January 10, 2023
In the RITE AID CORPORATION, DIP case, the Debtors notified the Court of their plans to close 19 additional stores. To date, the Debtors have notified the Court of 350 closures. In addition, the Debtors notified the Court they rejected 146 leases.
Additionally, the Debtors filed an adjusted timeline related to the sale of the Rite Aid retail assets:
|Rite Aid Retail Bid Deadline
|The deadline by which all binding bids with respect to the Rite Aid Retail Sale Transaction must be actually received pursuant to the Bidding Procedures.
|November 30, 2023 at 5:00 p.m. prevailing Eastern Time
|January 19, 2024 at 5:00 p.m., prevailing Eastern Time
|Rite Aid Retail Auction (if necessary)
|The date and time of the Rite Aid Retail Auction, if one is needed, which will be held at the offices of Kirkland & Ellis LLP, 601 Lexington Avenue, New York, NY 10022.
|December 4, 2023 at 10:00 a.m. prevailing Eastern Time, if necessary
|January 24, 2024 at 10:00 a.m., prevailing Eastern Time, if necessary
|Rite Aid Retail Sale Objection (if necessary)
|The deadline by which objections to the entry of an order by the Court approving the Rite Aid Retail Sale Transaction must be filed with the Court and served so as to be actually received by the appropriate notice parties.
|December 15, 2023 at 4:00 p.m., prevailing Eastern Time
|January 29, 2024 at 4:00 p.m., prevailing Eastern Time
|Rite Aid Retail Sale Hearing (if necessary)
|The hearing before the Court to consider approval of the successful bid or bids for any or all of the Rite Aid Retail Assets, pursuant to which the Debtors and the winning bidder or bidders will consummate the Rite Aid Retail Sale Transaction.
|December 19, 2023 at 11:00 a.m., prevailing Eastern Time
|February 6, 2024 at a time to be determined by the Court, or as soon thereafter as the Debtors may be heard.
The acquisition of CHICO'S was completed by Sycamore Partners, a private equity firm specializing in retail, consumer, and distribution-related investments, for $7.60 per share, in an all-cash transaction valued at approximately $1 billion. Following the transaction, Chico's FAS shares of common stock have ceased trading and are no longer listed on the New York Stock Exchange.
Concurrently, KnitWell Group, a holding company comprising industry-leading apparel brands Ann Taylor, LOFT, and Talbots, announced it has added Chico's, White House Black Market and Soma banners to its portfolio. KnitWell, which is controlled by Sycamore, also provides oversight and shared services to Lane Bryant, a leading plus-size women's apparel brand.
BJ'S WHOLESALE CLUB will open a new store in North Jacksonville, FL on January 12. The new club will include a gas station and bring the chain's store count in Florida to 37. The Company opened its second location in Tennessee in Mt. Juliet in December 2023, and its eighth location in Ohio, in Lewis Center. In November, BJ's entered Alabama, opening a club in Madison.
AMAZON shuttered its final Fresh Pickup store in Seattle, WA in December 2023. The store, piloted in 2017, enabled Amazon Prime members to place their orders online and then pick them up at one of two physical locations in Seattle. The first pickup site closed in January 2023. Both pickup sites were a prelude to Amazon Fresh stores.
SPROUTS FARMERS MARKET set the opening dates of the following seven new stores: Port Charlotte, FL (1/12), Miami-Coconut Grove, FL (1/19), Burtonsville, MD (1/19), Cudahy, CA (2/16), Bakersfield, CA (3/1), Victorville, CA (3/15), and Rockwall, TX (3/15). In addition, Sprouts plans to open six more stores in the Philadelphia area, bringing its store count to 11 in a two-year span.
CAMPING WORLD is set to acquire Bent's RV, with two locations in Boutte and Albany, LA. The transaction is anticipated to close in 2Q24 and will increase the Company's count in Louisiana to four. The Company also announced it is set to acquire Genuine RV, with locations in Texarkana and Nacogdoches, TX and Idabel, OK. The transaction is anticipated to close in 2Q24 and will increase the Company's Texas location count to 13, and its Oklahoma location count to six.
