January 11, 2022
Last week, Macy’s revealed the six full-line Macy’s stores it plans to permanently close in 1Q22. The stores are in City of Industry, CA; Centennial, CO; Baytown, TX; Boulder, CO; Lee’s Summit, MO; and Mountain Brook, AL. The Company will also close one Bloomingdale’s store in Estero, FL. In November, during its 3Q earnings call, Macy’s CFO Adrian Mitchell said the Company would announce 10 closures during January, in line with its previously announced plan to close 125 stores by 2023 (60 of those are still open). In addition to adding smaller-format stores, including the new Bloomie’s concept, Macy’s plans to open more than 400 Toys “R” Us shops inside its stores this year. The Company currently operates 516 Macy’s and 33 Bloomingdale’s stores. Click here to request a sample list of future closings.
Bed Bath & Beyond’s capex during its most recent 3Q21 were $83 million and were used for store remodels, supply chain and information technology systems. The Company spent $232.5 million on capex YTD and anticipates spending approximately $350 million during FY21, down from previous expectations of $400 million. During 3Q21, the Company opened two stores including one Bed Bath & Beyond store and one buybuy BABY store, but five were closed (4 Bed, Bath & Beyond and one Harmon) with another 30 closures expected through the end of FY21, for a total of 200 closures. Remodels were completed on 12 stores during 3Q21 and 82 YTD with expectations of 130-150 for the year; the Company has projected $250 million in capex over the next three years to remodel 450 BBB stores, with 130 to 150 planned for the U.S. and Canada in FY21. The Company also is planning to begin construction on a new DC in southern California in 2022. Click here to request a list of recent and future closures.
After nearly a year, Sportsman’s Warehouse terminated its merger agreement with Bass Pro’s parent, citing FTC antitrust concerns. Meanwhile, the Company’s operating performance continues to return to earth after outsized gains in 2020, driven by historically high sales of firearms and ammunition. 3Q21 sales grew 4% due to the opening of seven stores over the past year, partially offset by a 1.5% drop in comps. Management disclosed that it expects net sales will “continue to stabilize or decrease,” and global supply chain constraints will continue to drive costs higher, negatively impacting gross profit in 4Q21 and likely into 2022. Click here for more info.
On January 10, 2022, Big Lots provided a long term growth outlook, however it did not provide an y relevant timelines. The Company set goal of $8 billion to $10 billion in sales and opening an additional 500 stores. The store base currently sits at 1,424. Based on Big Lots' stated plans to open 50 stores in FY22 and about 80 per year thereafter, it would take about seven years to achieve its goal. This would imply a growth rate of about 4%. Projecting sales growth over the same period would require growth of about 4% to 7%. These numbers reflect a significant change from past behavior when store openings were running at 20 or less on an annual basis. Click here to request a sample list of future openings.
Denny’s reported selected preliminary and unaudited results for its 4Q and FYE December 29, and made several announcements regarding important brand initiatives. 4Q same-store sales vs. 2019 were up 5.1% for Company restaurants, 0.4% for domestic franchised restaurants, and 0.7% for domestic system-wide restaurants. FY same-store sales vs. 2019 were down 3.5% at Company restaurants, down 4.8% at domestic franchised restaurants, and down 4.7% at domestic system-wide restaurants.
In 2021, Denny’s opened 20 restaurants, including 8 international locations, and closed 30 restaurants, bringing the year-end total count to 1,640. In addition, nine remodels were completed during the fiscal year, including four at company restaurants. Click here to request a sample list of future openings and closings.
A new Casey’s is slated to take over a former Price Chopper gas station in downtown Des Moines, IA. Casey’s plans to remodel the building before reopening, although no timeline has been set. Click here to request a sample list of future openings.
Walgreens’ latest (1Q) quarterly results were stronger than expected, as it and the rest of the retail drug sector benefit from strong demand for COVID vaccines and tests, which pushed pharmacy and front-end comps up 6.8% and 10.6%, respectively, while operating profits jumped nearly 50%. The Company is in the midst of once again transforming its business, recently completing the sale of its European Wholesaling business, while diverting more capital to new ventures, notably a $5.20 billion investment in VillageMD as it, like CVS, looks to expand its primary care business. There has been speculation that the Company may be looking to sell its Boots UK retail chain, although we estimate this is contingent on them receiving a high enough multiple for the asset, which had been struggling due to pandemic-related lockdowns, although 1Q22 Boots UK sales recovered, with pharmacy and front-end comps up 8.8% and 16.3%, respectively. However, store traffic was still about 20% below pre-pandemic levels. As previously disclosed, Walgreens is also closing about 150 U.S. stores over the next three years.
