December 9, 2020
On December 10, Amazon will open a new 35,000 square-foot Amazon Fresh location in Naperville, IL. The store includes the Amazon Dash Cart, which enables customers to skip the checkout line, as well as new Alexa features to help customers manage shopping lists and better navigate aisles. Prime members also have access to free, same-day pickup from the store. It is the Company’s fifth Amazon Fresh unit to open so far, following California openings in Los Angeles in November (25,000 square feet), Woodland Hills in August (35,000 square feet), Irvine in October (40,000 square feet), and Northridge earlier in November (30,000 square feet). The stores are among eight Amazon Fresh locations identified by Amazon thus far; three others are soon expected in the Chicago, IL area.
Amazon plans to open a fulfillment center in Missouri City, TX in 2021. The one million square-foot fulfillment center will work to ship bulky or larger-sized customer items. Click here for a list of Amazon future openings.
On December 3, Francesca’s Holdings Corporation filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware. The proceedings have been designated as case number 20-13076. The Company intends to use the proceedings to implement a sale process, focused on its core retail locations as well as its digital expansion and new brand launches. In connection with the sale process, the Company has entered into a letter of intent with TerraMar Capital, LLC (an investment firm that provides debt and equity capital to middle-market businesses) to become the stalking horse bidder for the auction.
On December 7, the Company filed a motion seeking authorization to close an additional 97 boutiques that are “currently underperforming relative to lease costs, and which the Debtors intend to close and wind down.” Store-closing sales will commence as soon as possible after the Court issues an interim order. Separately, the Debtors filed a motion seeking interim authorization to: (i) use cash collateral, and (ii) access up to $15.0 million under a $25.0 million DIP Facility provided by Tiger Finance, LLC. Both the store closing and DIP Facility motions are scheduled to be heard at a hearing today (December 8). Click here for a list of lease rejections.
In the J.C. Penney bankruptcy case, the Debtors notified the Court of the closing of the sale of substantially all its retail and operating assets to Simon Property Group and Brookfield Asset Management. Commenting on the development, CEO Jill Soltau said, “With this closing, our operating company has exited Chapter 11 and is continuing under new ownership and the JC Penney banner.” Management said that with the completion of the sale, it has access to about $1.50 billion of new financing. The Company also said that assets remaining in bankruptcy include separate property holding companies comprising 160 of its real-estate assets, and all of its owned distribution centers, which will be owned by JCP’s DIP and first-lien lenders. The property companies are expected to complete the Court-supervised restructuring process and emerge from Chapter 11 protection in the first half of 2021. The Company operates approximately 790 stores. Click here for a list of store closures.
Dollar General’s sales increased 17.3% during 3Q20. Comparable store sales rose 12.2% during 3Q and are up 14% from quarter end through December 1. Operating profit increased 57%, benefitting from fewer markdowns, higher initial markups, and more sales of non-consumable products with higher margins, partially offset by rising distribution and transportation costs and COVID-related costs. The Company has added in-store pickup to nearly 17,000 locations, from just 2,500 at the end of 2Q20; self-checkout is also now available at 900 stores. Fresh produce is available at more than 1,000 stores, with another 600 to be added next year. As Dollar General increases its reach of self-distribution of perishables through most of the store base, the availability of produce will expand further. The Company plans to invest $1.00 billion - $1.10 billion in capex for the full year, including funds for 1,000 new stores and 1,670 remodels; 1,050 new stores and 1,750 remodels are planned for FY21. Dollar General recently introduced its new pOpshelf store format, focused on categories such as seasonal and home décor, health and beauty, home cleaning supplies, and party and entertainment goods; it opened the first two of these locations during the quarter and aims to open approximately 30 by the end of FY21. Although total debt was up 50%, the Company holds $2.20 billion in cash, and net debt was actually down 22% from last year. Click here for a sample list of store openings.
