June 9, 2021
USR Parent Inc., the Sycamore-affiliated owner of Staples, Inc., submitted a proposal to The ODP Corporation outlining a plan to acquire the Office Depot and OfficeMax retail store business, its direct channel business (officedepot.com), and intellectual property, for $1 billion in cash. USR Parent reiterated that it intends to commence a tender offer for all of the outstanding common shares of ODP unless the proposal is accepted. The slow pace of store closings at both Staples and ODP has been a chronic problem since before the failed attempt to merge seven years ago. ODP has so far rejected USR Parent's recent proposals, however, they seem determined to work it out and the competitive environment has changed much in those seven years, whereby a transaction seems logical and likely to be allowed this time through. There is considerable overlap between the two companies’ stores, likely setting the stage for more rapid closings. The map below shows Staples, Office Depot and OfficeMax store closings since the start of 2020. Click here for a full store overlap analysis.
AggData's Sister Company Creditntell Launches Version 3.0 of its Retail and Real Estate Intelligence Platform
Mobile Data Analytics Platform Provides Enhanced Visibility into Market Dynamics and Consumer Shopping Behaviors
Industry-leading retail consulting and data analytics firm Information Clearinghouse, Inc., through its Creditntell division, has announced the successful launch of version 3.0 of its Retail and Real Estate Intelligence (REI) platform, a Big Data analytics tool providing unparalleled insights into consumer traffic and shopping patterns.
Click here for the full press release.
Five Below lapped last year’s 1Q when it had to close all of its stores. 1Q21 revenue was up almost 200%, and 64% above 1Q19. Store counts were up 167 and 298 from 1Q20 and 1Q19, respectively. Comps also soared, up 162%, and up 23% from 1Q19. The Company is still not providing full year guidance but did volunteer that 2Q21 sales are projected to be down 4% to 6% versus last year. During the quarter, Five Below entered Utah, with seven stores in the Salt Lake City area. The Company plans on opening 170 to 180 new stores during FY21. Later in FY21, Five Below will enter New Mexico for the first time. Click here for a list of future store openings.
PriceSmart’s May sales increased 16.3% to $286.4 million. Foreign currency exchange rate fluctuations impacted sales negatively by 1.6%, or $3.8 million. For the five weeks ended May 30, comps increased 12%. The Company’s Click & Go service, including curbside pickup and delivery, contributed 4% to total sales. For the nine months ended May 31, sales increased 7.3% to $2.6 billion, and comps increased 4.3%. The Company opened a net of two new warehouse clubs over the past year, bringing its store count to 47. CEO Sherry S. Bahrambeygui commented, “Our Membership base has increased by 5.2% and our trailing 12-month renewal rate has increased by 8.9% from the lows in August 2020.”
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Hibbett Sports opened a 5,000 square-foot store in Richmond, VA, its fourth in the city. The new store features a boutique-style design with a focus on new releases and easy navigation. The Company also opened a new City Gear outpost in Tallahassee, FL, a 4,000 square-foot unit offering urban streetwear and footwear brands. Hibbett operates 1,071 stores, including 168 City Gear locations. Click here to request a list of future store openings.
H. E. Butt has begun construction on its second H-E-B store planned for the DFW Metroplex in Plano, TX. The store is set to open in fall 2022. The new flagship format store will be 111,000 square feet. The Company has also announced plans to open a flagship store in Frisco, TX. Click here to request a list of future store openings.
Academy Sports + Outdoors’ 1Q21 sales increased 39.1% to nearly $1.6 billion, and comps were up 39%. Compared to 1Q19, sales grew 47%. Growth was driven by strong, double-digit consumer demand across all product categories, notably in apparel, footwear, and team sports. E-commerce sales declined 21%, compared to triple-digit growth in 1Q20 when consumers shifted to online ordering at the beginning of the pandemic last year. Compared to 1Q19, e-commerce sales have increased 300%. Gross margin increased 950 bps to 35.7% due to improved merchandise margins from a favorable mix shift, higher average unit retails, fewer promotions, and less clearance activity. Adjusted EBITDA rose 408.8% to $271 million. The store base remained unchanged at 259 units. Click here to request a list of future store openings .
