March 4, 2020
On February 20, it was reported that Stage Stores is reportedly preparing for a financial restructuring that could include a bankruptcy filing. Reports indicated that the situation remains fluid, and the Company could complete an out-of-court debt restructuring process. We also previously noted that the Company is in the process of transitioning to its Gordman’s off-price banner. On February 26, reports state that the Company is planning to close up to 60 existing Gordman’s units as well as 10 department stores that were targeted to become Gordman’s stores. The planned closings are in addition to 40 stores that management identified for closure last fall. As of mid-January 2020, the Company operated a total of 158 Gordman’s stores. Click here to request a list of the company's future openings and closings.
On February 12, it was reported that Modell’s Sporting Goods requested vendors to agree to a schedule of extended payment terms through 2023. On February 28, reports state that vendors rejected the proposal for extended payment terms over three years. Instead, they required a return to normalized terms in 90 days as a condition of supplying merchandise. The reports state that management will submit a new proposal to vendors in the coming days.
In other developments, management negotiated rent concessions for seven of 24 stores it had originally targeted for closure. The Company currently operates 141 stores; with the additional 17 closures, Modell’s will have closed over 20% of its store base in just over a year. Please see the map below of the closing stores, click here to request a list.
Publix Super Markets has begun construction on a new refrigerated distribution center in Greensboro, NC. The 940,000 square-foot facility will be the Company’s 10th DC overall and first in North Carolina. The first phase of the project will be completed by the end of 2022 and will provide more efficient delivery of refrigerated products to Publix locations in the Carolinas and Virginia. Meanwhile, Publix will open a new 48,000 square-foot store in Watersound, FL in summer 2021. Click here to request a list of future openings.
Amazon is planning to open a grocery store in south Naperville, IL, according to a liquor license application submitted to the city. The 30,000 square-foot store is about three miles from a Whole Foods. No opening date has been set. Amazon has more than 10 Amazon Hub locker locations throughout the city of Naperville and seven Amazon Go stores in Chicago, largely in the downtown area. The cashier-less convenience stores sell things like snacks, pre-made sandwiches and salads, and other items.
On Thursday, Amazon will seek to overturn a European Commission (EU) order to repay about €250.0 million (US$277.0 million) in back taxes to Luxembourg. The EU said in its 2017 ruling that the tax deal, which covered the period from May 2006 to June 2014, meant almost three-quarters of Amazon’s business went untaxed. Amazon was able to shift a significant portion of its profits from a subsidiary to a holding company without paying tax.
According to published reports, Prime Now and Amazon Fresh deliveries from Amazon could experience delays as customers turn to the Company’s services and stay away from physical stores amid growing fears over the coronavirus. The Company has seen a surge for both services, straining operations, and Amazon said there is limited availability of both.
7-Eleven is expanding is new retail concept, called Evolution Store, to the Washington D.C. and San Diego, CA markets over the next few months. The Evolution Store was introduced to the Dallas, TX market last March and serves as an experiential testing ground where customers can sample and purchase its latest innovations. In addition to featuring a Laredo Taco Company restaurant, a brand the Company acquired along with Stripes convenience stores in South Texas as part of a 1,000-store acquisition from Sunoco in 2018, 7-Eleven Evolution Stores offer an assortment of exclusive products, services, and features customized to the neighborhoods and customers they serve.
In other news, 7-Eleven has closed on the previously announced acquisition of more than 100 independently operated 7-Eleven stores in central Oklahoma. Financial terms of the deal were not disclosed.
Hudson’s Bay Company’s (HBC) shareholders voted in favor of a plan to become a private company, at a special meeting of shareholders. Shareholders approved the resolution with 98.28% of the votes cast in favor of the plan, surpassing the required favorable vote of at least 75%. The special resolution also required approval by a “majority of the minority” shareholders, and 94.46% of the votes cast by minority shareholders were voted in favor of the resolution. Under the plan of arrangement, HBC will become a private company owned by a group of continuing shareholders, led by Richard Baker, governor and executive chairman of HBC. The Company’s other shareholders will receive C$11.00 per share in cash. Following completion of the arrangement, it is anticipated that the Company’s common shares will be delisted from the Toronto Stock Exchange, and the Company will apply to cease reporting under applicable Canadian securities laws.
HBC expects to release its fourth quarter and fiscal 2019 financial results around April 1. At this point, we are not certain how much financial information HBC will disclose once it becomes a private company.