The Company continues to aim for over 320 locations over the next five years, through a combination of acquisitions, new store openings, and manufacturer exclusive locations.
Anagram Holdings, PARTY CITY'S balloon supplier, has emerged from bankruptcy. This follows a sale of the business to its bondholders, including Neuberger Berman, Littlejohn and Barings, which was approved last month by the Bankruptcy Court. Anagram renewed its supply contract with Party City last week, as detailed in our previous alert. Anagram supplies 99% of Party City's balloons. Party City exited bankruptcy in October 2023.
During CVS HEALTH'S earnings call with investors,when asked about the new cost plus pharmacy pricing models (see the following paragraph) management said, “We are prepared and already have sat down and had conversations to support these models,” while also noting it would likely take at least two years to see any meaningful changes.
As we previously reported, CVS is attempting to simplify and improve transparency around the way it sets prescription drug prices by moving to a “cost plus” model. Under the plan, called CostVantage, CVS’s pharmacies will get reimbursed by pharmacy-benefit managers (PBMs) and other payers based on the amount that CVS paid for the drugs, in addition to a limited markup and a flat fee to cover the services involved in handling and dispensing the prescriptions. Today, pharmacies are generally paid using complex formulas that aren’t directly based on what they spent to purchase specific drugs. Drug retailers have also faced increased criticism over the way drugs priced and the lack of transparency. The move is an effort by CVS to stabilize is pharmacy profits, which have faced increasing pressure from lower reimbursement rates and new competition. Management recently said it has faced about $1 billion in pharmacy reimbursement challenges each year. CVS is adopting a similar simplified pricing model for its PBM, called TrueCost, based on the net cost of drugs with defined fee structures. CVS said the change isn’t expected to increase its profits, but ensure more stable and predictable earnings. The Company declined to disclose target ranges for its drug markup or the flat fees.
TGI FRIDAYS said it will close 36 underperforming locations in select markets across the U.S. as part of its "ongoing growth strategy." The closings include eight restaurants in Massachusetts, and the one remaining location in Colorado, in Longmont. In addition, the Company announced the sale of eight previously corporate-owned restaurants in the Northeast to Ray Blanchette, who served as CEO of TGI Friday's from October 2018 to Spring 2023. He was succeeded by Brandon Coleman, who left the chain after two months on the job.
ALIMENTATION COUCHE-TARD completed the acquisition of certain European retail assets from TotalEnergies. As previously announced in March 2023, this acquisition includes 100% of TotalEnergies' retail assets in Germany and the Netherlands, as well as a 60% controlling interest in the entities in Belgium and Luxembourg. The retail assets encompass 2,175 sites, with 1,191 located in Germany, 562 in Belgium, 378 in the Netherlands, and 44 in Luxembourg. The majority are Company-owned (69%) with the balance being dealer-owned (31%). The transaction was financed using the Corporation's available cash, U.S. Commercial Paper program, and term loans.
The December Employment Situation... The U.S. Bureau of Labor Statistics reported employment increased by 216,000 in December. Unemployment was unchanged at 3.7%, with the number of unemployed essentially unchanged at 6.3 million. A year ago the jobless rate was 3.5% and the number of unemployed was 5.7 million. The labor force participation rate was 62.5%, down 0.3% in December. The number of persons not in the labor force who currently want to be edged up to 5.7 million, up 514,000 YOY. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey.
The Government sector added 52,000 jobs, followed by healthcare with 38,000 jobs, and social assistance at 21,000. Retail trade added 17,000 jobs, with employment gains at warehouse clubs, supercenters, and other general merchandise retailers mostly offset by losses in department stores.
Average hourly earnings rose 0.4% in December, matching the prior month’s gain. That raised the YOY increase in wages to 4.1% from 4% in November.
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