Our Hot Market Report takes a closer look at the Washington D.C. 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.
Dick’s followed up on solid 1Q21 results, including comp growth of 115%, by announcing last week the grand opening of seven stores, including its second Dick’s House of Sports in Knoxville, TN. House of Sports is one of several latest new store concepts from Dick’s, which includes the Dick’s Sporting Goods Warehouse and Overtime by Dick’s Sporting Goods clearance-based concepts; the Company also expects to launch the outdoor concept Public Lands in 2H21. House of Sports is an upscale, experiential concept with features such as an outdoor running track, rock-climbing wall, and golf hitting bays. Management believes it has the potential to be its store of the future, and expects to incorporate the most successful elements from the format into its Dick’s Sporting Goods stores. The other new stores included a relocated Dick’s Sporting Goods and three Warehouse locations. The Company is also opening two new redesigned Golf Galaxy locations; the redesigned concept debuted back in April. In addition to the seven new locations, the Company is also adding experiential soccer shops in select stores nationwide. When it released 1Q results, Dick’s also raised its FY21 outlook, and now expects comps to grow 8% – 11%, compared to prior guidance of down 2% to up 2%. Including the seven stores announced last week, the Company expects to open six new Dick’s Sporting Goods stores and six specialty concept stores in FY21. The Company also plans to relocate 11 Dick’s Sporting Goods stores and convert two former Field & Stream stores into Public Lands stores in FY21. Click here to request a list of future store openings.
Last week, Sprouts Farmers Market opened a new 135,000 square-foot produce distribution center in Orlando, its first DC in Florida and its seventh across the country. The facility will serve its current 23 stores in the state and 10 additional locations planned to open in Florida this year. Click here to request a list of future store openings.
Walmart has entered into an “exclusive” partnership with GNC to sell a selection of GNC’s product assortment through its stores and website. GNC’s vitamins and nutritional products will be available in more than 4,000 Walmart stores this month, and GNC plans to add sports nutrition and weight management products to the mix. The agreement with Walmart raises questions about GNC’s partnership with Rite Aid, which it has had since 1998. Through late February, 1,652 Rite Aid store had GNC store-within-a-store departments and, under a contract extension announced in early 2019, GNC and Rite Aid are slated to open another 33 GNC departments in Rite Aid stores through December 2021. Click here to request more information.
Arden Group’s Gelson’s has signed a long-term lease to become the retail anchor at a mixed-use development in West Los Angeles, CA. The 36,000 square-foot store is expected to open in early 2023.
Most sporting goods retailers had an excellent year in 2020. However, FY20 sales at REI fell 12% to $2.76 billion, largely due to the temporary closure of the entire store base because of COVID-19. EBITDA fell 82%, and net income turned negative. The Company burned cash during the year, but the balance sheet remained debt-free, and cash balances at 1/2/21 increased to $837 million from $469 million at the end of FY19, due to the $391 million sale of the Company’s headquarters building. Liquidity was supported with a revolver, which was virtually untapped. The Company operated 165 stores at 1/2/21, up three from the previous year. Click here to request a list of future store openings.
Rouses Market recently opened a new store in New Orleans, LA. The 10,000 square-foot supermarket is significantly smaller than its average size for new stores of 40,000 – 50,000 square feet. The store also houses the Company’s first full-scale restaurant. Click here to request a list of future store openings.
At Home’s 1Q22 sales and comps jumped 182.9% and 187.3%, respectively, benefitting from approximately $45 million of estimated sales attributable to stimulus payments, which are not expected to recur in future quarters. Gross margin for 1Q22 was 37.3% compared to 8.6% in the prior year period primarily due to occupancy, depreciation, freight and distribution center expense leverage as a result of increased net sales and, to a lesser extent, product margin expansion. Adjusted EBITDA spiked to $110.6 million, reversing the $14.6 million EBITDA loss last year and up substantially from the $30.4 million during 1Q20. 1Q22 EBITDA margin of 20.6% was also more than double the 9.9% EBITDA margin from 1Q20. The Company opened nine and closed two stores in 1Q22, ending the quarter with 226 stores in 40 states. Click here to request a list of future store openings.