Authentic Brands Group (ABG) withdrew its plans for an IPO last week. The Company did not provide a reason, but in November, private equity firms CVC Capital Partners and HPS Investment Partners acquired equity stakes in ABG in a deal that valued the Company at $12.70 billion including debt. ABG had filed to go public in July, intending to list on the NYSE.
In other news, ABG signed a long-term licensing deal with Tristate Holdings Limited to operate the Reebok brand in China, Hong Kong, Macau and Taiwan. The deal, terms of which were not released, is expected to close in 1Q22, effective upon the completed transfer of ownership of Reebok from adidas to ABG. The license includes footwear for men, women and kids, sportswear, outerwear and activewear for men, women and kids. As previously reported, the Company purchased a majority stake in David Beckham’s brand-management company, DB Ventures LLC; ABG’s retail portfolio now spans 30 brands in the luxury, specialty, department store, mid-tier, mass and e-commerce segments.
Urban Outfitters announced holiday sales results for the two and eleven-month periods ended December 31. Total Company net sales for the two-month period increased 14.6%, compared to the two months ended December 31, 2019. Comparable Retail segment sales were up 14%, driven by strong double-digit growth in digital channel sales, partially offset by high single-digit negative retail store sales, primarily due to reduced store traffic.
For the 11 months ended December 31, total net sales increased 14.4%, compared to the same period ended December 31, 2019. Comparable Retail segment net sales rose 16%, driven by strong double-digit growth in digital channel sales, partially offset by low double-digit negative retail store sales due to reduced store traffic. Year to date, as of December 31, the Company opened 56 new retail locations: 29 Free People stores (including 18 FP Movement stores), 17 Urban Outfitters stores, 9 Anthropologie Group stores and 1 Menus & Venues restaurant; and closed 10 retail locations including 4 Anthropologie Group stores, 2 Free People stores, 2 Urban Outfitters stores and 2 Menus & Venues restaurants. Click here to request a sample list of future openings.
Yesterday, Noodles & Company announced a deal making Warner Foods its exclusive franchise partner for the state of California. Warner currently operates over 150 restaurant franchises under the Jack in the Box, Black Bear Diner, and Panera banners. As part of the agreement, Warner will develop 40 new restaurants over the next 12 years, and all 15 Company-operated Noodles & Company restaurants in California will be re-franchised to Warner, operating as Norcal Noodles. This deal reflects management’s desire to ramp up store expansion, which has been slowed by the pandemic. Noodles & Company expects seven to nine new openings in 1Q22 alone and overall 8% unit growth for FY22.
Grocery workers at Kroger’s Colorado King Soopers said they will begin to strike tomorrow, January 12. UFCW Local 7 said it would strike at 88 stores across Denver, Colorado Springs, and other Front Range communities for three weeks until February 2. The official strike announcement comes after months of back-and-forth contract negotiations between the union and Kroger. The union’s current contract expired this past Saturday.
Yesterday, King Soopers and City Market filed unfair labor practice charges against UFCW Local 7 for refusing to bargain in good faith. Additionally, Local 7 rejected mediation services to help aid in a peaceful resolution. Local 7 has given no indication of when they will reengage in the negotiation process.
Grocery Outlet will close a store in Sequim, WA on January 15. The Company operates a nearby location in Port Angeles. Grocery Outlet has more than 400 locations in six states, with ownership held by independent operators. Click here to request a list of future openings and closings.
Our Hot Market Report takes a closer look at the Miami, FL real estate landscape, and provides visual competitive analyses as well as key real estate metrics such as future openings, store count, market share, digital insights, and demographics. Click here to request a copy of the full report.
BJ’s Wholesale opened its newest club in Commack, NY on January 7. The opening brings the Company’s U.S. club count to 224, with 12 locations on Long Island. The Company also operates 154 BJ’s Gas locations. Click here to request a sample list of future openings.