Lucky’s Market Parent Company, LLC, filed motions to retain CBRE as its real estate adviser and to provide services in connection with monetizing and divesting its store portfolio not subject to the seven stalking horse bids. The debtor previously retained Great American Global Partners, LLC to liquidate store inventory. Real estate services are to include: negotiate with landlords, develop a marketing plan for the Company’s owned properties, or those with a leasehold interest, and coordinate the bidding procedures and sale process.
This week, Coborn’s will reopen three newly remodeled locations in New Prague, Clearwater and Sauk Rapids, MN. The remodeled stores now offer new, enhanced services, an expanded product assortment, and updated décor. The Company currently operates 28 stores, of which 10 have been converted to the new format. The Company first introduced the updated concept in 2016. Coborn’s also recently announced it will open a new store in Otsego, MN in 2020.
Last Thursday, DoorDash announced that it has filed for an initial public offering (IPO). The number of shares to be offered and the price range for the proposed offering have not yet been determined, and the IPO is expected to take place after the SEC completes its review process, subject to market and other conditions. The Company has reportedly hired Goldman Sachs to lead the IPO.
Paper Source, the greeting cards, stationery, and gift retailer, announced it acquired 30 shuttered Papyrus locations for $575,000, and plans to rebrand them to Paper Source. The first wave of converted locations will open sometime this month, with the balance to open by the end of April. The acquired locations, which includes nine in New York City alone, will bring Paper Source’s total store base to 165 locations nationwide. As background, Schurman Fine Papers, parent of Papyrus, filed Chapter 11 in January 2020 and announced it would close all of its 254 locations in the U.S. and Canada. Paper Source has experienced double-digit growth in card and gift categories since 2015; over 65% of the chain’s assortment is exclusive products.
Last week, Walmart confirmed it is considering a sale of its 50% stake in Asda. A joint statement was released in response to private equity partner speculation for Asda: “Following inbound interest, Walmart and Asda can confirm that we are currently considering whether there is an opportunity for a third party to invest in Asda, alongside Walmart, in order to support and accelerate the delivery of Asda’s strategy and position Asda for long term success. Together, we are in discussions with a small number of interested parties who share Walmart and Asda’s commitment and passion to growing the business – and who share our values, both forour customers and colleagues.” A person with knowledge of the matter said that Walmart would likely retain a significant minority stake in Asda in any deal.
Walmart is launching a new service called Walmart Fulfillment Services that allows third-party vendors to hire the Company to store, pack, and ship items for customers. Third-party vendors will pay Walmart a fee to store and ship goods, which will help drive up profitability. Customers will have more brands to choose from, faster shipping, and easier returns. The Company did not say how much it will charge sellers but indicated it would be “one of the lowest-priced services on the market.” Sellers currently have to use a third-party to handle fulfillment or do it themselves. The service will be going head-to-head with the Fulfillment by Amazon (FBA).Click here to request a list of future openings.
Walmart announced last week it is testing a membership program similar to Prime called Walmart+. This is somewhat of a rebrand of the Company’s Delivery Unlimited program and may include unlimited grocery delivery, although further details were not provided. The Company is also reportedly in talks with Comcast’s NBC Universal to sell Vudu, its entertainment and streaming service. This seems at odds with the startup of a membership program, where Vudu could be offered as a nice perk, similar to Amazon Prime. Walmart has named Jamie Iannone as its new COO for US e-commerce. Iannone most recently was CEO of Walmart’s SamsClub.com business, as well as EVP, membership and technology.
In other news, Walmart is looking to expand its role in healthcare industry through adding healthcare clinics. While it already has pharmacies and vision centers in some of its 4,756 stores, it currently operates only two clinics, which offer more comprehensive medical, vision and dental care, along with x-rays and lab tests. Unlike traditional clinics, which are usually staffed by nurse practitioners, Walmart’s health centers are run by doctors, and patients are seen in exam rooms. Patients are told what their care will cost before they get it, and those prices are often half of what Walmart has estimated they cost elsewhere. The Company has not disclosed how many clinics it plans to build but has implied that health center expansion is one of its top growth initiatives. If it is successful, the move sets Walmart up to compete against companies like Walgreens and CVS, which have moved into clinics, and could give patients in rural communities more access to care.
