December 23, 2020
J.C. Penney announced it will close an additional 15 locations by the end of March. The Company exited bankruptcy earlier this month and closed more than 150 stores during the bankruptcy process. Click here to request a list of additional store closures.
Amazon plans to open its first fulfillment center in South Dakota, in Sioux Falls. The 640,000 square-foot fulfillment center, which is anticipated to launch in 2022, will pack small items. The Company also recently announced plans for a new one million square-foot fulfillment center in North Little Rock, AR. The facility, Amazon’s fifth DC in central Arkansas in the past two years, is expected to be launched in 2021 and will handle larger-sized items.
Amazon said it is giving shoppers more options for returning holiday purchases this year, including at physical stores. Most items shipped between October 1 and December 31 can be returned until January 31. Amazon is also allowing customers to return products (without boxes or labels) at more than 500 Whole Foods Market stores across the country, as well as at other locations including Amazon Books, Amazon 4-star, Amazon Fresh grocery stores, Amazon Go stores, UPS Store locations, Kohl’s, and other locations. Click here for a list of Amazon future openings.
Apple temporarily shut down all of its stores in California (53) over the weekend, as well as locations in Tennessee (4), Minnesota (4), Utah (3), and Oklahoma (2), and individual locations in Portland, OR; Anchorage, AK; Omaha, NE; and Albuquerque, NM. While no re-opening dates were provided, the stores are expected to remain closed through the holidays. In addition to the 70 U.S. locations that closed, Apple temporarily shuttered 16 stores in the U.K., and two each in Mexico and Brazil. These closures follow temporary shutdowns of 18 Apple stores in Germany and the Netherlands. As a result, there are 108 Apple Stores that are non-operational at this time due to rising COVID cases. For stores that remain open (401 of 609 global stores), Apple is operating in a limited “Express” capacity, allowing for pickups and genius bar appointments but no in-store shopping and browsing. Apple’s stores were previously closed between March and June to mitigate the spread of the coronavirus.
On December 21, Sportsman’s Warehouse announced it entered into a definitive agreement to join the Great American Outdoors Group, parent company of Bass Pro Shops, Cabela’s, White River Marine Group and a collection of nature-based resorts. The Great American Outdoors Group will remain a private company. Sportsman’s Warehouse will be acquired for $18.00 per share in cash, or approximately $800.0 million. YTD2020, Sportsman’s Warehouse’s shares have traded as high as $18.46, and after closing yesterday at $12.65, have increased more than 50% since the beginning of the year. The acquisition price reflects an EBITDA multiple in mid-6x range, based on the 3Q20 TTM EBITDA of $125.0 million.
The merger agreement was unanimously approved by Sportsman’s Warehouse’s board. The transaction, expected to close in 2H21, will be completed through a cash merger and is subject to approval by Sportsman’s Warehouse’s shareholders, as well as regulatory approvals. The transaction is not subject to any financing condition. The entities will continue to operate independently until the transaction closes. Bass Pro Shops and Cabela’s operate 169 stores, and Sportsman’s Warehouse operates 112 stores.
Last week, Wawa opened its first drive-thru convenience store, in Westampton, NJ. The store also has three parking spaces reserved for curbside pickup. Click here to request a list of future store openings.
Central Garden & Pet has entered into an agreement to acquire Hopewell Nursery, a live goods grower serving retail nurseries, landscape contractors, wholesalers and garden centers across the Northeast. The purchase price and other terms of the transaction were not disclosed. Founded in 1988, Hopewell owns more than 1,800 acres of farmland in New Jersey and Maryland, which includes over 9.5 million square feet of greenhouse production, 100 acres of pot-in-pot production, and offers more than 2,000 different varieties of plants. Hopewell will be a part of the Central Garden segment. The transaction is expected to close on December 31.
Two Independent Piggly Wiggly store owners, with the support of supplier C&S Wholesale Grocers, entered into a definitive agreement with Southeastern Grocers (SEG) to acquire one BI-LO store in South Carolina and one BI-LO store in Georgia. This deal is part of a series of transactions for SEG as part of its strategic decision to divest the BI-LO banner, first announced on June 4. Piggly Wiggly stores in South Carolina and southeast Georgia, which are independently owned and operated, are supported and supplied by C&S Wholesale Grocers. The transactions are expected to close in mid-January 2021, and the acquired stores will be rebranded under the Piggly Wiggly banner. With the additional stores, C&S will service a total of 55 Piggly Wiggly locations in South Carolina and southeast Georgia. Click here to request a list of future Piggly Wiggly store openings and closings.
