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June 3, 2020


Today, Ahold Delhaize announced that its Food Lion brand has agreed to purchase 62 BI-LO and Harveys Supermarkets from Southeastern Grocers. The stores are located in North Carolina, South Carolina and Georgia and will be converted to Food Lion stores as part of the brand's continued expansion in the southeastern U.S. The deal also includes the acquisition of a distribution center in Mauldin, SC. The acquisitions are expected to close in the first half of 2021, subject to customary closing conditions. Click here for the list of locations.

Financial terms were not disclosed and the Company noted that its overall financial guidance remains unchanged.


J.C. Penney is seeking rent abatement (foregoing rent) for June, July and August, to be followed by four months of “percentage rent.” In connection with these efforts, the Debtors, assisted by B. Riley Real Estate, have commenced discussions with each landlord, with a goal of completing the negotiations by mid-July. To facilitate the discussions, the Company seeks an extension of the time to pay June and July lease obligations through and including July 14, when $34.5 million of rent is scheduled to become due and payable. Approximately 304 stores have reopened in some capacity, 184 of which are leased. A hearing on the limited rent deferral is scheduled for June 11.

The rent deferrals approved in the Pier 1, DIP; J. Crew, DIP; and Modell, DIP’s bankruptcy cases arose because those entities’ stores were closed due to COVID restrictions during the bankruptcy proceedings. On the other hand, J.C. Penney is seeking a rental abatement (non-payment), which is linked to the goal of gaining landlord participation through rent concessions. One of the milestones in the Restructuring Support Agreement is delivery of a lease-optimization plan on June 15, which will outline anticipated rent concessions. Additionally, J.C. Penney’s request for a rent deferral during the period of the negotiations appears to be an interim step during which it can gauge the tenor of the negotiations. Click here to request more information.


Today, RTW Retailwinds announced in its NT 10-K filing for the fiscal year ended February 1, 2020 that a bankruptcy filing is "probable" due to COVID-19 challenges. Despite not carrying any debt, the Company's credit rating has been in decline since last year from softening comps and contracting margins. A​​​s the impacts of COVID-19 unfolded, the Company did not pay rent to landlords for April and May 2020, and did not make recent payments to many vendors. Consequently, the Company has received default notices from many landlords and vendors for non-payment, and the Company may be in default of all of its store lease agreements, but has not yet received default notification from all landlords. While the Company only has a $75.0 million secured credit facility due in October 2024, in which it drew down $40.0 million on March 20, 2020 as a precautionary measure from COVID-19, it does not expect to have the ability to raise additional capital without seeking bankruptcy protection. The Company does plan to repay amounts outstanding under the Loan Agreement. The Company plans to reopen stores during the first week of June 2020 with the majority reopened by end of June.

Prior to COVID-19, RTW Retailwinds had announced that it would close 150 of its 387 stores by fiscal 2021 after a disappointing FY19 to focus on becoming a digital-only business. Over 75% of stores had leases set to expire under two years, creating flexibility to exit underperforming locations and drive cost savings. From March to April 2020 and amid COVID-19 challenges, CEO Greg Scott stepped down from his role after almost 10 years with the Company, and his replacement, Traci Inglis, resigned on her start date. Sheamus Toal became CEO and CFO, effective April 17, 2020.


Documents filed by Deutsche Bank AG, the administrative agent under the prepetition ABL facility, state that shortly after the petition date Neiman Marcus Group violated a covenant related to the borrowing base. Inventory levels were $159.0 million less than the budgeted amount one week after the petition date, representing more than an 11% variance. Deutsche Bank noted the Company had disclosed that the initial budget contained material errors, and that the budget served as the basis for its consent to the Debtors’ use of cash collateral. Deutsche Bank acknowledged that the Debtors have proposed to cure the breach but indicated if this does not occur it will seek relief from the Court on an emergency basis, possibly including relief from the automatic stay or additional adequate protection. From a broader perspective, there have been concerns expressed about the Company’s cash position because it has yet to reopen any of its 69 stores that were closed due to COVID-19. Many of the Company’s competitors have started reopening stores in Texas and Florida where a total of 32% of the Neiman Marcus stores are located.


