February 24, 2021
Belk, Inc. filed a voluntary prepackaged Chapter 11 petition in the U.S. Bankruptcy Court for the Southern District of Texas. Currently, the petition is the only document filed in the case. The Company previously provided proposed versions of a Restructuring Support Agreement and a Plan of Reorganization. These documents note that the Plan of Reorganization was accepted by “holders of 99% of First Lien Term Loan Claims, 100% of Second Lien Term Loan Claims and 100% of the Interests in Debtor Fashion Holdings Intermediate LLC.” The Company intends to keep all 291 existing stores open. Click here to request more information.
Kroger’s Quality Food Centers (QFC) chain will close two underperforming stores in Seattle, WA, a decision accelerated by a new City Council mandate that requires certain employers to provide extra pay for some, but not all, city front-line workers. The city recently passed a $4-per-hour pandemic pay mandate that applies to employees of grocery operators with more than 500 workers worldwide and for locations of at least 100,000 square feet.
The two affected store locations will remain open and operational through April 24. Pandemic pay mandates passed by local governments on the West Coast have led to lawsuits and other Kroger store closings. Earlier in February, the Company blamed mandated pandemic hazard pay for the upcoming closures of two supermarkets it owns in Long Beach, CA. Click here for a list of future store openings and closings.
On January 15, Amazon acquired Australian company Selz, an e-commerce platform tailored to entrepreneurs and small and medium-sized businesses. The platform allows shop owners to create websites to build online stores, sell products and advertise on Alphabet’s Google, Facebook and its subsidiary Instagram. The deal is largely viewed as Amazon’s next step toward competing with Shopify and BigCommerce Holdings in the e-commerce sector. Click here for a list of Amazon future store openings.
Our Special Analysis outlines significant merger and acquisition activity during 2020, including notable asset sales within the Electronics/Office Products, Home Improvement/Building Materials, Sporting Goods, Toys/Books/Movies, Department Stores/Apparel/Jewelry, Auto Parts, E-Commerce, Specialty, Supermarket, Convenience, Drug, Casual Dining, and Mass Merchandisers/Deep Discount sectors. Click here to request a copy of the report.
Target will open a 77,000 square-foot store in a mixed-use development project located in Miami, FL. Construction is expected to begin this summer. Click here to request a list of future store openings.
On February 19, the Court issued an order confirming Ruby Tuesday's Plan of Reorganization. The Plan provides that lending units of TCW Group and Goldman Sachs (both of which are secured creditors) will exchange debt for equity and acquire the Company as a going concern. TCW will have a majority ownership interest and will operate most of the Company’s 210 remaining units (the Debtors operated 236 units on October 7, 2020, the petition date).
On March 13, The Giant Company will open a two-level flagship store in downtown Philadelphia, PA, its fifth location in the city. The 65,000 square-foot unit is situated on the second and third floors of a 25-floor residential tower. The store, along with a recently announced location in Northeast Philadelphia and an e-commerce fulfillment center slated to open in November, bring the Company’s total capex investment in Philadelphia to more than $106.0 million.
Peapod Digital Labs, Ahold Delhaize USA’s digital, e-commerce and commercial engine, has launched a micro-fulfillment technology pilot with Giant in the Philadelphia market. Part of an e-commerce fulfillment center (EFC), the pilot uses Peapod Digital Labs’ proprietary manual picking capabilities.
Walmart finished FY21 with a strong 4Q, as revenue jumped 7.3% on holiday sales and continued COVID-19 purchasing. The holiday season saw comp strength in recreation, home, electronic, and sporting goods. General merchandise led the way, with a low double-digit comp increase as consumers spent their stimulus checks. Comps were once again driven by a large improvement in average ticket size, up about 22%, as transactions were off 11%. Sam’s Club and International revenues grew 8% and 6%, respectively.
Walmart’s investment in its digital platform continues to pay off; U.S. e-commerce grew 69%, followed by Sam’s Club at 42%. The Company expects FY22 capex to be about $14.00 billion, with much of it going to supply chain and digital infrastructure, including new micro-fulfillment centers in or near stores to handle the increased digital sales.
