March 31, 2021
J.C. Penney announced it will close 18 stores on May 16. Management indicated it doesn’t anticipate any additional closures, and its go-forward store count is 672. The Company operated 846 locations when it filed bankruptcy in May 2020. On December 7, 2020, substantially all of the Company’s retail and operating assets were sold to Simon Property Group and Brookfield Asset Management. Click here to request a list of store closures.
Amazon Fresh plans to open a store in Plainview, NY, on Long Island, in a space formerly occupied by Fairway Market and vacated in July. The store would be the second Amazon Fresh location in the Northeast. Local reports claim the Company is also considering adding a shop in Sunset Hills, MO, less than 20 miles southwest of St. Louis. Real estate sources indicated that Amazon is seeking to repurpose a vacant Toys “R” Us building. In November, the Company said it would open an Amazon Fresh store in a shuttered Fairway Market in Woodland Park, NJ. To date, Amazon has opened 12 Amazon Fresh stores, eight in California and four in the Chicago suburbs. Click here for a list of Amazon future store openings.
At a conference last week, Ahold Delhaize USA CEO Kevin Holt detailed the Company’s focus on personalization, a fully integrated omnichannel experience, and private brands. With 46% of Ahold Delhaize USA’s customers indicating they would like to receive more personalized experiences, Mr. Holt commented, “At our [U.S.] operations last year, we delivered over 9.8 billion personalized offers to consumers. Because of these personalized opportunities that we continue to take advantage of, we’re seeing consistent retention rates in our omnichannel loyalty programs of over 80%.... We’ve had over a 400% increase in the amount of new customers that we’ve acquired digital.” By the end of its current fiscal year (FY21), Ahold Delhaize USA plans to expand to about 1,400 pickup sites across its banners. In terms of private brands, customers look for affordability, innovation, differentiation, responsibility, and convenience; Mr. Holt believes the prominence of private brands will continue to grow and noted, “In the past year, we saw 34% growth in private brands. Twenty-five percent of consumers have tried a new retailer private brand, and 73% of those consumers say that when they’ve tried these brands, they’ll continue to use the brands.”
During FY20 ended January 3, Ahold Delhaize USA’s online sales growth jumped 105%, exceeding the Company’s target of more than 90% growth. This was bolstered by an accelerated rollout of click-and-collect, from 883 pickup points in 3Q to 1,116 sites by the end of 4Q (meeting its FY20 target of 1,100 U.S. pickup locations). By the end of FY21, the Company aims to expand to about 1,400 U.S. click-and-collect sites plus a 30% increase in online capacity, following a 70% increase in 2020.Click here to request a list of future store openings and closings.
Dick’s Sporting Goods opened its first “experiential” store in Rochester, NY, called Dick’s House of Sports. The store has an outdoor field for sporting events, a rock climbing wall, and indoor wellness spaces; the store’s goal is to provide a fitness community. A second store under this format is slated to open in Knoxville, TN in May. Click here to request a list of future store openings.
H.E. Butt plans to open two new stores in Frisco and Plano, TX in fall 2022. The stores will be nine miles apart within the competitive Dallas-Fort Worth market. The Plano store will be on land H-E-B has owned since 2012 and is about five miles from the Company’s Central Market store in Plano. H-E-B already has six Central Market stores in the market; a spokesperson indicated that at some point all H-E-B banners - including Mi Tienda and Joe V’s - will have a presence there. Click here to request a list of future store openings.
Our analysts recently issued a report on Icahn Enterprises, dba Pep Boys, which discusses the Company’s overall outlook and that of the automotive sector in general, as well as financial highlights. Click here to request a copy of the full report.
Dunkin’ Brands opened its 1,000th Next Gen restaurant in Woodstock, GA. The opening comes about three years after Dunkin’ first unveiled the concept in Quincy, MA. Additional Next Gen stores are in the works. Click here to request a list of future store openings.
7-Eleven’s Laredo Taco Company opened its first drive-thru restaurant in Dallas, TX at its sixth “Evolution Store.” The Company first introduced Laredo Taco and the Evolution concept in March 2019 at a lab store in Dallas and has since opened two more in the Dallas market and three elsewhere in the U.S. The new drive-thru is attached to a corporate-owned store.
In August, Marathon Petroleum Corp. (MPC) reached an agreement to sell the Speedway convenience store chain to 7-Eleven for $21.00 billion. Per the deal, 7-Eleven would acquire approximately 3,900 Speedway stores in 35 states. The deal was originally slated to close in 1Q21, a timeline MPC was still targeting as of early February. However, in an SEC filing last week, MPC is now pushing the timeline to early 2Q21. The International Brotherhood of Teamsters sent a letter earlier this month to the FTC asking it to pause its review of the sale, which also includes a 15-year fuel supply agreement between the two companies, because the deal “duplicates vertical integration — minus any efficiencies — and thus may provide an incentive for Marathon to raise wholesale prices to competing retailers.” Click here to request a list of future store openings.
