January 27, 2021
An Amazon Fresh supermarket has opened in Whittier, CA at the site of a former Orchard Supply Hardware store. It is Amazon’s fifth such grocery location in Southern California. The others are in Woodland Hills, Irvine, North Hollywood, and Northridge.
A new Amazon Fresh grocery store is scheduled to open in Schaumburg, IL later this week. The 45,000 square-foot store is the second in the state and eighth overall under the format. Click here for a list of Amazon Fresh future store openings.
Published reports indicate that Hudson’s Bay Co. is in talks with investors to spin off Saks.com into a public company, with a potential IPO coming in the next 12 months, following a private placement. The separation of the Saks website from its brick-and-mortar stores would likely be a first in the retail industry. The two companies would have an exclusive agreement between them to maintain omnichannel capabilities. Saks.com generated about $1.00 billion in annual sales, roughly twice the volume of the Mytheresa luxury website that recently went public (it was previously spun off by Neiman Marcus). Mytheresa offered 15.6 million shares at $26 per share, raising $407.0 million in its IPO. In first day trading on January 21, its share price closed at $31, giving it a market capitalization of $2.90 billion.
Mass Merchandisers Quarterly Sales Analysis
It’s been more than ten months since the COVID-19 pandemic began, creating a tremendous disruption in the lives of North American consumers. The pandemic has resulted in an explosion in sales of food to be consumed at home, and its impact on grocery shopping habits remained a powerful factor for the supermarket industry during the third quarter of 2020. However, same-store sales and revenue growth are trending downward after their peaks earlier in the pandemic. Click here to request a full report on the Mass Merchandisers Industry, documenting industry trends and how competition stacks up in terms of sales performance metrics.
The Giant Co., a division of Ahold Delhaize, will begin construction on a replacement store in Doylestown, PA this March. The new 72,500 square-foot supermarket is expect to open later this year, replacing a smaller store on the same street. Ahold Delhaize’s Food Lion opened a liquor store adjacent to its Clover, SC supermarket, the second of its kind. The first opened in August 2015 in Rock Hill, SC. Click here to request a list of future store openings.
Ruby Tuesday, Inc. notified the Court that it did not receive any qualified bids for the sale of its assets, and the planned auction was cancelled. The Debtors will now attempt to reorganize under new ownership by Goldman Sachs Group Inc. and TCW Group Inc., the prepetition secured creditors, who will equitize their debt holdings.
On January 25, the Debtors provided a supplemental list of lease rejections (click here to request a list). Additionally, the Debtors filed a motion seeking to extend the period to assume or reject leases through the earlier of: (i) the date of entry of an order confirming the Plan of Reorganization, or (ii) May 5. The current period expires on February 4. A hearing on the motion has not yet been scheduled.
With Alex Lee’s acquisition of W. Lee Flowers (completed in October 2019) adding 50 retail stores and another 75 to the wholesale base, and with COVID-19 related grocery demand, the Company’s FY20 (ended October) sales increased nearly 40%. The Company is in the process of acquiring 20+ Bi-LO stores from Southeastern Grocers, which will further boost the top line. Overall, although the Company likely took on some debt to fund the W. Lee Flowers and BI-LO acquisitions, the surge in pandemic-related sales and cash flow should help offset that leverage and provide plenty of short-term liquidity. Click here to request a list of future store openings.
Amazon’s Whole Foods has agreed to acquire Jackson Whole Grocer, a family-owned natural foods store in Jackson, WY, marking its entrance into the state. Terms of the deal, expected to close in early 2021, were not disclosed. The store is slated to stay open during the transition. Click here to request a list of store openings and closings.
According to reports, Steak ‘n Shake is preparing for a potential financial restructuring. The Company has hired FTI Consulting Inc. to advise on its strategic options, which may include an out-of-court restructuring or a bankruptcy filing. Steak ‘n Shake has struggled with negative comparable restaurant sales for years, and the pandemic exacerbated its woes. Year-to-date sales through 3Q20 were down 43.1%, largely based on a 44.6% drop in customer traffic. Given the increase in COVID-19 cases across much of the country and the re-imposition of indoor dining bans in several states, those trends likely worsened in 4Q. The Company and franchisees permanently closed 92 net restaurants through 3Q20 (82 Steak ‘n Shake and 10 Western Sizzlin), ending the period with 260 Company-owned and 268 franchised Steak ‘n Shake locations and three Company-owned and 39 franchised Western Sizzlin locations, or 570 in total. The Company’s most pressing concern is a $153.1 million secured term loan that matures on March 19, 2021. Steak ‘n Shake’s parent company, Biglari Holdings, has stated that it is not and does not plan to become a guarantor for the loan.