At a recent conference, Sprouts Farmers Market’s CEO Jack Sinclair noted, “Something we’ve learned through COVID-19 is that customers want at-home delivery and curbside pickup, and we don’t think this is going to go away anytime soon. And because of that need, we’ve rolled out curbside pick up across all our stores in the last few weeks. And the focus on e-commerce will continue within our strategy implementation.” Regarding real estate, Mr. Sinclair commented, “Going forward, our new stores will be smaller, 21,000 to 25,000 square feet. And I want that farmers’ market feel with smaller square footage, but no less categories, just refined to really meet our target customers’ needs. As for our expansion plans, we narrowed our near-term expanding markets, which alone could provide 300 to 400 more stores. We will continue to focus where we’re strong, like California and Texas, while building out Florida and the Mid-Atlantic to achieve a larger concentration of stores. Our plan is to grow at a minimum 10% annual unit growth rate, but most importantly, support our growth with an appropriate supply chain network.” In terms of supply chain he stated, “We have a commitment to our customers to provide fresh produce. However, with 5 DCs supporting 344 stores, with a number of those stores beyond 500 miles, freshness is hard to guarantee. Going forward, we aspire to have our DCs within 250 miles of the stores. Colorado and Florida are our first priority (for new DCs), with the Mid-Atlantic on their heels.”

In other news, Sprouts will open its first location in Seattle, WA on June 10. It will be the Company’s fourth store in the state. Click here to request a list of future openings.


Under Armour began reopening its stores on May 15, and as of May 29 had nearly 50% of its North America stores open. Additional locations are expected to reopen on a case-by-case basis. Stores are operating under reduced hours to allow time for cleaning. In addition, the Company is limiting store occupancy at any given time; it is also requiring all employees and customers to wear masks in the store. Fitting rooms remain closed, and returned products will be kept off the floor for 72 hours. 


Amazon will open a brick-and-mortar grocery store in a 43,000 square-foot building in suburban Chicago, IL (Schaumburg) this summer. The store will be located in a former Babies R Us. It is part of the Company’s plan to open dozens of grocery stores around the U.S. that tout the perks of a traditional supermarket, including a non-Amazon Go checkout system.

Separately, Amazon will convert 125,000 (70%) of the 175,000 temporary hires brought on to deal with the surge in demand due to COVID-19 to full-time employees in June. Amazon initially planned to hire an additional 100,000 temporary workers. 


Westlake Ace Hardware, a member of Ace Hardware Corp., announced plans to build a new store in Lenexa, KS. The store will be Westlake’s 22nd store in the Kansas City metro area and is slated to open in late summer of 2021. Earlier last month, the Company confirmed plans to purchase Brandt & Sons Ace Hardware in Maryland Heights, MO, near St. Louis. The acquisition is to be finalized on July 27. Westlake Ace Hardware has been a member of Ace Hardware since 1959, and was acquired by Ace Hardware in 2012. It currently owns and operates 138 stores in California, Illinois, Iowa, Kansas, Missouri, Nebraska, New Mexico, New York, North Carolina, Oklahoma, Texas and Washington. 


The Indian government has rejected Flipkart’s proposal to enter the food retail business. Walmart owns a majority of the Indian e-commerce firm. The Department for Promotion of Industry and Internal Trade (DPIIT) told Flipkart that its proposed plan to enter the food retail business does not comply with regulatory guidelines, although it did not elaborate, according to a person familiar with the matter. Flipkart is reportedly evaluating the agency’s response and intends to reapply. During Walmart’s most recent quarterly earnings call, it said that as a result of COVID-19, limited operations at Flipkart had negatively affected the group’s overall growth. New Delhi announced one of the world’s most stringent lockdowns across the nation in late March that restricted it from delivering in many states and only sell “essential items.” Click here for a complimentary list of future openings and closings.


