February 3, 2021
Yesterday, Amazon announced that Founder and CEO Jeff Bezos will step down and become Executive Chairman; Andy Jassy, the current head of Amazon Web Services (AWS) will become CEO. The news was reported in the Company's 4Q20 release, where it was announced that sales rose 44% to $125.56 billion. By channel, online sales rose 46%, while physical store sales fell 8%. Amazon Web Services sales remained strong, growing 30% and comprising 11.8% of total sales.
Amazon unveiled its development plans for the second phase of its second headquarters in Arlington, VA. The headquarters will comprise three 22-story buildings, including one modeled after the geometry of human DNA, a double helix. The Company said it was committed to creating 25,000 jobs and investing $2.50 billion in the region over the next decade.
In other news, Amazon is expanding its Amazon One technology (allows people to enter Amazon Go stores and pay with just a handprint, not the app) to three additional stores in Seattle, WA. With this expansion, a total of eight Amazon physical retail stores in the Seattle area will offer Amazon One as an option, including select Amazon Go, Amazon Go Grocery, Amazon Books, and Amazon 4-star stores. Click here for a list of Amazon future store openings.
Kroger said it would close two stores in Long Beach, CA in response to city rules mandating an extra $4 an hour in “hero pay” for grocery workers during the COVID-19 pandemic that went into effect January 19. The stores slated for closure include a Ralphs and a Food 4 Less (both underperforming), affecting 200 workers. Click here to request a list of future store openings and closings.
In a recent interview, Raley’s CEO Keith Knopf discussed the evolution of the Company’s e-commerce business over the past year in the face of the pandemic. Mr. Knopf said that its buy online, pick up in store grew by a seven-fold factor and commented, “We do in a day now what we used to do in a week, and we learned how to do that more efficiently, we learned how to do it more profitably, we learned how to help people onboard, to enroll.” During the pandemic last spring and summer (April - July), Raley’s opened three new stores, an e-commerce fulfillment center, and converted an existing store to a warehouse, which supports about two dozen stores for delivery. Click here to request a list of future store openings.
Macy’s announced that its Bloomingdale’s chain will open a new format called “Bloomies” at the Mosaic District lifestyle center in Fairfax, VA. The 22,000 square-foot store is expected to open this fall and will be a fraction of the size of Bloomingdale’s full-line locations, which typically range from 150,000 – 250,000 square feet. The smaller, service-driven format will be used to support full-line locations and provide customers with an alternative destination to shop, make returns, or pick up packages ordered online. Bloomingdale’s previously opened several smaller-sized stores, including one in Manhattan’s SoHo neighborhood that was 80,000 square feet. Click here to request a list of future store openings and closings.
J.C. Penney notified the Court that both the closing of the Propco transaction and the effective date of the Plan of Reorganization occurred on January 30. PropCo is the landlord to OpCo under terms of a master lease agreement. Opco is an entity controlled by Brookfield Asset Management, Inc. and Simon Property Group, which purchased the Debtors’ operating assets and is running the retail business as a going concern.
On February 28, Schnuck Markets plans to close an underperforming store in Green Park, MO. The Company said it will not renew the lease (set to expire on March 31) on the 78,000 square-foot store. The store had been converted from a Shop ‘n Save and was one of the 20 Shop ‘n Save stores purchased from Supervalu in September 2018. There are two other Shnucks about three miles away. Click here to request a list of store openings and closings.
Walmart announced that it now offers same-day grocery delivery from 3,000 stores, a milestone it reached this past week. The Company introduced store-based grocery delivery in 2018 and has been rapidly expanding the offering since the COVID-19 pandemic began, nearly doubling the number of stores offering same-day delivery over the past year to meet demand and prepare for its Walmart+ membership service, which includes free delivery with many items shipping directly from stores. Last summer saw the largest growth, with 850 stores adding delivery between May and September. According to the Company, nearly 70% of the U.S. population now has access to grocery delivery from a Walmart store.
Walmart also announced it will add dozens of 20,000 - 30,000 square-foot automated fulfillment centers in the coming years, either in the backrooms of its stores or next to them. The centers will use high tech systems to streamline pick-up and delivery functions, and ease traffic in store aisles. The fulfillment centers will be equipped with “automated bots” that can fetch ordered items from the warehouse shelves using AI and bring them to the packing stations. This will make pickup and delivery a much quicker and more efficient process. Some stores will also be turned into automated pick-up points, where customers will be able to drive up to a window, scan a code and receive their order to go.
Separately, Walmart is partnering with Nationwide Pet Rx Express to offer Nationwide pet insurance members savings on prescription pet medications purchased at Walmart’s 4,700 pharmacies, and will introduce a new, expedited, in-store claims experience.