Godiva plans to close all 128 of its brick-and-mortar locations in North America, including 11 in Canada, by the end of March. The Company indicated that in-person shopping plummeted at its stores as a result of the pandemic, while online sales and sales from grocery and retail partners increased. Godiva will continue to maintain retail operations across the Middle East, Europe, and greater China. The Company has about 5,000 chocolatiers in 100 countries worldwide. In 2019, the Company announced it would open up to 2,000 cafes worldwide within six years, allowing it to offer products beyond chocolate, such as baked goods, sandwiches, and coffee. Click here to request a list of store closures.
In the Francesca’s Holdings Corporation bankruptcy case, the Court entered an order approving the sale of the Company’s assets to the stalking horse bidder, a group including TerraMar Capital LLC and Tiger Capital LLC. The Company will be sold as a going concern, and TerraMar has committed to continue operating at least 275 stores. The purchase price is comprised of approximately $18.0 million in cash, subject to certain adjustments, a $1.25 million promissory note, and the assumption of $7.74 million in liabilities. The transaction could close by next week. As of January 19, the Company operated 551 locations, mostly in malls. About 140 stores were closed before the Chapter 11 filing in December. TerraMar is an investment firm that provides debt and equity capital to middle-market businesses; Tiger was engaged to dispose of the Debtors merchandise and provided DIP financing.
Nike opened its latest small-format Nike Live store in Eugene, OR last week, joining three other Nike Live locations in Los Angeles, CA; Tokyo, Japan; and New York City. Last year, the Company announced plans to open 150 – 200 such locations across North America, Europe, the Middle East, and Africa over the subsequent few years, after testing the concept in 2018. Click here to request a list of future store openings and closings.
Kroger, in partnership with Ocado, announced it will build its tenth robotic customer fulfillment center (CFC) in Phoenix, AZ. The 200,000 square-foot automated warehouse facility will help strengthen the Company’s distribution and delivery systems in the region. Click here to request a list of future store openings.
Documents in the ascena retail group bankruptcy case indicate that proceeds totaling $471.5 million were received from the sale of the Ann Taylor, LOFT, Lou & Grey, and Lane Bryant brands to Premium Apparel LLC, an affiliate of Sycamore Partners. Approximately $254.9 million was retained by the trustee as a “reserve amount.” Additional details on use of the proceeds are not yet available. The sale closed on December 23, 2020.
On January 25, the Debtors provided a list of (i) numerous additional planned store closings, and (ii) lease rejections. Click here to request a list of future store closures.
On January 25, private equity firm Sentinel Capital Partners announced that it sold Pet Supplies Plus to Franchise Group for $700.0 million. Sentinel Capital Partners purchased the Company in December 2018 (financial terms not disclosed); the transaction is expected to close in March 2021. For FY20, Pet Supplies Plus is expected to generate system-wide revenue of approximately $1.20 billion and adjusted EBITDA of nearly $80.0 million. As of January 25, the Company operated 537 store locations in 36 states, compared to 448 stores in 33 states at the time of Sentinel’s acquisition in late 2018.
In the Christopher & Banks bankruptcy case, the Debtors filed a motion seeking approval of bidding procedures in connection with the sale of its inventory, intellectual property, and avoidance actions. The Debtors anticipate entering into an asset purchase agreement by today with ALCC, LLC (the agent and lender under the Debtors’ prepetition term loan facility), which will serve as the stalking horse bidder. As consideration for the transaction, ALCC is expected to assume the related liabilities. Qualified bids are due by February 17, with an auction on February 19, and a sale hearing on February 22. A hearing on the motion is scheduled for February 2. The Court set March 24 as the deadline to file proofs of claim, including requests for payment under section 503(b)(9). The Company also filed a motion to reject the lease on a store in Clay, NY. Click here to request a list of store closures.
The below retailers recently released their earnings reports. To request more information on these companies, or to discuss the financial performance with a retail industry expert, please click here.
