August 14, 2019
600+ retailers have filed for bankruptcy year to date, including several major national chains. To request the full list of bankruptcies or to sign up for our daily listing of Chapter 11 filings (all industries), click here.
H.E. Butt will begin construction on a five-story, 150,000 square-foot tech hub at its San Antonio, TX headquarters. It expects to complete the facility in summer 2022. The announcement follows the June 2019 opening of its 81,000 square-foot Eastside Tech Hub in Austin, TX. This growth is part of the Company’s push to integrate more innovative technology-based services. Along with the acquisition of on-demand delivery company Favor in February, H-E-B continues to expand curbside and home delivery, which is expected to be at over 200 locations by the end of the year, and H-E-B Go, a mobile scan and pay solution. The Company operates about 200 stores in Texas and Mexico. Click here to request a list of H-E-B future openings.
Yesterday, reports stated that management told employees that it plans to close all of its stores in the coming weeks (click here to request a list). Employees were also informed to institute final sale policies, and not accept customer returns or to sell gift cards. No public announcement has been made.
Transform Holdco (New Sears) announced that it is closing 26 large-format Sears and Kmart locations (5 Kmart and 21 Sears) in late October (click here to request a list). The Company commented that they have faced a number of challenges in returning stores to “sustainable levels of productivity which have unfortunately affected our performance and limited our strategic choices.” The Company also noted that it could not rule out additional store closings in the "near-term." Sears Auto Centers at those locations will close in late August and liquidation sales are set to begin around August 15. The store closures and management's comments raise concerns over the Company's ability to overcome the myriad of issues that faced Sears Holdings, DIP. The Company did discuss, without specifics, its plans to open smaller Sears Home & Life stores. The Company also expects to complete its acquisition of Sears Hometown and Outlet Stores in the third quarter. New Sears has not provided ongoing financial disclosure since emerging from bankruptcy.
On June 10, 2019, it was reported that a group of shareholders of Hudson's Bay Company submitted a proposal to acquire the Company at a price of $9.45 per share, payable in cash. On July 22, a competing offer was submitted by The Catalyst Capital Group to purchase up to 14.8 million common shares of HBC at a price of $10.11 per common share, payable in cash. The competing offer is equal to a 7% premium to the price offered by the Company’s controlling shareholders, and is open for acceptance until Friday, August 16, 2019. On August 8, another group publicly stated its opposition to the $9.45 per-share buyout plan. Land & Buildings Investment Management, which holds an undisclosed minority stake in Hudson’s Bay, said the buyout bid offered by the shareholder group is unacceptable. Land & Buildings said the actions of the chairman, Richard Baker, and his buyout group “demonstrate he should be removed from the board” if the bid to take the Company private fails.
Meanwhile, on August 9, reports stated that the Company is evaluating a sale of Lord & Taylor to Le Tote, Inc., a subscription service that rents clothing and accessories for a flat monthly membership fee. HBC would receive cash and equity in exchange for free rent at Lord & Taylor stores, for a period of time, although the details are not yet clear. There are about 40 Lord & Taylor stores, and Le Tote would operate most of them. It should be noted that Le Tote has never operated stores during its seven year existence. The impetus for the possible transaction appears to be Le Tote’s technology and data analysis resources, which could help establish a rental business for the Company, and perhaps for Saks Fifth Avenue in the U.S. and the Hudson’s Bay department stores in Canada. We are monitoring developments and will provide updates as they become available.
Today, Francesca's Holdings Corporation announced that it entered into a $10.0 million second lien term loan with Tiger Finance, LLC. The Company also announced completion of its previously announced strategic alternatives review, in which it concluded that the Company will "focus on the continued execution of its turnaround plan."
Last week, Amazon’s Whole Foods opened a new, 30,000 square-foot store in Toledo, OH. The new store features expanded produce and prepared food departments. The Company also plans to open a 38,000 square-foot store in Kenwood, OH on August 29. With these two new stores, the Company will operate a total of 11 stores in Ohio. To request the latest list of Whole Foods future openings and closings, click here.
On Monday, SpartanNash Co. announced that it has accepted the resignation of president and CEO, Dave Staples, who is leaving the Company and the SpartanNash board. The board appointed Chairman Dennis Eidson, to the additional roles of interim president and CEO, effective immediately. Mr. Eidson will serve in these roles until the next CEO is identified.