Amazon is reportedly adding 3,700 new sellers on a daily basis in 2021. As of last week, that totaled 295,000 new sellers in 2021 to date, or 155 new merchants every hour. Amazon could add 1.4 million new sellers by the end of 2021. A total of 26% of those new sellers are in the U.S., while 10.1% are located in India.
In other news, the votes on whether to form a union at Amazon’s Alabama fulfillment center are set to be reviewed starting today. Ballots were sent to more than 5,800 workers at the Company’s Bessemer warehouse as part of a prolonged process expected to last days and spark legal challenges. Amazon has aggressively discouraged attempts by the Retail, Wholesale and Department Store Union (RWDSU) to become the first ever to organize at one of its U.S. facilities. A union victory would leave Amazon, which employs more than 800,000 nationwide, vulnerable to additional organizing efforts.
Varsity Brands’ subsidiary BSN Sports announced last week that it has acquired Dillard’s Sporting Goods, a regional team sports business based in Anderson, SC. After a hiatus on acquisitions during most of the pandemic in 2020, the Company ramped up acquisitions the last few months; this is BSN’s fifth acquisition in 2021. Dillard’s Sporting Goods is a third-generation family-owned business founded in 1946. As a result of the acquisition, Dillard’s Anderson location will transition to a BSN Sports sales office.
The Gap announced the sale of its premium children’s fashion brand, Janie and Jack, to Go Global Retail; terms were not disclosed. The sale includes all stores, assets, and its e-commerce platform. This transaction is a part of Gap’s turnaround strategy, in which it will be focusing on its larger and core brands, Old Navy, Gap, Banana Republic, and Athleta. The Company purchased Janie and Jack in 2019; the concept has about 115 stores as shown in the map below.
Today, Natural Grocers will reopen a store in the Dallas-Fort Worth metro area under a new format. The new store features a contemporary layout that is 40% larger than the original footprint (typical Company stores range in size from 5,000 square feet - 15,000 square feet); it will have a more efficient checkout, a Nutrition Education Center, and increased organic produce, body care and beauty, dietary supplements, frozen meats, and grab-and-go selections. The store will staff a Nutritional Health Coach (NHC), offering free health coaching by phone or video. The new space has also been upgraded with sustainable building features and 100% LED lighting. Natural Grocers operates 161 stores in 20 states. Click here to request a list of future store openings.
Real estate investment firm Marcus & Millichap has completed the sale of a 56,555 square-foot net-leased ShopRite in Ellenville, NY for $8.175 million, following an auction. The firm had the exclusive listing to market the property on behalf of the seller, a private investor. The buyer is also an undisclosed private investor. The property was under contract in February, but the pandemic shelved the sale; after deciding to auction the property, the sale closed within 90 days. According to local reports, the store was renovated in 2015 and is the only major grocery store in the area. ShopRite is a registered trademark of Wakefern Food Corp.; there are nearly 280 ShopRite supermarkets throughout New Jersey, New York, Pennsylvania, Connecticut, Delaware and Maryland.
On Monday, Walmart announced a partnership with fast-casual dining brand Saladworks to open Saladworks kitchens and eateries in Walmart’s U.S. stores. The deal covers bringing non-traditional locations to 60 stores in the U.S. and 30 stores in Canada by the end of calendar 2021. Ghost Kitchen Brands is working with Saladworks to execute the deal. Many of the new “kitchens” will offer seating; all locations included in the deal will offer carry-out and third-party delivery. The deal will allow Saladworks entry into new states, including South Carolina, Iowa, Idaho, Kansas, Louisiana, Missouri, Oklahoma, Oregon, and Washington, as well as the Canadian provinces of Ontario, Quebec and Alberta. Saladworks is part of the newly formed WOWorks family of brands, along with Frutta Bowls and Garbanzo Mediterranean Fresh, which have also partnered with Ghost Kitchen Brands as part of a smaller test agreement. Conshohocken, PA-based Saladworks now has at least 10 grocery store outposts, including a recently opened flagship Giant store in downtown Philadelphia and a Kroger store in Cincinnati, OH. Founded in 1986, Saladworks operates more than 130 locations across 18 states and 2 countries.
In other news, Walmart invested $153.0 million in Japanese e-commerce company Rakuten, giving it a 0.9% stake in the Company. Click here to request a list of future store openings and closings.
Continuing towards its goal of operating in all 48 contiguous states, Camping World announced the acquisition of the Trailer City RV dealership in Fairmont, WV. This will be the Company’s first location in West Virginia and 39th state overall. The acquisition is expected to close in May. Camping World operates 174 locations.
