March 8, 2023
Walmart announced its plans to open 28 new Walmart Health center locations in 2024. By the end of 2024, the Company expects to have more than 75 centers across the U.S., which would nearly double its current footprint. The first of the new Walmart Health centers will open in 1Q24. The new locations include 10 in the Dallas metro area; eight in Houston; six in Phoenix; and four in Kansas City.
Buc-ee’s is looking to expand into Wisconsin with a 74,000 square-foot store in DeForest that will include 120 fuel pumps and over 600 parking spaces. If plans go through, Wisconsin will become the chain’s 11th state. Meanwhile, the chain gained approval for an 80,000 square-foot unit in Ocala, FL, which will have 120 fuel pumps and 750 parking spots when it opens in late 2023. This will be Buc-ee’s third Florida unit, joining locations in St. Augustine and Daytona Beach, both on Florida’s East Coast, opened in 2021. Buc-ee’s has been expanding into a number of new markets recently, with stores expected to open in Colorado and Missouri in 2024. The Company is also early in the process of opening a Reston, LA site, and it is looking into New Kent County, VA, though that location would open sometime in 2027. Buc-ee’s operates 34 large-format convenience stores in Texas, and 10 units in Alabama, Florida, Georgia, Kentucky, South Carolina, and Tennessee.
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Ross Stores’ 4Q22 revenue rose 4%, to $5.21 billion, while comps increased 1%. During the quarter, lower incentive costs and the easing of freight expenses drove EBITDA up 12.4%. For the full year, EBITDA and EBITDA margin were down roughly 12% and 140 bps, respectively, albeit EBITDA margin remained strong at 12.8%, a figure above competitors TJX and Burlington. During the year, the Company opened 92 net new stores, bringing store count to 2,015 (1,693 Ross stores and 322 dd's DISCOUNTS). Looking ahead, the Company expects FY23 comps to be flat and has not commented on its expansion plans, but typically opens 100 stores per year (75 Ross and 25 DD's).
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Amazon is permanently closing eight of its Amazon Go stores in Seattle (2), New York City (2), and San Francisco (4). The Seattle locations have been closed for some time, but the other Amazon Go sites will close on April 1. The Company said it remains committed to the format. With these closures, the Company will have 23 Go stores.
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EG Group announced it has entered into an agreement with Realty Income Corp. for the sale and leaseback of 415 of its store properties, primarily on the East Coast, for $1.50 billion. The transaction will consist of stores under the Cumberland Farms, Fastrac, Tom Thumb, and Sprint banners, and is expected to close in the second quarter of 2023. The Company will use the proceeds to reduce outstanding debt, which stood at about $10.25 billion at FYE21. Leverage at that time was about 7x. With the pay down, F&D/Creditntell estimates debt to TTM EBITDA would fall into the 5.5x to 6x range. Initial rent payments under the agreement will be about $103 million per year.
Nordstrom reported another quarter of disappointing earnings. 4Q22 sales fell 4.2%, including declines of 2.4% and 8.1% at Nordstrom and Nordstrom Rack, respectively. With its U.S. operations struggling, the Company decided to cut its losses in the Great White North and close all 13 of its Canadian stores and the e-commerce site. Nordstrom Canada filed for protection under the Companies’ Creditors Arrangement Act (CCAA), which although is not a bankruptcy, will allow it to liquidate its assets through a court supervised process. According to the filing, Nordstrom Canada made up just 3% of Nordstrom’s total sales, but has lost money every year since its launch in 2014.
In the Party City Holdco Inc., DIP case, the Court entered a final order authorizing the Debtors to: (i) use cash collateral, and (ii) access the entire $150 million under a DIP Term Loan Facility with Ankura Trust Company, LLC, as the administrative agent. Interest on borrowings is at ABR (with a floor of 2%) plus 9%. The DIP Facility matures upon the earliest of: (a) June 19, 2023, (b) the effective date of a Plan of Reorganization, or (c) the consummation of a sale or other disposition of all or substantially all of the Debtors’ assets. Additionally, A&G Real Estate Partners announced plans to auction eight additional Party City leases, subject to Bankruptcy Court approval of bid procedures. A&G previously announced a group of 12 stores where it would be auctioning leases; 10 remain available. The 18 stores range in size from 7,500 to 28,000 square feet. Some are freestanding, while others are in power centers, strips, or city street locations.
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Advance Auto Parts reported better than expected Q4 results, with net sales totaling $2.50 billion, a 3.2% increase aided by inflation and new store openings; comparable store sales increased 2.1%. For FY22, net sales of $11.20 billion were up 1.4%, with comps advancing 0.3%. 4Q gross margin was little changed, as improvements in strategic pricing, a more favorable channel mix and owned brand expansion, were offset by product cost inflation. The Company also provided FY23 guidance, and expects net sales of $11.40 billion to $11.60 billion, with comps growth ranging from 1% to 3%. Capital expenditures are expected to be between $300 million and $350 million, with free cash flow of at least $400 million for the year. The Company also plans to open between 60 and 80 new locations in FY23.