The Court issued an order confirming the Plan of Reorganization for Gymboree Group on May 28. The Plan provides that the Debtors will undertake a new business model by purchasing a controlling interest in Certified Art and Collectibles (CAC), which is developing a system to electronically verify the authenticity of art, memorabilia, and other items. Following the acquisition, CAC will be renamed as LuxVerity. The reorganization will be funded by a $10.0 million exit facility to be provided by Goldman Sachs Specialty Lending Group, which will provide for: (i) payment of administrative and priority claims; (ii) general corporate expenses; and (iii) the purchase of a controlling interest in CAC. General unsecured creditors are not expected to receive any recovery on their claims. The Plan gives equity in the emerging entity to DIP lenders. The reorganized Debtors will retain all causes of action (including avoidance actions), and they may, in their sole discretion, pursue or settle any such actions in accordance with “the best interests of the estate.” CAC has the ability to benefit from the Debtor’s federal and state net operating losses, which total at least $255.0 million and $162.0 million, respectively. 


Kum & Go will open a 3,000 square-foot urban convenience store in downtown Des Moines, IA, a new concept for the Company. According to the Company, “the walk-up store will focus on healthy and better-for-you products, as well as traditional convenience store items. It will also serve as a test store for the chain’s new items, and, if the business model is successful, a prototype for additional stores in the 11 states the Company serves.”


On May 27, Southeastern Grocers announced plans to expand in Florida with the addition of eight new Winn-Dixie stores before the end of the year. The new Winn-Dixie locations are a result of the previously announced agreements to purchase four Lucky’s Market locations (Fort Myers, Gainesville, Lake Mary and Melbourne) and four Earth Fare stores (Boynton Beach, Jacksonville, Lakewood Ranch and Viera). Each converted store will be remodeled.

In other news, the Company’s BI-LO chain has partnered with Instacart to launch same-day grocery delivery in Georgia, North Carolina and South Carolina from more than 70 of the 100 stores it operates in the three states. BI-LO began offering delivery through Target’s Shipt in select markets in 2018. Southeastern Grocers also offers same-day delivery through Instacart and Shipt at its Winn-Dixie and Harveys Supermarkets chains, and launched Shipt delivery at its Fresco y Más stores in Florida. Click here for a list of future openings.


Yesterday, Planet Fitness reported that it had reopened about 800 locations across 30 U.S. states and one province in Canada. The Company anticipates that an additional 200 stores may be able to open by mid-June. At locations that have reopened, management indicated that overall average membership levels have remained relatively consistent, with increases in both new members and members who have cancelled. The number of visits per unit at locations that have been open at least two weeks grew from date of opening through May 31, with store usage peaking at 60% of the levels last year. 


Hy-Vee added a third former Shopko location to its plans to expand its small-format Dollar Fresh concept in Minnesota. On May 15, Hy-Vee closed on the $1.3 million purchase of a vacant 42,500 square-foot unit in Glencoe. It comes on the heels of Hy-Vee’s purchase of vacant stores in New Prague and St. Peter, MN, and stores in at least six Iowa communities. 


The Court issued orders authorizing Pier 1 Imports, DIP to begin an orderly wind-down of its retail operations. Pier 1 intends to initiate liquidation sales once store locations can reopen, in compliance with COVID-19 guidelines from local government and health officials. As part of the wind-down, the Company intends to sell its inventory and remaining assets, including its intellectual property and e-commerce business, through a Court-supervised auction. It also extended the periods during which the Company has the exclusive right to file a Chapter 11 Plan and to solicit acceptances by 90 days, through and including September 14, and November 16, respectively. The current period within which to file a Plan is scheduled to expire on June 16. The Court established June 30 as the last date to file proofs of administrative claim for administrative claims arising on or before May 31. The hearing to consider approval of the Disclosure Statement was adjourned to a date to be determined. 


Today, Publix Super Markets is opening a 48,100 square-foot store in Vestavia Hills, AL. Publix will offer curbside pickup, grocery delivery powered by Instacart, and pharmacy delivery. Click here for a list of future openings.


Red Robin Gourmet Burgers provided an update on the impact of the COVID-19 pandemic on its operations for its 1Q20. Comparable restaurant sales were up 3.7% through the first eight weeks of the quarter, but following the suspension of dine-in service and significant traffic deterioration, comps fell 43.2% in the last eight weeks, culminating in a 20.8% decline for the quarter as a whole. Red Robin has reopened 158 dining rooms at limited capacity as of May 24, while 256 Company-operated restaurants are open on an off-premise-only model, and 35 restaurants remain temporarily closed. 