Dick’s Sporting Goods is opening four stores in March, including two namesake stores in Chattanooga, TN and Hagerstown, MD, and two Golf Galaxy stores in Berwyn, PA and Warwick, RI. Following the openings, Dick’s will have 727 namesake stores and 96 Golf Galaxy locations in 47 states. Click here to request a list of future openings and closings.
A U.S. Bankruptcy Court judge signed a final order on February 26 authorizing Earth Fare, Inc., DIP to pay pre-petition claims arising under the Perishable Agricultural Commodities Act (PACA) and the Packers and Stockyards Act of 1921 (PASA) of up to $16.0 million. Additionally, the judge signed a final order confirming a store-closing agreement is operative, approving store-closing sales free and clear of all liens, and approving a store-closing plan.
Topgolf Entertainment Group is opening a new location in Wichita, KS, which will be its second venue in Kansas. The new unit will feature an open-concept, single-floor design with community-focused entertainment. The location plans to hire 150 – 200 full and part-time associates and serve about 250,000 guests annually. Topgolf operates 58 locations nationwide.
Yesterday, Target reported results for its 4Q and FY ended February 1. Quarterly sales increased 1.8% to $23.40 billion, and comps rose 1.5%, reflecting comparable digital sales growth of 20%. Operating income was $1.20, up 7.3% from $1.12 billion in 2018. Full year sales increased 3.6% to $77.1 billion, reflecting a 3.4% increase in comps. Comparable digital sales growth was up 29%. In 2019, Target’s same-day services grew more than 90%, accounting for nearly three-quarters of the Company’s comparable digital sales growth.
Looking ahead at fiscal 2021, Target expects same-store grow in the mid-single digit percentage range for both the first quarter and full year.
Target’s investment in its digital platform is starting to bear fruit, as E-Marketer indicates it will jump into the eighth positon in the top 10 online retailers’ market share, at 1.2%. The Company leap-frogged Costco and Macy’s. Amazon (38.7%) and Walmart (5.3%) remain the dominant players by far. Click here for a list of the Company’s planned new locations.
TJX Companies reported 4Q sales growth of 9.7% to $12.21 billion. Consolidated comps increased 6%, consisting of growth of 4% at Marmaxx (U.S.), 5% at HomeGoods (U.S.), 4% at TJX Canada, and 10% at TJX International (Europe & Australia). Comp growth was driven primarily by customer traffic. Net income rose 17% to $984.8 million. For the full year, sales were up 7% to $41.72 billion, total comps increased 4% (+5% at Marmaxx (U.S.), +2% at HomeGoods (U.S.), +2% at TJX Canada, and + 8% at TJX International) and net income rose 6.9% to $3.27 billion.
During fiscal 2020, the Company increased its store count by 223 stores, to 4,529 stores, and square footage rose 4%. Looking ahead at fiscal 2021, TJX expects EPS of $2.77 – $2.83, representing a 4% – 6% increase over the prior year’s $2.67. The Company expects comp growth of 2% – 3% on both a consolidated basis and at Marmaxx. Click here to request a list of future openings and closings.
L Brands’ 4Q sales decreased 3% to $4.71 billion, and comps fell 2%. Victoria’s Secret’s sales (48.3% of total sales) fell 10.1% to $2.28 billion, and comps were down 10%. Bath & Body Works’ sales (46.2% of total sales) increased 11.5% to $2.17 billion, and comps rose 10%. Overall, operating income dropped 89.8% to $81.7 million; the Company recorded pre-tax, non-cash impairment charges of $725.0 million related to Victoria’s Secret goodwill and store-related assets. As previously announced on February 20, L Brands and Sycamore Partners entered into a definitive agreement under which Sycamore will purchase a 55% interest in Victoria’s Secret for $525.0 million. L Brands will retain a 45% stake in Victoria’s Secret. The transaction is expected to close during the second quarter. Over the past year, L Brands has opened 64 new stores and closed 87 underperforming locations, ending the year with 2,920 locations, including 1,181 Victoria’s Secret units and 1,739 Bath & Body Works units. Click here to request a list of openings and closings.
J.Crew Group’s 4Q sales increased 1.8% to $747.2 million, largely driven by a 3% comp increase, which more than offset 14 fewer stores in operation compared to last year. J.Crew segment sales (69.2% of total sales) decreased 2% to $516.8 million, despite a 1% increase in comps. Madewell sales (23.8% of total sales) increased 13% to $178.1 million, driven by a 9% increase in comps. Gross margin materially expanded 15.9% to 38.3% due to fewer markdowns this year and offset a 60 bps increase in the SG&A margin. Overall, adjusted EBITDA surged to $81.8 million, compared to last year’s negative $31.9 million.