Meanwhile, the Company announced that it has decided to exit its Indianapolis, IN-based Fresh Kitchen operations to improve operating earnings and EBITDA results within the Food Distribution segment. The Company will shift its focus to its produce distribution and Fresh Cut operations. The annual net sales impact of exiting the Fresh Kitchen operations will be approximately $20.0 million. Second quarter preliminary earnings from continuing operations include approximately $14.0 million of asset impairment expenses associated with Caito's Fresh Operations. The Company expects to complete the transition by the end of fiscal 2019.
Additionally, SpartanNash provided preliminary results for the 12-week second quarter ended July 13, 2019, and an updated fiscal 2019 outlook. The Company expects sales to be $2.00 billion compared to net sales of $1.90 billion for 2Q18. For 2Q19, it now expects to report a loss from continuing operations of $6.8 million, with Adjusted EBITDA of $44.3 million. The Company continues to expect fiscal 2019 full year net sales growth in the mid-single digits, but now expects Adjusted EBITDA improvement of $190.0 million – $205.0 million, versus $183.0 million – $195.0 million previously, primarily due to the exit of the Fresh Kitchen business. The Company's updated guidance for fiscal 2019 does not include costs associated with the CEO transition and costs from a non-recurring, supplemental transition incentive program for eligible associates.
Foot Locker is teaming with Nike to roll out its so-called Power stores, which are four times as big as a typical mall Foot Locker store. The newest location, a 9,000 square-foot store, opened over the weekend in Manhattan, NY. The Company plans to open upwards of 50 Power stores over the next three years. It currently operates four in the U.S.; one in Detroit and two in Philadelphia, in addition to the new Manhattan location. Foot Locker is one of Nike’s largest wholesalers. Simultaneously, Foot Locker is in the process of winding down the SIX:02 banner (click here to request a list of closures).
On August 8, Vitamin Shoppe announced that it has entered into a definitive agreement to be acquired by Liberty Tax in an all cash transaction valued at approximately $208.0 million. Vitamin Shoppe shareholders will receive $6.50 per share, which represents a premium of 43% to its closing share price on August 7, 2019. The transaction is expected to be completed in the fourth quarter of 2019, subject to approval by Vitamin Shoppe's shareholders and other customary closing conditions. Liberty Tax intends to finance the transaction with up to approximately $170.0 million in debt financing and a combination of available cash, and/or through the issuance of common stock of Liberty Tax. In connection with the execution of the merger agreement, Liberty Tax entered into debt commitment letters with institutional lenders and an equity commitment letter with an affiliate of Vintage Capital Management, LLC. Liberty Tax is the indirect parent company of Liberty Tax Service and Buddy's Home Furnishings, a specialty retailer engaged in the business of leasing and selling consumer electronics, residential furniture, appliances and household accessories. Liberty Tax is focused on the evaluation and acquisition of franchise-oriented or complementary businesses.
Vitamin Shoppe reported second quarter sales decreased 7.6% to $270.9 million, and comps were down 7.2%. The Company closed four stores during the quarter. Gross margin improved 110 basis points, benefitting from product margin improvement, offset in part by deleverage in occupancy. SG&A margin eroded 90 basis points to 30.2%. Adjusted EBITDA fell 20.1% to $17.6 million. Over the last year, the Company opened two stores and closed 19 underperforming locations, ending with 765 stores in operation.
On August 8, San Antonio, TX-based A’Gaci filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court in the Western District of Texas. The Company plans to close all of its 54 retail stores, with a majority of the closings expected to occur by the end of the month (click here to request a list); the Company’s e-commerce site is already shut down. Going out of business sales are being handled by SB350 Capital Partners and Hilco Merchant Resources. In the filing, A’Gaci cited a “challenging business environment” brought on by the shift to shopping online from in-store, hurricanes that negatively impacted its most profitable locations, and difficulties related to implementing an inventory management system. A’Gaci previously filed Chapter 11 in January 2018 and exited six months later, having closed 20 of its then 76 stores.
Alimentation Couche-Tard closed on its previously announced investment in Fire & Flower Holdings Corp., a cannabis retailer based in Edmonton, Alberta. Couche-Tard invested about $26.0 million in the form of unsecured convertible debentures to obtain a 9.9% ownership interest in Fire & Flower upon conversion. Couche-Tard will concurrently receive three series of share purchase warrants, which, if exercised in full, would subsequently increase Couche-Tard's ownership interest to 50.1%. Fire & Flower currently operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan, and Ontario, a wholesale distribution division in Saskatchewan, and the HiFyreTM digital retail platform.