Management estimates its current weekly cash burn at $2.0 million, which includes partial rent payments, reopening costs, and one-time COVID-19 expenses.


Today, Stater Bros. will open a new 48,000 square-foot store in Ladera Ranch, CA, in a former Gelson’s Market that closed in 2018. It is the Company’s 30th store in Orange County. 


Five Below announced that it will continue with its expansion plans, despite the impact of COVID-19. The Company opened 40 new stores so far this year and still expects to open a total of 100 to 120 new stores in 2020. As of May 29, Five Below said that it has reopened more than 75% of its 900-plus stores as pandemic lockdown restrictions eased. Locations have reopened in all but four states, where curbside pickup is available as allowed.

Earning Reports


Big Lots turned in a surprisingly good 1Q, with revenue up 11.1% to $1.44 billion, propelled by 10.3% comp growth. The Company’s stores have remained open during the pandemic; Big Lots carries food and other consumables, which make up about 29% of sales. The comp number is a bright spot, as the Company has managed only low single-digit increases over the last few quarters. Management indicated that 2Q is off to a good start but expects the comp trend to moderate later in the quarter. The Company had ample liquidity on hand due to the strong 1Q. Click here for more information.


Costco was a regular feature on the news early in the pandemic, showing lines of customers waiting to get in. The Company turned in another strong quarter, with 3Q sales up 7.3%, and membership fees growing 5%, as consumers gravitated toward bulk purchases. Comps were up 7.8%, excluding the impacts from gasoline and currency exchange. E-commerce expanded 66.1%. While Costco stores have remained open, certain services such as optical, photo and hearing aids were closed due to the high level of contact required for these sales. Click here to request a copy of the 3Q Sales Report.


Nordstrom’s 1Q sales (for the period ended May 2) decreased 38.5% to $2.12 billion, with full-price sales (67% of total sales) down 36.2%, and off-price sales (33% of total sales) dropping 45.2%. The Company’s 246 Nordstrom Rack stores, 100 full-line units, five Nordstrom Local stores, and two clearance stores were closed on March 17, which had a material impact on financial results, as stores made up two-thirds of its business in 2019. Online sales grew 5% to $1.10 billion, and its e-commerce business experienced a 50% growth in new customers. E-commerce sales represented 51% of total sales, up from 31% in the prior year. Gross margin eroded to 11% from 34% due to incremental markdowns to clear excess inventory, and deleverage from lower sales volume. The Company reported adjusted EBITDA loss of $539.0 million, compared to EBITDA of $221.0 million in the prior year period. Nordstrom entered FY20 with $850.0 million in cash, and it increased its position to $1.40 billion by the end of 1Q. Click here to request a copy of the 1Q Sales Report.

The Company began reopening stores in early May, with approximately 40% of its fleet now open (roughly 140 stores). Nordstrom continues to provide contactless curbside pickup in most full-line stores. 


Dollar General reported 1Q sales jumped 27.6%, as comps rose 21.7%. Sales momentum continued into 2Q with same-store sales up 22% through May 26. Gross margin rose 50 bps, and operating profit increased 69.2%. Based on COVID-19-related market concerns, the Company is not able to forecast performance and has withdrawn guidance; it expects to exceed previous guidance on sales, comps and EPS, which was 7.5% – 8%, 2.5% – 3% and 11.5%, respectively. The Company repurchased $63.0 million in stock during the first quarter prior to temporarily suspending repurchases due to COVID-19 but on May 27 also declared its normal cash dividend of about $90.0 million. Liquidity is abundant at roughly $3.80 billion. Click here to request a copy of the 1Q Sales Report.


Dick’s Sporting Goods reported 1Q sales (for the period ended May 2) declined 30.6% to $1.33 billion. Comps were down 29.5%, driven by temporary store closures that began on March 18; last year’s comps were flat. 1Q comps through March 10 were up 7.9%. E-commerce sales increased 110% (including curbside contactless pickup), representing 39% of total sales, up from 13% last year. The Company recorded an adjusted operating loss of $176.9 million, compared to a profit of $95.8 million last year.