The Company has entered into an amendment to the Transaction Support Agreement to eliminate the requirement that it commence the proposed Madewell IPO on or before March 2 and to extend the outside date to complete the transactions from March 18 to April 30. The Company continues to pursue strategic alternatives to maximize value, including the separation of J.Crew and Madewell into two independent companies and a potential IPO of the Madewell business. Click here for a list of J. Crew and Madewell openings and closings.
Office Depot’s focus on improving profitability, through cost-cutting and the elimination of unprofitable sales, is evident in its 4Q results. This has positioned the Company to now focus on reviving the top line in FY2020. Quarterly sales decreased 6.1% to $2.51 billion, due to lower retail sales, reflecting a 4% decline in comps, the closing of 54 units over the past year, and lower sales in both the CompuCom and business solutions divisions. Product sales and service revenue fell 6% as a result of a 16.3% drop at CompuCom, partially mitigated by a 6% increase in service revenue in the retail division. Gross margin improved 20 basis points to 22.8%, and SG&A margin improved 80 basis points to 14.6%. As a result, EBITDA rose 14.1% to $219.0 million. Click here for a list of sample list of future closings.
Chico’s FAS reported 4Q sales increased 0.4% to $527.1 million, reflecting a 2.2% increase in comps, partially offset by the impact of 77 store closures since last year’s fourth quarter. Chico’s segment sales (47.3% of total sales) decreased 0.7% to $249.6 million, but comps rose 0.9%. White House Black Market segment sales (32.6% of total sales) declined 2.2% to $171.6 million, but comps inched up 0.1%. Soma segment sales (20.1% of total sales) increased 8.2% to $105.8 million, and comps rose 9.4%. Gross margin increased 230 basis points to 32.5% on lower costs, and as a result, operating loss narrowed 74.8% to $5.6 million. The Company opened one Chico’s outlet and one Soma location during the quarter, and shuttered 34 underperforming locations across its banners (12 Chico’s, 18 White House Black Market, and four Soma units).
Publix reported 4Q sales growth of 5.1% to $9.80 billion, driven by comp growth of 3.6%. Net earnings were $789.3 million, compared to $407.0 million in 2018. Excluding the impact of net unrealized gains on equity securities in 2019 and 2018, net earnings would have been $656.6 million, a decrease of 0.6%. For fiscal 2019, sales were up 5.6% to $38.10 billion, and comps rose 3.6%. Net earnings were $3.00 billion, compared to $2.40 billion last year.
Effective March 1, Publix’s stock price increased from $47.10 per share to $48.90 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board.
Lowe’s Companies reported 4Q sales rose 2.4% to $16.03 billion, and comps were up 2.5%; U.S. comps improved 2.6%. Gross margin decreased 22 basis points to 31.1%. The Company recorded operating income of $958.0 million, compared to a loss of $567.0 million in the 4Q18, negatively impacted by a $952.0 million goodwill impairment associated with the Company’s Canadian operations. As of January 31, Lowe’s operated 1,977 stores in the U.S. and Canada.
Noodles & Company announced results for its fourth quarter and fiscal year ended December 31. 4Q sales were up 0.6% with system-wide comps up 1.5%. Higher menu prices continue to prop up comps, while customer traffic declines (-3.8% in 4Q). New menu items seem to be driving traffic improvement in 1Q20, and management is forecasting 3% – 5% comp growth for the year. The Company is slowly shifting back into expansion mode, with 10 – 15 openings planned for this year (~3% unit growth), then accelerating to 5% in 2021 and 7% thereafter.
Wendy’s reported 4Q revenue growth of 7.4% to $427.2 million, driven by a 4.3% increase in North American comps and an increase in franchise royalty revenue. The Company posted an operating profit of $36.7 million, down from $45.8 million last year. The decrease resulted primarily from an increase in franchise support and other costs, partially offset by lower general and administrative expense and an increase in franchise royalty revenue and fees. Net income increased to $26.5 million, primarily driven by a cash settlement related to a previously held investment, partially offset by the fall in operating profit and a higher provision for income taxes. Adjusted EBITDA declined 22.6% due to an increase in franchise support and other costs, general and administrative expenses, and decline in net rental income.