Giant Food Stores opened its 100th Beer & Wine Eatery, located in Lebanon, PA. Giant opened its first Beer & Wine Eatery in 2016. The Company said it has continued to obtain restaurant licenses in Pennsylvania and will open more Beer & Wine Eateries where it makes sense. Overall, Giant Food Stores operates 181 stores in Pennsylvania, Maryland, Virginia, and West Virginia under the Giant, Martin’s and Giant Heirloom Market banners.
On August 7, Big Y Foods broke ground on an expanded distribution center in Springfield, MA. The DC, currently 189,000 square feet, will have another 232,000 square feet added to it, for a total of 425,000 square feet. The expanded DC is expected to support an additional 20 supermarkets. Big Y currently operates 70 stores in Massachusetts and Connecticut. Management’s long-term strategy is to expand to 150 stores over the next two decades.
As part of Price Rite Marketplace’s rebranding effort launched in the fall of 2019, five of its locations in Connecticut reopened last week with a new store redesign, expanded fresh and private label offerings, and more price savings. Price Rite is a part of the Wakefern cooperative, which operates 66 stores under that banner.
In a recent filing with the SEC, Biglari Holdings disclosed that a total of 103 Steak ‘n Shake restaurants have been temporarily closed as of June 30, 2019. That is more than double the 44 restaurants Biglari Holdings reported as temporarily closed as of March 31, 2019. The Company explained it is actively working to identify franchise partners for the 103 restaurants stating, “Since 2017, Steak ‘n Shake has experienced sales declines, which is the primary reason for Steak ‘n Shake's lower profitability. To mitigate the sales declines and increase profitability, Steak ‘n Shake is emphasizing its franchise partnership program."
As of the end of fiscal 2018, Nugget Market operated 15 stores in California including 11 in the highly competitive Sacramento Valley area, three stores in Marin County, and one store in Sonoma Valley acquired in mid-2016. The Company noted sales were up mid-single digits for the year to $400.0 million as comps were positive and the Company benefited from moderate inflation.
Hy-Vee recently opened an 8,000 square-foot Fast & Fresh store in Waukee, IA. The Fast & Fresh concept offers groceries, prepared foods, gas and convenience store items at a smaller scale than a typical Hy-Vee grocery store, but bigger than a typical convenience store. It is the Company’s third Fast & Fresh location; the first opened in Davenport in December 2018 and the second in Altoona in February.
On August 7, FedEx said it will end its ground contract with Amazon. The move follows the June decision to walk away from Amazon’s express shipping business. The move is for FedEx to work with other e-commerce players to fight off Amazon’s dominance. Amazon can still ship with FedEx, but it no longer has contractually negotiated rates. The move comes in the summer, but it has bigger implications for Christmas. Both United Parcel Service (UPS) and FedEx have struggled in prior years to keep up with volume during peak shipping season, while complaining about below-average profitability for the Amazon business.
Meanwhile, Amazon's mail order pharmacy, PillPack, is facing major push back as it attempts to take on the prescription drug market. CVS and Walgreens have accused the Company of requesting patient prescriptions without getting consent. PillPack is denying the accusations. Amazon purchased PillPack in mid-2018 for $753.0 million.
In other news, Amazon’s six-wheeled, self-driving robots (the size of a small cooler) will start serving customers in Irvine, CA, expanding the test in Seattle that started earlier this year. Amazon says that the robots are able to avoid crashing into trash cans or pedestrians. A worker will accompany the robots at first.
The Company is also reportedly planning a new brick-and-mortar store in San Francisco, CA that will be dedicated specifically to liquor. Amazon has applied for a license to set up a liquor store in the city, where it already has a warehouse. The store would serve as a delivery hub for Prime Now deliveries in the area as well as operating as a traditional liquor store.
Amazon launched a new program called Sold by Amazon last week, which allows the Company control of third-party product prices in exchange for a minimum payout to sellers. Sellers who sign up to the program give Amazon permission to cut the price of their products at will, in exchange for a guaranteed payout called Minimum Gross Proceed (MGP), to ensure the discounts don’t result in an unexpected loss for the sellers.