Meanwhile, Walmart rebranded its media network from Walmart Media Group to Walmart Connect as part of a larger ad overhaul. Walmart Connect will focus on leveraging owned properties like Walmart.com, Walmart+ and the Walmart app to create holistic campaigns for advertisers, build out in-store experiences through assets like TV walls and self-checkout screens, and apply first-party data to improve media performance for sellers operating outside of Walmart’s proprietary sites. Click here to request a list of future store openings and closings.
On January 25, private equity firm Sentinel Capital Partners announced the sale of Pet Supplies Plus (PSP) to Franchise Group (FG) for $700.0 million. Sentinel Capital Partners purchased PSP in December 2018 (financial terms were not disclosed); the transaction is expected to close in March 2021. For FY20, PSP is expected to generate system-wide revenue of approximately $1.20 billion and adjusted EBITDA of nearly $80.0 million. As of January 25, there are 537 store locations in 36 states compared to 448 stores in 33 states at the time of Sentinel’s acquisition in late 2018. Including the transaction, FG believes it can reach more than $3.60 billion in sales.
On January 8, Uncle Giuseppe’s Marketplace opened a new store in North Babylon, NY. It is the Company’s seventh store on Long Island and ninth overall. The full-service supermarket offers Italian-themed specialties and food offerings.
JD Sports Fashion entered into a conditional agreement to acquire Baltimore, MD-based athletic footwear and streetwear retailer DTLR Villa for $495.0 million in cash (of which about $100.0 million will go to repaying existing debt). The deal comes less than two months after JD purchased Shoe Palace, a California-based shoe operator of 165 stores, for $681.0 million (including cash and equity). DTLR, currently majority owned by BRS & Co. and Goode Capital, was established in 1982 under the name Downtown Locker Room and currently operates 247 stores across 19 states, primarily in the North and Eastern parts of the U.S. Once the transaction closes, Glenn Gaynor and Scott Collins will remain co-CEOs of DTLR, and they will reinvest a portion of their proceeds into the Company in exchange for a new 1.4% minority stake.
Last week, JD Sports announced that it is looking at raising new funding in order to continue strategically growing via acquisitions. The announcement came after published sources previously speculated the Company was in talks to issue £400.0 million in new equity capital. The Company most recently acquired U.K. men’s specialty apparel retailer Wellgosh. As of August 1, the Company had ample liquidity of £1.59 billion.
Belk entered into a Restructuring Support Agreement with its majority owner, Sycamore Partners, holders of more than 75% of its first lien term loan debt and holders of 100% of its second lien debt. Belk will file Chapter 11 in the Southern District of Texas in late February. The bankruptcy filing will facilitate a debt for equity swap, with Sycamore retaining 50.1% of ownership and debt holders receiving a 49.9% ownership stake. Sycamore and the debt holders will be providing Belk with a $225.0 million loan. The debt swap will eliminate $450.0 million of debt and push all maturities out to 2025. Suppliers will be paid in full for past and future shipments. Belk hopes to get through the bankruptcy process in as little as 24 hours. It appears Belk will only close two previously announced locations. The agreement will be subject to Bankruptcy Court approval.
Love’s Travel Stops & Country Stores plans to open up to 50 travel stops and add more than 3,000 truck parking spots and 3,000 jobs during 2021. During 2020, it opened 38 new locations and added about 3,000 truck parking spaces. Click here to request a list of future store openings.
Empire Company Limited (parent of Sobeys) announced the next seven locations for the expansion of its FreshCo discount banner. Six of the new stores will be in Alberta, while the seventh will be in Northern Ontario. With this latest announcement, the Company has confirmed 37 of approximately 65 locations in Western Canada. In December 2017, Empire announced plans to convert approximately 25% of its Safeway and Sobeys locations to FreshCo over a five-year period. The Company is on track with its ‘Project Horizon’ commitment to open 10 to 15 FreshCo stores in fiscal 2021. Since April 2019, Empire has opened 16 FreshCo stores in British Columbia, two in Manitoba and four in Saskatchewan. By the end of fiscal 2022, the Company intends to have the 37 confirmed FreshCo stores open in Western Canada. Click here to request a list of future store openings.
Talbot’s is a privately held women’s specialty retailer currently operating 531 locations (29 temporarily closed), down from 550 locations at the beginning of 2020. While the Company has not disclosed recent financial information, it is believed that operations have been heavily pressured by the pandemic, even more so than typical apparel retailers given the age of its core demographic (55+), which is more susceptible to the effects of COVID-19. Click here to request a Special Update Report.