Walmart is projecting a slight decline in FY22 net sales, primarily due to divestitures during the last year (Asda, Grupo de Narvaez, Seiyu). Walmart U.S. and Sam’s Club comps were guided to a low single digit increase
In other news, Sam’s Club launched an automated and 100% touchless health screening kiosk for its associates. The new kiosk was developed internally and is currently rolling out to clubs across the country.
Meanwhile, Walmart is raising wages; 425,000 of its nearly 1.5 million store associates in the digital and stocking workgroups would increase to a range of $13 – $19 per hour, depending on location and market. The pay increase will take effect on March 13.
Last Tuesday, Walmart completed its sale of Asda Group Ltd. to private equity firm TDR Capital and the gas station billionaire brothers Zuber and Mohsin Issa for £6.80 billion; they have progressed on regulatory approvals and await approval from the U.K.’s Competition and Markets Authority, which they expect to receive in the second quarter.
Walmart was temporarily forced to close hundreds of stores throughout various parts of the country last week to winter storms. As of last Tuesday, approximately 465 Walmart and Sam’s Club stores were temporarily closed while the retailer’s emergency operations center monitors the storms and “other potential disasters.” Click here to request a list of future store openings and closings.
On February 26, Ulta Beauty will open a 12,000 square-foot store in Herald Square, Manhattan, NY. The location will join an existing Ulta Beauty on the city’s Upper East Side, which opened in 2017. The location will feature an in-house beauty salon, a mobile virtual makeup tool (GLAMlab), and BOPIS services. Click here to request a list of future store openings.
In the ascena retail group bankruptcy case, Simon Property Group withdrew its previous objection to confirmation of the Plan of Reorganization. Simon objected to leasing certain properties to an affiliate of Sycamore Partners, whose Premium Apparel LLC subsidiary purchased ascena’s Ann Taylor, Lane Bryant, Loft, and Lou & Grey units out of bankruptcy. Simon initially expressed concern over Premium’s ability to satisfy its contractual commitments, citing Sycamore’s history of “repeatedly bankrupting retailers it acquired.” Negotiations ensued, and the objection was withdrawn after the Debtors assumed and assigned the leases to Premium “on terms that were acceptable to Simon.” The confirmation hearing is scheduled for February 25. Separately, the Debtors filed a motion to reject additional leases, consisting of four Ann Taylor stores in New York City, Staten Island, NY; Stamford, CT; and Boca Raton, FL; three Justice locations in Canada, and one Lane Bryant store in San Marcos, CA.Click here to request a list of store closures.
In the Century 21 Department Stores bankruptcy case, the Court issued a final order authorizing the Debtors to use cash collateral. We previously noted that the Debtors did not seek access to a DIP Facility during the course of the proceedings. Documents in the case note that in late December 2020 the Debtors sold certain insurance policies and liquidated assets in a trust. On December 31, 2020, the proceeds were used to: (i) repay in full the outstanding balance of $16.3 million under the prepetition ABL Facility; and (ii) pay landlords for “stub rent.”
The Company has announced it plans to re-launch sometime later this year, due to demand from loyal shoppers. It had shuttered all 13 stores last fall. No other specifics were offered. Click here to request a list of store closures.
Camping World announced three acquisitions last week. First, the Company acquired Boat-N-RV Superstore’s two locations in the Northeast, in Hamburg, PA and Albany, NY. Both stores have been rebranded Gander RV & Outdoors and bring the Company’s store count to five in New York and four in Pennsylvania. Second, the Company acquired two dealership locations of Flagg RV in Uxbridge and West Boylston, MA, and additional land in Griswold, CT, for a planned future location. The acquisition is expected to close in April 2021. Camping World said it plans to continue Flagg RV’s key initiatives to expand into Rhode Island and Connecticut. Both Massachusetts locations will be converted to the Camping World brand and reopen by mid-April. Finally, Camping World acquired Lee’s Family Trailer in Windham, ME; this will be the Company’s first location in Maine when the acquisition closes in April and will be converted to the Camping World brand. All three acquisitions are part of the Company’s efforts to establish a presence across all 48 contiguous states. Currently, Camping World owns and operates more than 170 locations in 38 states. Click here to request a list of future store openings.