La-Z-Boy announced plans to close its Redlands, CA upholstery manufacturing facility and move production to available capacity at its other North American facilities. In addition, the Company will transition the leather cut-and-sew operation from its Newton, MS upholstery manufacturing plant to its other North American-based cut-and-sew facilities. The Redlands facility, which plans to cease production in October 2019, employs about 350 people and accounts for 10% of La-Z-Boy-branded total upholstery production. The 200,000 square-foot facility will be marketed for sale following its closure. The move of the Newton plant operations is expected by the end of 2019 and will impact about 105 of the 525 employees at that location. La-Z-Boy expects to incur $5.0 million – $7.0 million in fiscal 2020 one-time pre-tax charges related to the transitions. Beginning in fiscal 2021, the Company anticipates ongoing annual operating savings of $4.0 million – $6.0 million pre-tax.
Tiffany & Co. announced plans to enter the India market through a joint venture with Reliance Brands Limited. The Company expects to open new stores in Delhi later this year and Mumbai in 2020. Reliance also has partnerships with Burberry and Armani Group. Tiffany operates more than 320 stores in over 25 countries, including 80 in Asia-Pacific.
U.K. financial firm Elliott Advisors announced the closing of its Barnes & Noble acquisition, and as a result Barnes & Noble became a privately-held, indirect wholly-owned subsidiary of Elliott, and its shares ceased trading on the NYSE. Elliott completed its tender offer of 60.3 million shares of Barnes & Noble’s common stock on August 6, representing 82.15% of the outstanding Barnes & Noble shares; Elliott paid $6.50 per share, valuing the deal at $683.0 million. The move follows Elliott’s acquisition of U.K. bookseller Waterstones last year. While Barnes & Noble and Waterstones will operate independently, both will be run by James Daunt as CEO. Elliott plans to apply “a model that successfully turned around Waterstones over the past decade” to Barnes & Noble, which includes treating the stores as independent, local stores.
As part of Walgreens Boots Alliance’s Transformational Cost Management Program (TCMP) announced in December 2018 and the subsequent review of their real estate footprint in the U.S., the Company confirmed on August 6th plans to close approximately 200 stores in the U.S., although no specifics were provided on identified locations, implementation timeline, and whether this is incremental to the remaining 119 Rite Aid acquired stores slated for closure. Additionally, the Company disclosed initial cost estimates of the TCMP will result in cumulative pre-tax charges of approximately $1.90 billion to $2.40 billion, primarily related to lease and other real estate payments, employee severance, and technology costs related to IT transformation.
In other news, on August 9, Walgreens amended its $1.00 billion unsecured Term Loan Credit Agreement. The amendment allows the Company to borrow, repay and re-borrow amounts borrowed thereunder prior to the maturity date (January 29, 2021). The Company reported full utilization of the $1.00 billion term loan at the end of its fiscal 2019 third quarter.
The Asset Purchase Agreement (APA) with Williston Holding Company, Inc. (WHC) was terminated after WHC notified Kona Grill Inc., DIP’s counsel that it would not be able to close the sale. The Debtors and WHC entered into an agreement which reserved all of the Debtors’ rights and remedies arising from WHC’s breach of the APA. Additionally, the Court approved an agreement between the Debtors and Keybank (the DIP Facility lender) which does the following: (i) extends the maturity date of the DIP Facility and other milestones, and (ii) permits the Debtors to continue using cash collateral through the earlier of: (a) Court approval of a new asset purchase agreement on terms that are acceptable to the Debtors and KeyBank, or (b) September 13, 2019.
J. Alexander Holdings announced that its board of directors is expanding its review of strategic alternatives for the Company. The board will explore, review, and evaluate a range of options focused on maximizing shareholder value that include a possible merger of sale of the Company; a strategic large investment in the Company, accompanied by a significant share repurchase; or the acquisition of complementary concepts to increase the Company’s revenue base and operating leverage. J. Alexander's currently operates 46 restaurants in 16 states.
The Company also reported results for its second quarter ended June 30. Sales increased 3% to $62.2 million. Average weekly same store sales per restaurant were up 0.3% for both J. Alexander’s/Grill restaurants and Stoney River Steakhouse and Grill restaurants. Operating income growth was flat at $2.3 million.