Earlier today, Planet Fitness announced it entered into a definitive agreement to acquire Sunshine Fitness Growth Holdings, LLC, an owner and operator of 114 Planet Fitness clubs in the Southeast, in a cash and stock transaction valued at $800 million. The cash portion will be funded with new secured notes and cash on hand (details not yet disclosed). The acquisition and debt financing is expected to result in lower total debt to EBITDA on a pro-forma basis, based on the historical and anticipated financial results of Sunshine Fitness locations, and be accretive to the Company’s bottom line in 2022. The transaction is expected to close in 1Q22. Following the purchase, the Company will own more than 200 corporate locations or about 10% of all Planet Fitness clubs. In connection with the deal and new debt offering, the Company also expects to refinance its 2018 Class-A-2-I Notes ($558 million outstanding as of September 30, 2021). Click here to request a sample list of future openings.
Costco reported strong December sales this week; revenue grew 16% to $22.24 billion and was up almost 17% YTD. Company-wide comps (ex-fuel) expanded 11.5% for the month, led by Canada up 13.6%. E-commerce continued its steady growth, gaining almost 18% during the month; YTD ecommerce is up 14%. Costco currently operates 828 warehouses, opening 13 new units this fiscal year. Click here to request a sample list of future openings.
Trek has acquired Race Pace Bicycles and its seven Baltimore, MD-area locations. Financial terms were not disclosed. The stores will transition to Trek Bicycles in March. Trek has been a supplier to the Race Pace chain since 1980.
Builders FirstSource has acquired National Lumber, a New England building materials supplier. Financial terms were not disclosed. National Lumber operates 19 facilities in Massachusetts, Connecticut and Rhode Island, with sales of approximately $440 million in 2021. National Lumber’s President Manny Pina, along with other key members of senior leadership, continues to manage local operations.
L.L. Bean announced plans to close its store anchoring a mall in McLean, VA, inside the DC metro area, on January 17. The Company indicated it was unable to reach a deal with its landlord and is searching for a new location in the area. The store has been open since 2001. The Company operates 57 total locations, the majority of which are in the Northeast.
Mattress Firm filed for an IPO three years after an overly aggressive debt-funded expansion led to a Chapter 11 filing and a relatively quick emergence. All of the shares in the IPO will be offered by existing stockholders; the Company will not receive any of the proceeds. A filing with the SEC reveals that net revenue for FY21 (ended September 28) was $4.40 billion, net loss was $165.1 million, and adjusted EBITDA was $669.2 million (15% EBITDA margin); the net loss reflects a nonrecurring charge in connection with the extinguishment of debt. At FYE21, net debt totaled $1.10 billion, and the ratio of debt to EBITDA was 1.9x. Additionally, there was availability of $102.6 million under the $125 million ABL facility. At the end of FY21, the Company operated 2,353 stores, down from 2,419 at FYE20. Click here to request a sample list of future openings.
WHP Global, parent of Toys “R” Us and Babies “R” Us, has signed an exclusive long-term license agreement with Ragabesh & Co. to open the first Babies “R” Us stores in Brazil. The agreement covers physical retail, with plans to open about 20 freestanding stores in the market. The first location is expected to open in late 2022, with additional stores slated to launch in 2023. Last March, WHP announced it had acquired a controlling interest in Tru Kids Inc., parent company of Toys “R” Us, Babies “R” Us, Geoffrey the Giraffe, and more than 20 related consumer toy and baby brands. Toys “R” Us opened its first store under its new owners in December at the massive American Dream entertainment and retail center in East Rutherford, NJ.
Papa John’s International announced a partnership with independent private equity firm FountainVest Partners to open more than 1,350 new stores across South China by 2040. FountainVest has also purchased a majority stake in current Papa John’s franchisee CFB Group, which owns and operates approximately 160 restaurants in Shanghai and across southern China. The new franchisee development agreement is the biggest in Papa John’s history. Papa John’s also noted China as one of the world’s fastest-growing pizza delivery markets.
FAT Brands, parent company of Johnny Rockets and 16 other restaurant concepts, announced on January 5 that it has expanded its South American footprint with the addition of three new Johnny Rockets locations in Brazil and Chile. The brand already has a presence across South America, with multiple locations throughout Bolivia, Ecuador and Peru, along with existing restaurants in Brazil and Chile.
Checkers & Rally’s announced plans to launch voice-ordering bots at 267 corporate stores in partnership with Presto. Checkers is now the first national restaurant concept to scale the use of AI-powered voice assistants at the drive-thru, which will be rolled out throughout 2022. The move comes as the industry faces a massive labor shortage. Click here to request a sample list of future openings.
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