID-19 has created uncertainty and it is too early to know the full impact. The Company continues to expect underlying EPS growth in the mid-single-digit range for the year, with free cash flow to exceed its previous guidance of €1.50 billion, on the expectation that some capital programs will likely be delayed due to COVID-19. Click here for a sample list of future openings/closings.


Published reports indicate that Macy’s has hired investment bank Lazard Ltd. to explore its financial options; it also reportedly hired restructuring lawyers at Kirkland & Ellis but noted that no debt restructuring is imminent. The Company’s 873 stores have been closed since March 18, leaving its e-commerce site as its only source of revenue; e-commerce accounted for about 25% of its annual sales. On March 26, the Company drew down the entire available amount under its $1.50 billion revolving credit facility, which matures on May 9, 2024.

At 4Q19 end (February 1), the Company had $2.19 billion in total liquidity. Macy’s has $3.60 billion in long-term debt and $7.00 billion in store lease obligations. Roughly $530.0 million of debt is due January 2021, and $450.0 million is due in 2022.

Macy’s was in the process of cutting costs long before the outbreak began, having closed more than 100 stores since 2015; the Company had announced plans to permanently close 125 stores over the next three years.

According to research conducted by S&P Global Market Intelligence, retailers within the department store sector have a 42.1% median probability of defaulting on their debt within one year. As of April 7, this is the highest among consumer companies. The default risk for department stores rose nearly 20% between March 25 and April 7. 


Giant Eagle plans to open its second curbside pickup and delivery-only store in Garfield Heights, OH. The Company’s first pickup-only store, located in Akron, opened last week and has doubled online order capacity for that city along with nearby Canton. The Garfield Heights location will stop allowing customers into the store starting April 18, so employees can fulfill e-commerce orders. Customers reserve slots for online orders. Giant Eagle is hiring more shoppers to fill online orders in an effort to increase time-slot availability across the chain. The Company has reportedly been increasing ordering slots every week by 1,000. It has increased delivery and pickup capabilities by 25% in Pittsburgh.


Topgolf International decided to postpone its plan for an IPO, given that its 64 locations have been closed since March 18. The Company expects to resume the IPO when conditions normalize. Reports say the IPO intended to value the business at $4.00 billion. In January, Topgolf hired underwriters including Morgan Stanley, JP Morgan Chase, and Bank of America.


According to reports, Staples will not pay April rent to landlords. Details are scant; however, there is no indication that the Company proposed deferred payments nor did it address whether it will pay rent for May. Most of the Company’s 1,093 stores remain open to provide essential services, and it should be noted that commercial landlords are currently prohibited from evicting commercial tenants while the pandemic is ongoing.

The Company will likely experience a slight increase in demand from individuals who are working at home, but that may be offset by lower demand from commercial accounts. Additionally, it is likely the Company will cut costs and capital spending to offset cash burn in the near term.


iFresh provided a business update amid the COVID-19 outbreak. The Company said that it has temporarily closed “several” stores and reduced hours in those that remain open. Orders from the Company’s “fresh quick delivery” online grocery platform have been increasing significantly; close to 1,000 orders have been received for the ten days ended April 9, with an average of $200 dollars per order, which roughly translates to a high single-digit boost to the top line on a run-rate perspective. The Company is expecting to see steady growth in online grocery delivery sales, as customers continue to stay at home.

iFresh also said that Xiamen DL Medical Technology Co. Ltd., a 70% owned subsidiary of the Company, has begun to ramp up the production of N95 medical face masks, with an approved CE certificate for exporting. The Company expressed its enthusiasm for the face mask import business. 


Amazon will begin to put new grocery delivery customers on a waitlist and curtail shopping hours at some Whole Foods stores to prioritize orders from existing customers buying food online during the coronavirus outbreak. Many shoppers are seeing a lack of available delivery slots. Amazon relegated all new online grocery customers to a waitlist beginning this week, while working to add capacity. In recent weeks it increased the number of stores offering grocery pickup ​to more than 150, up from 80 previously. Amazon ​also plans to shorten some Whole Foods stores’ hours for the public, so its employees can more quickly fill online grocery orders. The Company is hiring more workers and plans to launch a new feature to help customers secure a virtual “place in line,” distributing the delivery windows on a first come, first served basis. It also offered higher pay to encourage its warehouse workers to work for its grocery delivery service.