TravelCenters of America signed a new franchise agreement to bring a TA Express site to Baker, CA, expected to open later in 2021. TA expects five other franchised TA Express sites to open in California over the next year. The Company is currently negotiating franchise agreements for 20-plus additional travel centers across the U.S. and has more than 80 other potential franchise agreements in the pipeline. All TA Express locations have a travel store, quick-serve dining areas, and multiple fueling positions. TA has more than 270 locations in 44 states and Canada, principally under the TA, Petro Stopping Centers, and TA Express brands. TA operates nearly 650 full-service and quick-service restaurants and 10 proprietary brands, including Quaker Steak and Lube, Iron Skillet, and Country Pride.
Topgolf Entertainment Group announced a new partnership with BetMGM, a sports betting and gaming entertainment company, to collaborate on marketing and promotional offers through the BetMGM platform at select Topgolf venues and within WGT by Topgolf, the Company’s online golf game. BetMGM digital branding will be used in cities where BetMGM operates, including Las Vegas, Indianapolis, Nashville, Detroit, Virginia Beach, and Denver. BetMGM will also activate branding and promotional integrations in additional Topgolf locations as its sports betting and gaming platforms become available in new states. Click here to request a list of store openings.
On February 18, BSN Sports, a division of Varsity Brands, announced it acquired Shively Sporting Goods in Louisville, KY. Terms of the deal were not disclosed. Founded by Bob Flanders in 1968, Shively’s is the largest independent sporting goods dealer in Kentucky. Trisha Morrison and Mike Flanders, the children of Bob Flanders and co-owners of Shively, will join BSN Sports as part of the deal.
A&G Real Estate Partners announced that it is seeking replacement tenants for three remaining stores (two in New York and one in Washington D.C.) formerly operated by Modell's Sporting Goods, Inc. following the Company’s liquidation in November 2020. The deadline for submitting leasing terms is March 21, 2021.
In the Christopher & Banks bankruptcy case, the Debtors notified the Court that no qualified bids, apart from the stalking horse bid, were received for the sale of the Company’s intellectual property prior to the bid deadline on February 17. Accordingly, the auction was cancelled. The Debtors intend to present the stalking horse agreement as the successful bid at the sale hearing, scheduled for today (February 23). The stalking horse bidder is ALCC, LLC (the agent and lender under the prepetition term loan facility, and an affiliate of Hilco Merchant Resources). The stalking horse agreement provides that ALCC will purchase inventory and avoidance actions in addition to the IP assets. The purchase price consists of the value of the term loan ($8.1 million) along with certain assumed liabilities. Click here to request a list of store closures.
On February 18, ODP Corporation announced the acquisition of BuyerQuest Holdings, a provider of cloud-based enterprise Procure-to-Pay software. This acquisition accelerates the development of the Company’s technology platform and enables the integration of online, procure-to-pay, and supply chain. The news follows the recent hiring of B2B industry veteran, Prentis Wilson, to lead ODP’s new B2B technology business.
Rent-A-Center announced the completion of its acquisition of Acima Holdings. Management characterizes Acima as “a fast growing, profitable lease-to-own technology company with a national presence in retail partner stores and e-commerce platforms, and a broad range of product verticals.” Total consideration of $1.65 billion consists of $1.27 billion in cash and 10.8 million shares of Rent-A-Center common stock, currently valued at $377.0 million. Rent-A-Center has obtained $1.83 billion in debt financing commitments from J.P. Morgan Securities LLC, Credit Suisse, and HSBC Securities Inc. in connection with the transaction.
Founded in 2013, Acima’s annual revenue has grown from $97.0 million in 2016 to an expected $1.25 billion in 2020.
Management said it believes the combination has strong synergy potential, and it anticipates combined pro-forma 2020 revenue of $4.10 billion and $540.0 million in adjusted EBITDA, which it said, “improves the long-term outlook for revenue, profitability and cash flow generation.” As of September 30, 2020, TTM revenue was $2.76 billion, and TTM EBITDA was $307.0 million.