In other news, Southeastern Grocers reported that over the past year it has “renewed” 32 stores throughout its footprint to offer improved shopping experiences, opened eight brand new Winn-Dixie stores in Florida, and expanded its Hispanic grocery store Fresco y Más, into a new community in Southwest Florida.
The Court in the CEC Entertainment, Inc. bankruptcy case issued an order confirming the Plan of Reorganization, which eliminates $489.0 million in debt, provides for the lenders to take control of the Company. The Plan provides for an exit facility comprised of a $200.0 million first lien, first out term loan, subject to an increase to repay claims under the DIP Facility and fund the liquidity requirements of the Reorganized Debtors. The Debtors stated that they will waive avoidance/preference actions. The Disclosure Statement provides that allowed administrative and 503(b)(9) claims will receive a recovery of 100%, while general unsecured creditors are projected to receive a recovery of between 12.2% and 19.4% of their allowed claims. The Plan is supported by the Creditors’ Committee and the ad hoc group of noteholders. The effective date is anticipated to be December 28. Separately, the Court denied the Debtors’ motion to abate rental payments at six Chuck E. Cheese locations in three states. The Court stated that the 60-day period within which relief may be granted had expired as to these locations. The Court noted that, “if abatement was authorized under applicable non-bankruptcy law, the 60-day limitation would not apply. However, neither the leases nor state laws allow the Debtors to abate or reduce its rent obligations at these locations.” Click here to request a list of store closures.
As Rite Aid continues to implement its RxEvolution turnaround plan to expand its role as a health care company, it reported stronger-than-expected 3Q results, including a 12% increase in total revenue, aided by a 29% surge in Medicare Part D membership in the recently rebranded Elixir PBM segment. Retail comps grew 4.3%, driven by a 6.1% jump in prescription comps, despite a reduction in acute prescriptions and a slow start to the cold and flu season, which given the pandemic and social distancing, is expected to remain soft. Online sales grew 225%. Despite the stronger sales, retail EBITDA was $20.0 million lower on pandemic-related costs ($16.5 million) and the lost Walgreens TSA income ($8.0 million), coming in at just 2.2% of segment revenue. Elixir EBITDA was virtually flat, as strong sales were offset by increased drug costs and costs related to the new Medicare Part D business, with overall EBITDA down 13%, to 2.3% of revenue. The Company is in the process of refreshing the exteriors of all Rite Aid stores, including the new branding; it has completed more than 700 to date and expects to complete all stores by next year. Rite Aid also opened the first three Stores of the Future, which again emphasize healthcare offerings and brings the pharmacists front and center.
The Company will roll out the next phase of pilot stores in 4Q; however, management said it is not taking a cookie-cutter approach with the new prototype format but will approach it market by market, store by store. For 4Q21, management is expecting continued top-line growth to be offset by the soft cold season, pharmacy reimbursement rate pressure, and pandemic-related costs. For FY21, management expects comps to grow 3.5% to 4.5%.
The Company will also begin providing COVID-19 vaccinations, although because it is not a national chain it will only have a minor initial role. Rite Aid will participate in the Phase II vaccine rollout, which it expects to begin in February, although it is uncertain exactly what impact it might have on profitability. Management also said it anticipates “there’s going to be a COVID vaccine forever probably because if not this mutation, possibly more mutations.”
Meanwhile, today Rite Aid is opening 99 additional drive-thru sites offering no-charge COVID-19 tests, which will bring its total testing footprint to 400 sites. With the expansion, Rite Aid will offer testing in 12 states.
Brinker International announced selected business results and a withdrawal of financial guidance for 2Q21, as Chili’s Grill & Bar and Maggiano’s Little Italy restaurants are impacted by dining room closures and capacity limitations per state and local guidelines. As a result of government mandates, as of December 9, approximately 77% of Chili’s and 69% of Maggiano’s restaurants were operating with dining rooms open. For the week ended December 9, comps fell 12.3% at Chili’s, 63.9% at Maggiano’s, and 21.7% at Company-owned units. Brinker continues to maintain adequate operating liquidity, with total available liquidity of approximately $646.0 million as of December 11, including revolver availability of $593.0 million and cash of $53.0 million.
Kwik Trip is revamping the exterior of the 36 Stop-N-Go convenience stores it acquired earlier this month. At the time, Kwik Trip said it planned to continue to operate many of the acquired stores under the existing Stop-N-Go banner. The retailer will remodel and rebrand some of the larger stores as Kwik Trip, or Kwik Star in Illinois. In addition to the Stop-N-Go stores, Kwik Trip owns and operates more than 750 stores in Wisconsin, Minnesota and Iowa. Click here to request a list of Kwik Trip future store openings.