Management indicated that it incurred $62.0 million of pre-tax expenses, including $34.0 million of teammate compensation and safety costs, and $28.0 million of inventory write-downs. The Company ended 1Q with $1.50 billion in cash and cash equivalents and $1.40 billion in outstanding borrowings under its revolving credit facility.

Through the first four weeks of 2Q, comps were down 4%, representing a progressive recovery. As of May 30, the Company has reopened approximately 80% of its 860 stores.Click here to request a copy of the 1Q Sales Report.


Burlington Stores 1Q sales (for the period ended May 2) dropped 51% to $798.0 million, as the Company’s 727 stores were closed on March 22 and remained closed through the end of the quarter. Management noted that comps through early March were up 3%. The Company took a $272.0 million inventory charge against aged inventory due to the extended store closures. This charge is expected to cover the full cost needed to clear this inventory, which it anticipates taking in 2Q. As a result, gross margin plunged to just 2% and pushed quarterly EBITDA into negative territory at $463.6 million. Despite $334.2 million of cash burn in the quarter, the Company ended with $1.64 billion of liquidity ($1.49 billion of cash and $151.0 million of availability). Burlington had borrowed $400.0 million under its $600.0 million secured revolver and closed on $1.10 billion of debt offerings, which included $300.0 million of senior secured notes and $805.0 million of convertible senior unsecured notes, each maturing in April 2025.

As of May 29, the Company has reopened 402 of its stores (management noted that sales have exceeded prior-year levels). Management expects most of the remaining 334 locations to reopen by mid-June. 


Williams-Sonoma’s 1Q sales (for the period ended May 3) slipped 0.5% to $1.24 billion, and comps were up 2.6%. The Company’s 616 stores (211 Williams Sonoma, 201 Pottery Barn, 118 West Elm, 74 Pottery Barn Kids, and 10 Rejuvenation) closed on March 18, and they remained closed for the remainder of the quarter. E-commerce sales jumped more than 30%. Comps grew 8.5% at Pottery Barn Kids and Teen (15.3% of total sales), 5.4% at Williams Sonoma (16.1% of total sales), and 3.3% at West Elm (25.5% of total sales); comps fell 1.1% at Pottery Barn (38.9% of total sales). Gross margin contracted 230 basis points to 33.5%. Operating income fell 34.4% to $48.6 million. 


Dollar Tree reported 1Q sales rose 8.2% to $6.29 billion, with Company-wide comps up 7%, but operating income actually fell $15.0 million to $365.9 million, on $73.2 million in COVID-19-related expenses, mostly connected to wage premiums for workers, and safety and sanitation. Family Dollar comps rose 15.5%, while its margins increased 230 bps. Dollar Tree comps fell 90 bps, as its seasonal and discretionary business was impacted by lower Easter holiday sales. The Company has reported solid momentum early in 2Q, with Family Dollar seeing sales improvements in discretionary categories and Dollar Tree having a rebound in discretionary categories following Easter, especially in crafts, graduation, stationery, Mothers’ Day seasonal, and balloons. Full-year store openings have been slightly curtailed and consist of 325 Dollar Trees and 175 Family Dollars, down from initial guidance of 350 and 200, respectively. Full-year guidance has been withdrawn, though the Company believes the spike in unemployment can only be a tailwind to performance. Click here to request a copy of the 1Q Sales Report.


ascena retail group’s 3Q sales (for the period ended May 2) were down 45%. All 2,764 stores were closed on March 18, and they remained closed through the end of the quarter. The Company was able to continue its e-commerce business (40% of total revenue), which experienced a 9% increase in demand during April. Ascena has been using its stores to fulfill e-commerce orders from its existing store inventory. As a result, inventory was down 20% at the end of the quarter. In early May, Ascena began to reopen a select number of stores, although it experienced significantly reduced customer traffic relative to the same period last year.

The Company ended the quarter with $430.0 million in cash and outstanding term-loan debt of $1.30 billion, with interest payments due in 4Q20 of $20.9 million and its next quarterly term-loan payment of $22.5 million due in November. Ascena will continue to evaluate all available options to preserve its ongoing operations.