Petco filed a registration on Form S-1, related to a proposed initial public offering of its common stock, which would list on the NASDAQ exchange under the ticker symbol “WOOF.” From 4Q18 to 3Q20, comps were positive, swinging from 2.6% to 16.3%; the latter was attributed to the pandemic’s stockpiling of goods and pent-up demand upon in-person services reopening to the public. FY19 sales (ended 2/1/20) were $4.43 billion, an increase of just 1% from FY18. FY19 adjusted EBITDA fell 3% to $424.5 million (9.6% EBITDA margin). For the year-to-date period ended October 31, Petco’s net sales accelerated 9%, and adjusted EBITDA advanced almost 15%. From FY18 to FY19, the Company closed a net 12 pet care centers, bringing the total in operation to 1,478 locations; there was another 10 net store closures by October 30. Click here to request an analysis on Petco's recently filed financial statements.
Demoulas Super Markets opened its 84th store on Friday in Maynard, MA. The 70,000 square-foot unit contains more than 50,000 items, a market café and a sushi bar. Click here to request a list of future store openings.
Yesway opened its second Allsup’s Market concept store, in Vaughn, NM, marking the first new store opening since Yesway acquired Allsup’s convenience stores last November. The 5,500 square-foot store, which replaces an older 2,400 square-foot unit, has 20 fueling stations. Yesway has commenced the major remodeling of approximately 100 additional Yesway and Allsup’s stores in Texas and New Mexico. The Company is also looking to add to its portfolio by building new stores in Texas, New Mexico, Oklahoma, and South Dakota. Yesway has begun acquiring land, and designing and planning for six stores in markets where it currently has a presence and in new markets Yesway believes would benefit from having a new Allsup’s store.
On January 2, Giant Eagle will close its Economy supermarket in Baden, PA. Other area Giant Eagle supermarkets are located in Rochester, Aliquippa, Leetsdale, and Franklin Township.
Reports indicate that Save Mart has sold six of its San Jose stores to Oak Street Real Estate Capital, a real estate investment group based in Chicago, for $131.4 million (sale leaseback). Management did not disclose how it plans to use the funds. Save Mart currently operates 206 stores in California and Northern Nevada.
CVS Health is continuing to expand its Hispanic-focused CVS Pharmacy y más chain, which places emphasis on grocery, in New York and New Jersey with the opening of 12 locations. They will be the first stores of this kind in the Tri-State area. The stores provide a one-stop shop for consumers looking for food, beauty, and other merchandise, with more than 1,500 grocery products from Hispanic brands. Since 2015, CVS has opened more than 200 CVS Pharmacy y más locations in more than 90 cities across California, Florida, Nevada, Oklahoma, Texas, and Puerto Rico. Click here to request a list of future store openings.
Amazon recently announced it is expanding further into the retail pharmacy space by launching Amazon Pharmacy, which offers free two-day delivery of prescriptions to Amazon Prime members, discounts for uninsured consumers, and a pharmacy helpline. Click here to request a Special Analysis Report.
PriceSmart’s November net merchandise sales increased 7.9% to $300.0 million, with foreign currency exchange fluctuations negatively impacting results by 3.4%, or $9.8 million. Comparable net merchandise sales rose 5.6%. YTD net merchandise sales (includes three months ended November 30) were up 7.7% to $838.4 million, and comps increased 3.6%.
On December 4, PriceSmart opened a new warehouse club in Bogotá, Colombia, bringing its count to 47. It is the Company’s 8th warehouse club in Colombia and the third in the greater metro area of Bogotá. Click here to request a list of future openings and closings.
Last week, Kwik Trip closed on its acquisition of Stop-N-Go, which operates 36 convenience stores in southern Wisconsin and northern Illinois. Kwik Trip plans to continue to operate many of the acquired stores under the existing Stop-N-Go banner, and remodel and rebrand some of the larger stores as Kwik Trip, or Kwik Star in Illinois.
Harbor Freight Tools plans to open a new, 17,000 square-foot location in a former Kmart in Frederick, MD. Harbor Freight stocks more than 7,000 items in categories including automotive, shop equipment, air and power tools, outdoor equipment, compressors, welding, and woodworking tools. The Company operates over 1,000 stores across the U.S., including 11 in Maryland.