Chipotle Mexican Grill plans to continue expanding into Canada, with a new restaurant in Surrey, BC, scheduled to open today, marking the Company’s first new Canadian location since October 2018. Chipotle will unveil its first Canadian “Chipotlane” drive-thru digital order pickup lane at a new restaurant opening in Port Coquitlam, BC this summer. In addition to the Surrey and Port Coquitlam units, the Company plans to open six additional restaurants in British Columbia and Ontario over the next 12 months. There are currently 23 Chipotle restaurants in Canada, with locations in the greater Toronto and Vancouver metro areas as well as Ottawa and London, Ontario.
In other news, Chipotle has invested in Nuro, an autonomous delivery company, as part of Nuro’s Series C funding round. Chipotle said that expanding access and convenience through its digital ecosystem is a strategic priority.Click here to request a list of store openings.
Wendy’s franchisee Delight Restaurant Group has acquired 54 additional Wendy’s restaurants in the Raleigh, NC market as part of NPC International’s bankruptcy deal. Based in Norfolk, VA, Delight indicated that per the deal it plans to build several new restaurants in the Raleigh metro area and remodel certain acquired units in Wendy’s new Image Activation format. Last week, Flynn Restaurant Group completed its acquisition of NPC International’s 937 Pizza Hut locations and 194 of its Wendy’s restaurants. Click here to request a list of future store openings.
GameStop’s 4Q20 net sales declined 3.3% to $2.12 billion reflecting a 13% decrease in the store base due to the Company’s strategic de-densification efforts. It also reflects a 27% reduction in European store operating days stemming from temporary store closures in response to the COVID-19 pandemic. Comps increased 6.5%; global e-commerce sales increased 175% and represented 34% of net sales in 4Q20, up from 12% in 4Q19. The Company closed 232 stores in 4Q20, bringing full-year closures to 693. At 4Q20 quarter-end, there was $508.5 million in unrestricted cash. Borrowings under the revolver totaled $25.0 million, which was repaid on March 15. Management did not provide details on borrowing availability.
Yesterday, GameStop announced it appointed Elliott Wilke to the role of chief growth officer, effective April 5. Mr. Wilke most recently served seven years at Amazon, holding a variety of senior roles across segments like Amazon Fresh, Prime Pantry, and Worldwide Private Brands. Additionally, GameStop named Andrea Wolfe as VP of brand development, effective March 29. Ms. Wolfe previously served as Chewy’s VP of marketing. Tom Peterson was appointed VP of merchandising, after previously serving in that same role at Chewy. Last week, GameStop appointed Jenna Owens as COO. Most recently, she was director and general manager for distribution and multi-channel fulfillment at Amazon. The Company also hired Neda Pacifico as SVP of e-commerce. Ms. Pacifico previously served as Chewy’s VP of e-commerce. Ken Suzuki was named VP of supply chain systems; Mr. Suzuki previously served as Zulily’s VP of supply chain technology.
Last week, GameStop informed the SEC that eight members of its board are expected to step down, including Reginald Fils-Aime, Kathy Vrabeck, Lizabeth Dunn, Paul Evans, Raul J. Fernandez, William Simon, James K. Symancyk, and Carrie W. Teffner. The Company has not yet determined a definitive slate of nominees for election at its 2021 annual meeting.
Little Caesars is looking to grow its New York metro area presence, with a goal to sign at least a dozen new franchise units in Long Island, Westchester, Northern New Jersey, and the five boroughs (The Bronx, Brooklyn, Manhattan, Queens and Staten Island) in 2021.
The Michaels Companies completed the go-shop period under its agreement to be acquired by Apollo Global Management, having received no rival proposal. The Company’s adviser, UBS, contacted seven strategic parties and 18 financial parties about a potential transaction. Apollo agreed to acquire Michaels for $5.00 billion on March 2; a tender offer to acquire all outstanding shares for $22 per share in cash began in mid-March and is due to expire on April 12. The transaction is expected to close in 1H21. Click here to request a list of future openings and closings.
Omega Sports, Inc. filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the Western District of North Carolina. The proceedings have been designated as case number 21-30160. Prior to the filing, the Debtor closed 5 of its 12 stores as a result of operational disruptions due to COVID-19. In each instance, the Debtors vacated the leased premises and surrendered the property to the applicable landlord months before the bankruptcy filing. As of the petition date, the Debtors operated seven stores in North Carolina, in Charlotte, Greensboro, High Point, Wilmington, Raleigh, and Winston-Salem. Among its first day motions, the Debtors seek to reject unexpired leases on the five closed stores and to use cash collateral. Click here to request more information.