Ahold Delhaize announced results for its second quarter and six months ended June 30. Quarterly U.S. sales grew 0.2% at constant exchange rates, to $10.99 billion. Comparable sales, excluding fuel, also increased 0.2%. The second quarter was negatively impacted by an 11 day strike at Stop & Shop as well as the shift in the timing of Easter compared to last year. According to the Company, the impact of the strike on direct sales was estimated at $224.0 million, with an impact on underlying operating income of around $100.0 million. In addition, the subsequent sales loss during the recovery period following the strike was estimated at $121.0 million. Adjusted for both the strike and Easter, comparable sales growth, excluding gasoline, was 2.3%. The Company's other U.S. business continued to post strong sales, with Food Lion reporting its 27th consecutive quarter of positive comparable comps. Online sales increased 14.4% at constant exchange rates to $249.0 million. Adjusted for the impact of the strike at Stop & Shop and the subsequent recovery, online sales would have increased by 18%. The Company continues to anticipate total U.S. online sales growth in excess of 20% in fiscal 2019.
In other news, Retail Business Services, the services arm of Ahold Delhaize, has launched a new private brand product line for children called Nature’s Promise Kids. The new line is an extension of the current Nature’s Promise line that includes many organic options. The first two items available in the line are a Sparkling Seltzer Water and Squeezable Fruit Pouches, with other products expected to be introduced over the next few months.
Party City’s second quarter sales increased 0.5% to $563.9 million. Retail sales increased 2.9% driven by year over year square footage growth from store acquisitions. Brand comps fell 2.1% due to approximately 200 basis points of headwinds from the helium shortage. Gross margin decreased 390 basis points to 37.1%, primarily due to higher freight costs associated with product imported during the second half of 2018 as the China tariffs caused temporary operational disruptions; inventory markdowns associated with the Company’s store optimization program, and sales mix shifts due to the temporary helium shortage. As a result, adjusted EBITDA dropped 16.1% to $81.0 million.
During the quarter, the Company entered into a sale and leaseback transaction on three properties, its Chester, NY distribution center, its Eden Prairie, MN metallic balloons manufacturing facility, and its Los Lunas, NM injection molded plastics manufacturing facility, to Spirit Realty. The transaction generated gross proceeds of $128.0 million and resulted in a gain of $58.4 million.
As announced on August 8, Canadian Tire agreed to acquire Party City’s Canadian business, in a transaction valued at C$174.4 million (US$131.0 million). The acquisition includes 65 Party City retail locations (about 6% of its store base), along with Party City’s brand, leaseholds, inventory and fixed assets. The two parties also entered into a 10-year wholesale supply agreement.
Wendy’s second quarter net income rose 8.4% to $32.4 million, driven by higher sales, store growth and franchise royalty revenue. Revenue increased 5.9% to $435.3 million and comps increased 1.4% at North American stores. Operating profit was $80.57 million, driven by an increase in franchise royalty revenue and an increase in net franchise rental income.
Wendy’s opened 28 stores during the quarter and had a net increase of nine stores during the period. The Company continues to expect 2019 global net new restaurant growth of approximately 1.5%. Click here for a list of the Company’s planned new locations.
The Company reaffirmed its full-year adjusted profit forecast of about 3.5% – 7% growth, global system wide sales growth of 3% – 4%, adjusted EBITDA growth of 2.5% – 4.5% and capex spending of $75.0 million – $80.0 million.
CVS Health Corporation announced results for its second quarter and six months ended June 30, 2019. Revenue increased 35.2% for the three months ended June 30, 2019, primarily driven by the November 2018 Aetna Acquisition, as well as increased volume and brand name drug price inflation in both the Pharmacy Services and Retail/LTC segments. The increase was partially offset by continued reimbursement pressure in the Retail/LTC segment, price compression in the Pharmacy Services segment, and an increased generic dispensing rate.
During its earnings call, CVS Pharmacy President Kevin Hourican said that the Company will open about 100 stores this year, and about 50 stores in fiscal 2020. The Company opened 145 new and 35 relocated stores in fiscal 2018. CVS has reportedly decided to slow its rate of store openings this year and next, and instead will focus its efforts on remodeling stores into HealthHUBs, which offer expanded healthcare services. CVS says it plans to have 1,500 HealthHUBs operating by 2021.
Subsequently, CVS Health announced a cash tender offer for up to $4.00 billion in fixed and floating rate notes, with maturities ranging between 2020 and 2021. Tender expiration dates of August 14, 2019 and September 5, 2019 have been established for the Any and All Notes and Maximum Tender Offer Notes, respectively. On August 8, the Company entered into an Underwriting Agreement to sell $1.00 billion of its 2.625% Senior Notes due August 15, 2024, $750.0 million of its 3% Senior Notes due August 15, 2026 and $1.75 billion of its 3.250% Senior Notes due August 15, 2029. The closing of the sale of the Notes will occur on August 15. Net proceeds from the sale, after deducting the Underwriters’ discounts and expenses, are approximately $3.46 billion and will be used together with available cash on hand, for the purchase of the tendered fixed and floating rate notes.