PGA Tour Superstore announced yesterday that it reported record comp store sales growth while gaining market share in FY20. While the Company initially closed its stores for nearly two months during the year, results benefited as golf rounds rebounded during the pandemic, including an increase in the number of new players. The Company did not report the actual percentage gains in FY20, but previously disclosed that for the three-year period through FY19, it generated total sales growth of 46%, comps of 22%, and online sales grew 91%.
In January, the Company opened its first store of 2021 in Natick, MA, and plans to open five additional stores later this year including in White Plains, NY and Arlington, TX. The Company is taking advantage of spaces left vacant by other retailers that have filed bankruptcy or closed stores, including Toys “R” Us, Stein Mart, Modell’s and Bed Bath and Beyond. During FY20 the Company opened three stores, and currently operates 45. Click here to request a list of store openings.
Wakefern will be closing underperforming pharmacies in 62 ShopRite supermarkets during the next month and transferring customer prescription files to nearby CVS Pharmacy locations. Terms of the deal were not disclosed. The Company plans to continue running pharmacies at 147 ShopRite locations. Wakefern’s decision follows similar actions by other grocery retailers to close or transfer operation of their pharmacies in the face of increasing retail margin pressure. In 2020, Schnuck’s sold 99 of its in-store pharmacies to CVS Health, which were rebranded as CVS Pharmacy. Other grocers that have recently divested pharmacy assets include Stater Bros., Tops, Southeastern Grocers, and Raley’s, as well as many small regional chains and independents. Larger operators with scale, like Kroger and Albertsons, continue to support their pharmacy business.
In the Christopher & Banks bankruptcy case, the Debtors entered into a stalking horse purchase agreement with ALCC, LLC (the agent and lender under the prepetition term loan facility, and an affiliate of Hilco Merchant Resources) for the sale of the Company’s inventory, intellectual property, and avoidance actions. The purchase price consists of the value of the term loan ($8.1 million) along with other assumed liabilities. Qualified bids are due by February 17, with an auction scheduled on February 19, and a sale hearing on February 22.
In addition, the U.S. Trustee appointed the Official Committee of Unsecured Creditors, whose members include: Simon Property Group, Inc.; Brookfield Properties Retail, Inc.; Bluprint Clothing Corp.; Hangzhou Jiayi Garment Co., Ltd; JiaXing Mengdi Import and Export Co., Ltd.; and Federal Express Corporate Services, Inc. Click here to request a list of store closures.
On January 29, Kings Super Markets, Inc. filed a motion seeking to reject additional leases. On January 26, the Debtors notified the Court that the sale of stores to Acme Markets, Inc., a unit of Albertsons, closed on January 23. As was previously reported, the purchase price was $96.4 million. Please click here to request the list of leases assumed in connection with the transaction. The next major milestone is the confirmation hearing, currently scheduled for this Thursday (February 4).
Tru Kids has reportedly closed two Toys “R” Us stores it opened in late 2019, due to challenges brought on by the COVID-19 pandemic. The Company acquired the intellectual property of the chain after Toys “R” Us liquidated in 2018 and closed all of its U.S. stores. Then Tru Kids opened two 6,500 square-foot stores in Paramus, NJ and Houston, TX, featuring a more interactive format and a smaller footprint than the traditional Toys “R” Us model. After just over a year of operation, the Houston store closed on January 15, and the Paramus store closed on January 26. Toys “R” Us continues to have 700 international stores as well as an e-commerce site that uses Amazon to complete purchases. Tru Kids plans on shifting resources toward opening new locations where there is better shopper traffic.
The U.S. division of beauty and wellness brand L’Occitane, filed Chapter 11 bankruptcy protection in New Jersey on January 26. The Company has immediate plans to close 23 stores as it looks to shed unprofitable and declining locations with “disproportionately high store rent obligations that are no longer tenable.” L’Occitane currently operates 166 boutiques in the U.S., largely based in regional malls. The Company’s lease obligations amount to $30.3 million annually. Sales fell 21% between April and December, with brick-and-mortar store sales down 56.5%, and e-commerce sales up 72% in that time. E-commerce sales now account for 42.7% of total sales, up from 20% prior to the pandemic. Click here to request a list of store closures.
On June 25, 2020, CEC Entertainment, LLC filed for Chapter 11 bankruptcy, emerging six months later on December 30. Prior to the COVID-19 pandemic, CEC’s top line was treading water, with 1.9% sales growth in FY19. The Company had a roughly even split in revenues between entertainment and food/beverage that allowed it to generate a solid 20.5% EBITDA margin, though promotional efforts to drive top-line growth had been pressuring those margins. Click here to request an Emergence Outlook report.