During the quarter, Wendy’s had 71 global restaurant openings, with an increase of 45 net new units. Image Activation includes reimaging of existing restaurants and building new ones; at the end of the fourth quarter, 58% of the global system was image activated.Click here for a list of the Company’s planned new locations.
Looking ahead at fiscal 2020, Wendy’s expects global system wide sales of $12.00 billion – $12.50 billion, adjusted EBITDA of $425.0 million – $435.0 million, and capex of $75.0 million.
Big Lots’ 4Q sales increased 0.5% to $1.61 billion, driven by sales growth in high volume new and relocated stores, and one more store than last year, partially offset by a comp decline of 0.9%. For fiscal 2019, sales rose 1.5% to $5.32 billion, and comps were up 0.3%.
Big Lots’ said it expects a “challenging” 1Q due to the coronavirus health emergency. The Company expects EPS of $0.30 – $0.45, and a decrease in comps in the low to mid-single digit range. For fiscal 2020 (guidance incorporates only the 1Q sales impact of coronavirus – not beyond) it expects EPS of $3.20 – $3.40, compared to $3.67 in fiscal 2019. Comps are expected to be flat to a low single digit increase, and accelerate in the second half of the year. The Company estimates capex of $160.0 million – $170.0 million. Click here for a list of the Company’s planned new locations.
Fiesta Restaurant Group’s 4Q revenues fell 4.9% to $159.5 million. Total Pollo Tropical restaurant sales decreased 1.3% to $89.7 million due to the closure of 14 restaurants in December 2018, partially offset by comp growth of 0.6%. Off-premise sales consisting of online, catering, and delivery orders comprised 5.6% of total restaurant sales. Sales cannibalization from new restaurants negatively impacted comps by approximately 60 basis points. Comp growth resulted from a 0.5% increase in comp restaurant transactions and a 0.1% increase in average check, driven by modest price increases. Taco Cabana restaurant sales decreased 9.2% to $69.0 million due primarily to a comp decline of 8.1% and the closure of nine restaurants in December 2018. Off-premise sales consisting of online, catering, and delivery orders comprised 4.2% of total restaurant sales. The decrease in comp restaurant sales resulted from a 7.1% decrease in transactions and a 1% decrease in average check. The decrease in average check was mainly due to the higher mix of value and promotion offerings, partially offset by menu price increases of 0.7%. During the first quarter of 2020, the Company intends to carefully reintroduce select items and expand dayparts to increase sales while maintaining the operational improvements provided by the menu simplification. The Company reported a fourth quarter loss of $21.1 million, larger than last year’s $7.9 million loss.
During the quarter, Fiesta opened one Pollo Tropical in South Florida and closed one Taco Cabana restaurant. As of December 29, 2019, there were 142 Company-owned Pollo Tropical restaurants, 164 Company-owned Taco Cabana restaurants, 32 franchised Pollo Tropical restaurants in the U.S., Puerto Rico, Panama, Guyana, Ecuador and the Bahamas, and eight franchised Taco Cabana restaurants in the U.S.
On February 26, Fiesta Restaurant Group announced that Charles Locke will no longer serve as president of Taco Cabana. An external search for Mr. Locke’s replacement is underway; in the interim, Richard Stockinger, CEO, president and a director of the Company, will assume the day-to-day management responsibilities for Taco Cabana.
Big 5 Sporting Goods reported 4Q sales decreased 1.2% to $244.1 million, and comps were down 0.6%. By category, apparel sales were up mid-single digits, supported by colder weather that boosted seasonal sales. Footwear sales increased low-single digits, while hardgoods were down mid-single digits, and were negatively impacted by more restrictive ammunition sales laws passed in California last summer, combined with lower firearms sales. Gross margin improved 310 basis points to 31.6%, largely reflecting an increase in merchandise margin of 239 basis points and higher distribution costs capitalized into inventory for the quarter. Overall selling and administrative expense decreased $700,000 due to lower print advertising expense and contract termination charges, partially offset by higher employee labor and benefit-related expenses. The Company recorded an operating profit of $2.5 million, compared to a loss of $3.5 million in the prior-year period. The Company opened one new store and relocated one existing store, ending the year with 434 locations. Management warned that 1Q20 sales got off to a bad start due to recent warm weather trends, with comps down about 10% quarter to date. Despite the soft sales, merchandise margins have continued to improve. The Company expects 1Q19 comps to decrease in the mid to high-single digit rate, and the Company has closed three stores so far in the quarter. For fiscal 2020, the Company plans to open and close five stores, with its store count remaining unchanged at year-end. Regarding the coronavirus, management said it expects it to affect its supply chain, but it is too early to quantify the impact.