PriceSmart’s July sales increased 2.8% to $255.8 million. Currency exchange impacted net merchandise sales negatively by $6.4 million or 2.5%. Comps increased 1.5%. The Company opened two new warehouses over the past year bringing its total store count to 43.
Office Depot’s second quarter sales fell 1.5% to $2.59 billion due to the closing of 54 stores since last year and a 4% decrease in comps, which came on top of a 2% decrease in the same period last year. Revenue in the Business Services Division was up 2%, while retail and CompuCom sales fell 4% and 7%, respectively. In the retail unit, product sales declined 7%, while service revenue increased 7%. The sales decrease at CompuCom was due to lower revenue from existing customers and lower services volume. Margins improved 50 basis points due to cost reductions, while EBITDA advanced 8.8%. TTM EBITDA margin and interest coverage were 4.9% and 6.4x, respectively. The Company closed 39 stores during the quarter and 41 units during the year-to-date period. At the end of the quarter, the 1,320 existing units occupied 29.4 million square feet of space, while average square footage per store was 22,300.
The Buckle’s July sales decreased 0.7% to $67.5 million, and comps decreased 0.5%. Second quarter sales increased 1.4% to $203.8 million, and comps were up 1.8%. Year-to-date sales slipped 0.2% to $405.1 million, and comps increased 0.3%. The Company will announce second quarter earnings on August 23. The Company operated 449 stores in 42 states, including one store opened in Kalispell, MT in July. Store count is down from 455 stores operating in 43 states last year.
Cineplex’s second quarter sales increased 7.4% to $439.2 million. Theatre attendance was down 1.7% to 17 million, but box office revenues per patron rose 2.9% to $11.13 and concession revenues per patron rose 6.8% to $7.04. Online and mobile ticketing represented 40% of total theatre admissions, up from 32% in the prior year period. Adjusted EBITDA rose 65.5% to $112.2 million. The Company opened one new theatre in Vancouver, BC, and plans to open a complex in Winnipeg, MB in 2021. CEO Ellis Jacob stated, “As a result of the successful ongoing execution of our diversification strategy, Cineplex reported a record second quarter with increases across all revenue sources. The third quarter is off to a strong start, with the Canadian box office up 10%. Looking ahead, the remainder of the year has a variety of powerful titles from sequels to first time stories, and I am encouraged by the positive results from our diversified business, as we continue to build scale and achieve more meaningful growth in the future.”
Advance Auto Parts reported second quarter sales inched up 0.2% to $2.33 billion, while comps were flat. Gross margin decreased 42 basis points to 43.3%, primarily driven by channel and product mix, in addition to planned supply chain wage investments. These headwinds were partially offset by continued improvements in utilization and management of inventory. Operating income rose 1.9% to $170.8 million. For the year to date period, the Company opened 12 new stores and closed 59 underperforming locations, resulting in 5,062 stores.
Houchens Food Group’s fiscal 2018 sales were estimated to be up slightly over $3.00 billion. The Company continued to close underperforming stores (8 stores closed in 2018 and 8 more closed so far in fiscal 2019). The Company’s long-term plans for SAL (Houchens is the largest franchise operator) are a bit of a question mark; SAL as a whole struggled in fiscal 2018 as the banner is under intense competitive pressure.
Canadian Tire reported strong second quarter results, with revenue up almost 5.9% to C$3.69 billion, and comps up 2.2%. Comps increased 3.7% at SportChek, 2.6% at Mark’s and 1.9% at Canadian Tire stores. Helly Hanson contributed almost C$100.0 million to revenue. Net income was $177.4 million, up from $156.0 million last year.
On August 8, Canadian Tire announced it agreed to acquire the Canadian business of Party City Holdco, Inc., in a C$174.4 million (US $131.0 million) transaction. The purchase price is estimated to be nearly 10x pro forma EBITDA. The acquisition includes 65 Party City retail locations (about 6% of its store base) across seven provinces, along with Party City's brand, leaseholds, inventory, and fixed assets. The two parties also entered into a 10-year wholesale supply agreement. Total international sales make up about 12% of revenue. Party City products will be made available in 500 Canadian Tire Retail stores. Canadian Tire will use cash on hand to fund the purchase and indicated the acquisition will be immediately accretive to EBITDA and EPS.