In the Town Sports International bankruptcy case, the Court issued an order denying a motion to block the $85.0 million sale of the Company’s assets to a group of term-loan lenders and Peak Credit LLC. The motion was brought after the term loan lenders expressed disappointment with the capitalization of the entity, which was created to effectuate the transaction. The ruling followed a joint objection by the Creditors’ Committee and the Debtors, which stated that blocking the sale would “irreparably harm all of the Debtors’ stakeholders, including unsecured creditors, and also jeopardize confirmation of the Plan.” Peak Credit is characterized as a multi-member limited liability company whose managing member is New York-based investment banking firm Lepercq, de Neuflize & Co. Separately, the Debtors filed a motion to reject additional leases (click here to request the list).
Walgreens and VillageMD are rolling out 40 more of their Village Medical at Walgreens primary care clinics, which provide physician-led primary care services co-located in a retail pharmacy setting. The model, which began with five Houston locations, will be rolled out to four new markets including El Paso and Austin, TX; Phoenix, AZ; and Orlando, FL. It will also be expanded in Houston. The first clinic outside of Houston will open in Phoenix, AZ on December 14. The new locations are part of plans to open between 500 and 700 Village Medical at Walgreens clinics in some 30 markets over the coming five years. Click here to request a list of future store openings.
While Walgreens and other retail drug chains continue to make a push into the clinic business and expand health care offerings, they may still have a perception problem. According to a recent report from the digital engagement platform UPshow titled “Healthcare Ecosystem 2021: Retail’s Role in the Future of Care” (based on 500 consumers and 250 retail healthcare executives across the U.S.), 47% of Americans surveyed are not confident in the level of medical care they would receive from a retail in-store clinic. About 61% of those who live in cities “completely trust” the care they receive in-store compared to 52% of those located in rural areas and 48% in suburbs. A smaller issue is that 11% of those surveyed were not aware that retail clinics accept major insurance. On a positive note for retailers, 49% of consumers prefer to use them instead of standalone facilities due to the pandemic. 60% of retail executives participating in the survey said that they have seen an increase in spending per clinic visit since the pandemic first hit the U.S.
Walgreens also launched Walgreens Advertising Group (WAG) last week. WAG is a retail media network that will attempt to generate advertising dollars by helping consumer product brands by providing first-party customer data through Walgreens’ own digital platforms, and leveraging its more than 9,000 stores and a loyalty program with over 100 million members. Last month, Walgreens launched its revamped loyalty program, called MyWalgreens, with a redesigned mobile app that offers same-day pickup and delivery with third-party providers. Last August, CVS Health rolled out its own retail media network, CVS Media Exchange, while other retailers including Kroger, Walmart and Target offer similar services. Given their in-store shopper data, retailers believe they can differentiate from tech companies like Google, Facebook, and Amazon.
Fareway Stores has entered into an agreement to purchase McGonigle’s Food Store in Kansas City, MO, and proceed with expansion plans for the store that were recently approved by the city. The store will close a few days as it transitions and reopens as a Fareway Meat Market and McGonigle’s Kitchen + Catering BBQ. The timeframe for the expansion is unknown.
In the ascena retail group bankruptcy case, B. Riley Financial, Inc., a business advisory and financial services company, announced that it has acquired “a significant interest in the Justice brand assets in conjunction with Bluestar Alliance LLC’s acquisition of the assets from ascena retail group. The investment in Justice aligns with B. Riley’s broader investment strategy to generate recurring revenue for its platform. B. Riley seeks to grow licensing revenue from its brand holdings, in partnership with Bluestar Alliance, by leveraging its extensive relationships and strategic partnerships in the retail sector.
B. Riley also intends to continue to pursue acquisitions of consumer brands, intellectual property, trademarks and licenses, and participate in select transactions as an equity owner.” Bluestar owns the rights, title and licenses of Justice, including its e-commerce business, free and clear of Justice’s prior liabilities, following Court approval of the transaction. Click here for a list of store closures.
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