PriceSmart announced plans to proceed with the construction of warehouse clubs in Guatemala City, Guatemala and in Portmore, Jamaica. The Guatemala City location is expected to open in fall 2021, while the Portmore’s opening is slated to occur in spring 2022. The two new locations will bring the Company’s total footprint to 49 warehouse clubs.
In the 24 Hour Fitness Worldwide bankruptcy case, the Court issued an order confirming the Plan of Reorganization. The Plan sets forth terms of a financial restructuring that will “reduce $1.20 billion of funded debt, provide increased financial flexibility to help navigate through the COVID-19 pandemic, and better position 24 Hour Fitness for long-term success.” Cerberus Capital Management, Sculptor Capital Management and other lenders that financed the Company will take over control as part of a debt-for-equity exchange. The Plan also provides for a $200.0 million exit financing facility. Following permanent closures during the bankruptcy process, the Company is left with less than 300 locations, down from 445 locations in March; currently, 91 clubs are operating indoors and 30 are operating outdoors. Management said it does not expect to have the majority of its remaining clubs open until March 2021. Click here for more information.
Rebag, a reseller of luxury handbags and accessories, unveiled its first-ever standalone Rebag Bar, a micro version of its traditional store. The 180 square-foot location at The Shops at Columbus Circle in New York City offers all of the elements of a traditional Rebag but in a smaller footprint. Owners can sell their items within 60 minutes, leveraging Rebag’s upfront payment offering and seamless selling process. The store features a curated selection of luxury items including bags, watches, fine jewelry, and accessories, tailored to the Upper West Side.
rue21 recently announced the appointment of Bill Brand as CEO. Mr. Brand most recently served as president of HSN, and he replaces John Fleming who has served as interim CEO since February. rue21 operates approximately 700 stores in 45 states.
The Company announced that beginning in January 2021 it will open 15 new locations, on top of three opened this year. rue21 filed for bankruptcy in 2017 and closed more than 400 stores. It is currently owned by private equity firm Apax Partners. Click here to request a list of store closures.
Rent-A-Center announced that it has entered into a definitive agreement to acquire Acima Holdings LLC, a leading provider of virtual lease-to-own solutions. Total consideration consists of $1.27 billion in cash and about 10.8 million shares of Rent-A-Center common stock, currently valued at $377.0 million. The transaction is expected to close in 1H21, subject to customary closing conditions, including clearance under Hart-Scott-Rodino. Management describes Acima as “a fast growing, profitable lease-to-own company, with a national presence in retail partner stores and e-commerce platforms, and a broad range of product verticals. Founded in 2013 in Salt Lake City, UT, Acima has grown annual revenues from $97.0 million in 2016 to an expected $1.25 billion in 2020. Acima will continue to operate out of Salt Lake City.”
J. Alexander’s Holdings provided an update on its operating results in light of recent mandated dining room closures and capacity restrictions in several markets, including Illinois, Kentucky, Michigan, Missouri, Pennsylvania, Maryland and Colorado. As of December 14, 10 of the Company’s 46 restaurants are closed for indoor dining, though all restaurants are continuing to offer carry-out service. After sales reached about 90% of prior-year sales in September and October, that figure fell to about 80% in November. Following these recent re-closures, sales on a weekly basis have begun to trend further downward, to about 60% - 70% at present. Based on this top-line deterioration, management withdrew its 4Q20 guidance of a weekly $265,000 - $315,000 cash burn (which includes the impact of a voluntary $10.0 million debt repayment in October). However, at current sales levels management still expects it will have adequate liquidity through FY21. As of December 13, the Company had $8.9 million in cash on hand and an estimated $25.0 million in availability under its revolving credit facilities.
MOD Super Fast Pizza Holdings has added its tenth franchise partner to grow its footprint in the South. DBMC Restaurants plans to develop 30 MOD Pizza locations during the next seven years across central Alabama, southern Louisiana, southern and central Mississippi, and the greater Nashville, TN area. The expansion will bring MOD into three new states: Louisiana, Mississippi and Tennessee, with the first opening in 2021 in DBMC’s home state of Louisiana. Click here to request a list of future store openings.
On December 16, In-Shape Health Clubs filed for Chapter 11 bankruptcy protection in Delaware. The Company plans to reject 24 leases, leaving it with about 45 clubs. In-Shape entered into a stalking horse purchase agreement, under which the prepetition lender will acquire the Company’s assets for $45.3 million, subject to higher bids. Additionally, the Company requested the Court approve a $30.0 million DIP Facility. In-Shape has been owned since 2013 by Fremont Private Holdings, an arm of the San Francisco-based private investment office for the Bechtel family, and Pulse Equity Partners LLC.