Starbucks provided an update on the impact of the COVID-19 pandemic on 2Q20 results. Through March 11, second quarter U.S. comps were up 8%, including a 4% increase in transactions. However, following the temporary closure of stores beginning on March 12, and the implementation of shelter-in-place orders across much of the U.S., comps declined significantly. In the last week of March, comps stabilized in the range of -60% to -70%, pushing overall 2Q20 comps down 3%. Management believes it has adequate liquidity to manage operations through the current crisis, with about $2.50 billion in cash and cash equivalents on hand at the end of the second quarter.


Schnuck Markets plans to permanently close a supermarket in Alton, IL after it was temporarily shut amid the Company’s response to COVID-19. The store was initially closed on March 16 to allow associates to assist at other stores with significant increases in customer traffic. The 51,000 square-foot store had been underperforming prior to the pandemic, and its lease is set to expire in June. 


A&G Real Estate Partners (A&G) announced that it has completed sales of 10 store leases and negotiated lease termination agreements for nine other locations from the Earth Fare, Inc. case. The transactions contributed more than $6.0 million to Earth Fare’s estate.

With the final leasehold sale to winning bidders closing on April 10, A&G brokered the sale of leases for four Florida locations to Southeastern Grocers’ Winn-Dixie chain; three locations to an investor group that includes one of Earth Fare’s founders and several of the chain’s former executives; two locations to Whole Foods; and one to ALDI. The investor group also acquired Earth Fare’s trade name and other intellectual property. The leases sold were for sites averaging 26,000 square feet and ranging in size from 21,000 square feet to 38,000 square feet. Click here for a list of closings and more information.


McDonald’s provided an update on its operations and actions taken in response to the COVID-19 pandemic. As of April 8, 99% of the Company’s U.S. restaurants are operating though providing only off-premise services, including drive-thru, delivery, and/or take-away. U.S. comparable restaurant sales for January and February were up 8.1% but then declined 13.4% in March, resulting in a 0.1% increase overall for the 1Q20 period, versus 4.5% growth in 1Q19.To support its franchisees, McDonald’s has deferred cash collection for certain rent and royalties in substantially all markets, though the extent of the deferrals differs by market.


On April 7, The TJX Companies announced it extended the temporary closure of all its 4,529 stores indefinitely. The Company expects the cadence of reopenings to vary by state and locality in the U.S., and by country. TJX committed to paying its associates through the week ending April 11 and is implementing temporary furloughs after that date for the majority of store and distribution center associates in the U.S., with employee benefits for those eligible continuing during the temporary furlough at no cost to impacted associates. The Company is taking comparable actions with respect to portions of its non-U.S. workforce and continues to evaluate a variety of additional measures. The temporary closure of TJX stores and distribution centers is expected to have an adverse impact on its results of operations, financial position and liquidity.


Costco reported March sales growth of 11.7% to $15.49 billion. Comps, excluding gas and the impact of currency exchange, rose 12.3%, consisting of growth of 12.1% in the U.S., 7.2% in Canada, and 19.2% in Other International. E-commerce sales jumped 49.8%. For the year-to-date period, sales rose 9% to $96.25 billion. Comps increased 7.8%, consisting of growth of 7.9% in the U.S., 6.4% in Canada, and 8.4% in Other International. E-commerce sales were up 22.4%. Click here for a sample list of future openings/closings.


In the Gymboree Group case, the hearing to consider confirmation of the Plan of Reorganization was adjourned to May 27, from the originally scheduled date of April 21. Under the Plan, the Company intends to emerge from bankruptcy and undertake a new business model. The Debtors plan to purchase a controlling interest in Certified Art and Collectibles, which is developing a system to electronically verify the authenticity of art, memorabilia, and other items. Following the acquisition, the reorganized Debtors intend to rename Certified Art and Collectibles as LuxVerity, complete its development, and market its products. The reorganized entity has the ability to benefit from the Debtor’s federal and state net operating losses, which total at least $255.0 million and $162.0 million, respectively.