The Company also announced that it intends to file its Quarterly Report on Form 10-Q for the quarter ended May 2 no later than July 27, pursuant to the 45-day extension permitted by the SEC.


Abercrombie & Fitch’s 1Q sales (for the period ended May 2) decreased 33.9% to $485.4 million, with Hollister sales (56.2% of total sales) down 36%, and Abercrombie sales (43.8% of total sales) down 30%. U.S. sales (66.5% of total sales) declined 31% to $322.9 million. EMEA sales fell 35% and represented 23.2% of total sales, and APAC sales dropped 51% and represented 6.7% of total sales. Gross margin dropped 610 basis points to 54.4%, driven by a 300 basis-point decline from charges to reduce the carrying value of inventory. As a result, operating loss widened 667.2% to $209.1 million. As of May 2, the Company had cash and equivalents of $704.0 million. Click here to request a copy of the 1Q Sales Report.

The Company continues to reopen stores globally on a rolling basis; roughly half of its store fleet is currently open. Hollister operates 388 U.S. units (of which 176, or 45%, are open), and 153 international units (of which 89, or 58%, are open). Abercrombie operates 252 U.S. locations (109, or 43%, are open), and 54 international locations (35, or 65%, are open). 


Ulta Beauty’s 1Q sales (for the period ended May 2) decreased 32.7% to $1.17 billion, and comps were down 35.3%. The comp decline was driven by a 38.6% decrease in transactions, partially offset by a 3.3% increase in average ticket. The Company’s 1,264 stores closed on March 20, and they remained closed through the end of the quarter. Gross margin eroded to 25.9% from 37%, primarily due to the deleverage of fixed store costs, pressure from channel mix shifts, and deleverage of salon expenses due to lower sales. These pressures were partially offset by lower promotional activity. The Company recorded an operating loss of $101.5 million, compared to a profit of $237.5 million last year. On April 23, the Company launched curbside pickup in select stores, and on May 11, Ulta began to reopen select stores (its 1,264 stores had been closed since March 20). As of May 28, the Company has 333 stores open and 840 stores offering curbside pickup. Click here to request a copy of the 1Q Sales Report.

As a result of the pandemic, Ulta trimmed its expansion target from a planned 75 new stores in 2020 to between 30 and 40. 


As of June 2, Sally Beauty has 2,458 U.S. and Canadian stores open to the public, up from 1,100 that were open as of May 4. This represents 84% of its U.S. and Canadian store base, with 16% still closed. In Europe, 202 units are now open (44% of European stores), up from 48 (10% of European units) open on May 4. The Beauty Systems Group has 1,009 U.S. and Canadian stores open (82% of units), up from 375 (31% of units) on May 4. The Company has seen strong demand at reopened stores. Sales for the month of May are estimated to be $262.0 million, up from April sales of $95.0 million. The Company noted that system-wide e-commerce sales were up 317% in May, on top of 353% in April and 52% in March. However, it did not provide e-commerce sales as a percentage of total sales.

Meanwhile, the Company is consolidating the field operations for its Sally Beauty and Beauty Systems segments. Approximately 190 filled and open positions in the field and at its headquarters will be eliminated. However, the Company expects to hire more than 120 personnel to support its e-commerce growth. Effective June 8, all furloughed associates in the U.S. and Canada will have been recalled, except for those working in the stores that remain closed. Additional associates in Europe and Latin America will return in the Company’s 4Q.

As of May 31, the Company estimates that it had more than $650.0 million of cash on-hand, with an additional $200.0 million of undrawn capacity on its asset-based line of credit. Sally Beauty expects to release its 3Q results in late July. 


Yesterday, Cracker Barrel Old Country Store reported its results for the third quarter ended May 1, and provided an update on its operations in response to the COVID-19 pandemic. 3Q comparable restaurant sales decreased 41.7% and comparable retail sales decreased 45.5%, primarily driven by significant traffic declines due to the Company-wide suspension of dine-in service in late March. 

Starting in late April, the Company began reopening dining rooms as allowed by local authorities, and as of May 29, 505 restaurants were operating with limited dine-in service out of a total of about 664 Cracker Barrel locations. Management expects substantially all restaurants will reopen dining rooms by the end of June.