Foot Locker’s 4Q sales decreased 2.2% to $2.22 billion, and comps were down 1.6%. Operating income fell 15.1% to $186.0 million. CEO Richard Johnson stated, “While we had leading positions in key on-trend footwear styles, this was not enough to offset softer than expected demand during the compressed holiday season, a very promotional marketplace for apparel, and tougher launch comparisons.” The Company opened 32 new stores during the quarter, remodeled or relocated 66 stores, and closed 63 locations. As of February 1, Foot Locker operated 3,129 units in 27 countries.
Camping World’s 4Q sales declined 1.8% to $964.9 million, and comps fell 8.3% on top of a 3.9% decrease in the prior-year period. New RV vehicle sales fell 21.6%, and used RV vehicle sales rose 2%. The Company recorded an EBITDA loss of $6.9 million, compared to positive EBITDA of $19.9 million in the prior-year period, negatively impacted by heavy discounting and liquidation of products and accessories related to the Company’s strategic shift away from locations that do not sell and/or service RVs. During its earnings call with analysts, management confirmed that it has now completed the strategic shift, and all related stores were closed and related product has been liquidated. After closing 52 stores in fiscal 2019, and another 10 earlier this year, the Company now operates 165 locations, 154 sell RVs, plus 11 Camping World stores that service but do not sell RVs. Of that mix, just 30 stores were legacy Gander locations.
For FY2020, the Company expects revenue of $4.70 billion – $4.80 billion, down from $4.89 billion in FY2019. Adjusted EBITDA is expected to be $235.0 million – $245.0 million (about a 5% margin, still well below the 8% – 9% margin range prior to the Gander acquisition in 2017), compared to $166.0 million for FY2019 (the Company deducts floor plan interest expense from EBITDA, which amounted to $40.1 million in FY2019). The EBITDA improvement includes efforts to control SG&A costs, the elimination of underperforming stores, improved gross margins, including the benefit from maintaining leaner inventory levels and a focus on more used RV business, and mid-single-digit RV volume growth. The Company’s outlook could be impaired if the broader economy slows or enters a recession, and negatively impacts demand for large ticket discretionary items like RVs.
J.C. Penney’s 4Q sales decreased 7.7% to $3.49 billion, and comparable store sales fell 7%. Excluding the impact of the Company’s exit from the major appliance and in-store furniture categories, comparable sales declined 4.7%. Management noted that the comp decline was driven by lower store traffic. The sales decline and deleveraged expenses outpaced gross margin expansion due to fewer markdowns (inventory was down 11% year-over-year) and improved shrink results, which pushed quarterly EBITDA down 11.2%. Fiscal 2019 EBITDA increased 2.9%, to $569.0 million, driven by a 270 basis-point increase in gross margin. The Company’s TTM EBITDA margin rose 50 bps to 5.1% but remains well below our monitored industry average of 7.9%.
In other news, J.C. Penney is offering a curbside pickup option known as “Style on the Go” at 50 locations across the U.S. The Company began piloting the service in November at a store in the Dallas, TX market, where it received a positive customer response. The service will now be available in several markets, including California, Florida, Kentucky, Missouri, New York, Ohio, Tennessee, Texas, Washington, and West Virginia. J.C. Penney operates about 850 stores across the U.S. and Puerto Rico.
AutoZone’s 2Q sales increased 2.6% to $2.51 billion, while domestic comps slipped 0.8%. Gross margin was up 20 basis points to 54.3% due to supply chain leverage, and as a result, operating income rose 2% to $407.9 million. CEO Bill Rhodes commented, “Our sales performance in our fiscal second quarter did not meet our plans or expectations. We had particularly challenging sales in specific weather sensitive categories and geographies, indicating to us that the mild winter was a considerable headwind to our and our industry’s sales performance. As we enter our seasonally strong second half of the year, we are optimistic about our prospects for the balance of the year.” The Company opened 25 new stores in the U.S., two in Mexico, and one in Brazil, ending the quarter with 5,815 stores in the U.S., 608 in Mexico, and 38 in Brazil.