Advance Auto Parts reported first quarter to date (through March 21) comps decreased 3.2%, negatively impacted by COVID-19 by approximately 180 basis points during the last two weeks of that period. With shelter-in-place orders in effect across most of North America, the Company’s comps were down approximately 28% during both weeks ended March 28 and April 4, compared to the same weeks in the prior year. COVID-19 has had a greater impact on the Company’s professional business than its DIY omnichannel and has been particularly acute in major urban markets such as New York, Detroit, and the San Francisco Bay Area. Advance Auto Parts reduced store hours of operation and strategically closed stores temporarily where it can service demand from an alternative location. The Company reduced costs in stores and its supply chain to reflect volume declines and deferred certain marketing expenses. It also decreased its remaining capital spend for 2020 by over 50%.

On April 13, Advance Auto Parts launched an offering of $500.0 million of its 3.9% Notes due 2030 in a private placement. The Company intends to use the proceeds for general corporate purposes, which it said may include refinancing its debt. The offering is expected to close on Thursday (April 16). 


At Home Group is offering curbside pickup and next-day local delivery where permitted, while its 212 stores remain closed (closures began on March 22). The Company also significantly reduced scheduled hours for store and distribution center associates, to align with demand. It eliminated about 10% of home office roles, primarily related to new store development and openings. Another 30% of home office associates have been furloughed, with the Company paying both portions of health insurance premiums for eligible salaried individuals during the furlough period. All remaining associates have reduced compensation, including the executive team, by 10% – 30% depending on salary grade. Chairman and CEO Lewis Bird has elected to forgo 100% of his salary for the duration of the furlough. The Company implemented a hiring freeze and deferred promotions and merit compensation adjustments for existing employees; it also deferred compensation for board members. 


Beginning April 15, REI will furlough most retail and field employees for 90 days, or until July 14. The Company anticipates beginning curbside pickup service in 45 days, at the end of May. Additionally, CEO Eric Artz will forfeit 100% of his base salary and all incentive eligibility for six months, while pay for senior management will be reduced by 20%. Based on a conversation with management, all 162 of the Company’s stores are closed, but it is processing orders through its website.


The Buckle reported that March sales dropped 50.2% to $41.0 million over the five-week fiscal month ended April 4. Over the nine-week period, sales fell 26.6% to $104.0 million. Beginning March 18, all 446 stores were temporarily closed, though e-commerce remains available for customers.

Earning Reports


Tesco recently provided a COVID-19 update and preliminary results for the year ending February 29. The Company said “significant panic buying” during the first few weeks of the crisis cleared its supply chain of certain items and caused sales to increase by about 30%. The situation has since stabilized, and Tesco indicated that “more normal sales volumes are being experienced.”It has added about 45,000 more workers to handle demand and make up for absence among staff that were sick or self-isolating. Meanwhile, it has stepped up its home-shopping capacity by more than 20%, though it still expects between 85% and 90% of all food bought will be in-store.

Tesco said the full financial impact for the crisis in 2020/21 was “impossible to predict with a high degree of certainty” and that it “would not be prudent to provide financial guidance.” Depending on the scenario, the Company estimates the negative impact could be between £650.0 million and £925.0 million, including significant cost increases in payroll, distribution, and store expenses.

For the fiscal year ending February 29, sales fell 0.7% to £56.5 billion, reflecting a 12.1% decline in Central Europe. Sales were up 0.1% in the U.K. and 6.7% in Asia. Operating profit increased 13.5% to £2.96 billion. Free cash flow was £2.06 billion, compared to £889.0 million last year.

CEO Dave Lewis defended the decision to have Tesco pay out £900.0 million in dividends, despite securing a £585.0 million tax break for the current financial year.He said the cash payout was “reflective of last year’s performance and the strength of the business” and stated, “We have a strong balance sheet and we do not need surplus cash.” Tesco shareholders will receive £9.15 per share, the Company’s first dividend in five years.


PriceSmart reported 2Q revenue up 6.1% to $906.7 million, with a comp increase of 0.4%. Like other warehouse clubs, the Company experienced a significant increase in sales in the first half of March as members stockpiled food and essentials. PriceSmart operates in 12 countries and one U.S. territory. Many governments have imposed restrictions, including temporary closures, limits on hours and days of the week a club can be open, and limits on the number of customers in a store at the same time. To help accommodate this, the Company has beefed up its online catalog, giving members close to real-time the availability of products in each club. As a precautionary action, PriceSmart drew $63.2 million on its credit facility after the end of the quarter, leaving about $5.2 million in availability on its $76.2 million revolver. Click here to request the report.