J. Jill’s 1Q21 sales increased 42% to $129 million. Direct to consumer sales grew 32.7% and represented 57.5% of total sales, down from 61.4% of total sales last year during the height of the pandemic. Gross margin improved to 68% from 55.1%, driven by lower promotional offers and stronger full-price selling. Adjusted EBITDA was $16.9 million compared to a loss of $25.8 million last year. The Company expects to close about 20 stores this year and plans to spend $10 million on capital expenditures. J. Jill has 265 stores operation nationwide.
Conn’s 1Q22 revenue increased 15% to $364 million, reflecting a 19.4% increase in same store sales and the opening of 13 new stores during the year; comps increased 1.8% on a two-year stacked basis. Operating income totaled $70 million, up from negative $60 million in the same period last year, due to higher revenue and a decrease in the provision for bad debts. Net debt increased to $486 million at the end of 1Q22 compared to $350 million at the same time last year. As of April 30, 2021, the Company had $297 million of liquidity. During FY22, Conn’s plans to open 11 – 13 new stores, which includes seven that have already opened. Click here to request a list of future store openings.
Sportsman’s Warehouse reported solid 1Q21 results, including a 24% increase in comps, and EBITDA margin more than doubling to 7.2%. Management noted the sales growth was broad based, but was still led by the hunting category, as sales of firearms continued to trend at historical levels. The Company maintains a debt free balance sheet, with $60 million in cash; it still expects to be acquired by Bass Pro’s parent, Great Outdoors Group, in 2H21. Click here to request a list of future store openings.
Asian grocery chain 99 Ranch Market opened its first store in Arizona, located in Chandler. The 44,100 square-foot store is the Company’s 54th location, operating across 10 states. 99 Ranch has been focusing on expanding and last year entered Massachusetts and Virginia. In November, the Company partnered with Instacart. Click here to request a list of future store openings.
JOANN reported a 1Q22 sales lift of 15% for the period ended May 1, 2021. Omni-channel sales were up 186% on a two-year basis, and represented 13% of 1Q sales, down slightly from 16% in 4Q21, but well above 4% pre-COVID levels; the Company currently believes the 12% – 15% range is appropriate. Gross margin improved 350 bps mainly driven by cost savings from strategic sourcing initiatives and reductions in promotional activity, partially offset by higher import freight costs. This helped more than double 1Q EBITDA to $57.5 million, while EBITDA margin advanced 560 bps to 10% of sales, a huge swing from the 4.4% during 1Q21. The Company has completed a review of its entire store base. Nearly 100% of the stores are cash flow positive and it plans to refresh the vast majority of the store base over the next seven to 10 years, with the expectation of about 60 to 70 projects per year, starting toward the end of the current fiscal year. The Company reduced net debt 38% year-over-year to $737 million, bringing net leverage down to a modest 2.1x. Management plans to further pay down debt to around $600 million – $650 million by the end of FY22. Click here to request a list of future store openings.
Kirkland’s reported a 60% sales increase for its first quarter ended May 1. Comps increased more than 75% (a 95% jump in store comps and 42% gain in e-commerce sales), recovering from the 40% drop during 1Q20. E-commerce is now 30% of sales, up from 24% in 4Q20, and the Company anticipates it will grow to about 50% in the next two to three years. Management stated it sees the big lift in home furnishings sales as sustainable due to work-from-home shifts, a strong housing market, and less store-based competition (notably Pier 1). Adjusted EBITDA flipped to positive at $7.7 million, with an EBITDA margin of 6.2%. During 1Q21, Kirkland’s closed five stores and opened two, ending the quarter with 370. The Company believes its ideal store count should be 300 – 350 and foresees additional opportunities for more favorable rent terms with ongoing lease renewals over the next two to three years. Management also anticipates up to five additional closures by the end of the year. Kirkland’s ended 1Q21 with no debt and $121 million of liquidity, including $72.3 million of cash and $48.7 million available under its $75 million revolver.
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.