Big 5 continues to struggle, as its high concentration of apparel and footwear are among the most competitive categories in retailing. Sales fell 13% to $238 million during 4Q22, as same store sales were down 13.2%. During FY22, the Company opened two new stores, relocated one store, and closed one store, ending the period with 432 units. Two stores were closed in 1Q23 to date, and during the remainder of FY23, the Company expects to open five new stores, relocate one, and close two units.
The inflationary environment along with a strong holiday season continued to drive consumers to seek value at the nation's discounters. Dollar Tree's 4Q22 results benefited from this combination as sales jumped 9%. Company-wide comps improved 7.4% with Dollar Tree (DT) gaining 8.7% and Family Dollar (FD) up 5.8%. During the quarter, the Company opened 123 stores and closed 77; for the full year the Company added 464 locations and closed 205. Dollar Tree continues to convert stores to its new formats. For DT, the Company converted/opened 1,800 stores to the DT Plus format which features the $3 and $5 dollar items. FD added over 500 stores to the H2 format which includes more freezers and cooler doors and added 570 Combo stores. For FY23, the Company is projecting 600-650 new stores, with most being backloaded in 2H23.
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Schnucks will open a second Eatwell Market location on March 29 in Chesterfield, MO. The 30,000 square-foot store will emphasize natural and organic foods and feature local offerings. The first Eatwell Market debuted in Columbia, MO in 2020.
Macy’s reported lower 4Q sales and earnings, although results were still better than expected. 4Q22 sales fell 4.6%, gross margin rate was down 240 bps as elevated markdowns were used to clear out inventory, and Company-reported EBITDA fell 27%. However, management noted post-holiday demand for remaining winter and early spring product was stronger than expected, and markdowns were shallower than contemplated. Inventories declined 3% at FYE22 compared to FYE21 and were down 18% compared to FYE19. Macy’s provided a relatively upbeat outlook for FY23, although sales are still expected to fall up to 4%. Management noted “conflicting data regarding the U.S. consumer,” and discretionary spending will be under pressure, as inflationary pressures shift spending towards services and essentials. Management identified five primary growth factors to begin driving low-single digit comps starting in FY24: evaluating, refreshing, and replacing private brands (16% of FY22 sales); Market by Macy's and Bloomie's off-mall stores; Marketplace; luxury; and personalized offers and communication.
To date, the Company closed 80 of the 125 planned closures announced in 2020, and plans to close five stores in FY23, while adding that roughly 99% of its mall base is profitable on a four-wall basis. Macy’s currently has eight Market by Macy's and two Bloomie's. These average about 30,000 to 40,000 square feet, or roughly one-fifth the size of its on-mall locations. In 2023, the Company plans on opening four Market by Macy's and one Bloomie's. And if new locations continue to outperform, management will look to incrementally accelerate off-mall openings beginning in 2024.
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H Mart is opening a second store in Austin, TX. The location is just over 23,000 square feet and is the Company’s sixth store in the Lone Star state. Since January, the grocery chain has announced plans to open three other units; on the Upper East Side of Manhattan in New York City as well as at the American Dream mall in New Jersey and near the University of Illinois Urbana-Champaign campus in Urbana, IL.
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Sprouts reported 4Q results in line with trend. Sales advanced 6% due to more stores and comps advancing 3%, still shy of inflation and industry peers. However, Company-provided EBITDA increased 13%, with the margin up 40 bps to 6%, as the Company’s efficiency and cost-cutting efforts continued to pay dividends. Though the Company has consistently been adding stores and is looking to open 30 in FY23, it also announced it will be closing 11 in the coming year, a significant uptick compared to just four closures over the prior three years. The closures will be targeted at some of the Company's older larger-format locations which are underperforming. Sprouts balance sheet and liquidity remain solid; the Company is in a net cash position and has access to an estimated $700 million of liquidity.
Founded in 2013, Madison Reed offers prestige, ammonia-free, hair color box kits at affordable prices with an organic formula and a proprietary color-matching technology. As of early March 2023, the Company operated 82 color bars, up from 27 at FYE20, ranging in size from 1,500 to 2,000 square feet, slightly larger than Supercuts’ average size of 1,200 square feet. By year-end, Madison Reed plans to operate over 100 locations. The Company also has wholesale partnerships with Ulta and Ulta Beauty at Target and sells its products through its website and Amazon.com.
In 4Q22, Chico’s opened 14 stores (13 Soma boutiques and one Soma outlet) and closed six (three Chico’s, one Chico's outlet, one White House Black Market, and one Soma outlet), bringing FY22 openings and closures to 27 and 24, respectively, ending the year with 1,269 locations. In FY23, the Company expects to open up to 50 new Soma boutiques while closing up to 20 underperforming locations across its banners. Since 2018, the Company has closed 230 underperforming locations.
Kroger posted a 6.2% ID sales increase, excluding fuel, during 4Q22. Total sales advanced 5.4% to $34.82 billion; excluding fuel, sales growth was 5.9%. Gross margin (excluding fuel) was essentially flat, reflecting effective management of product cost inflation through successful sourcing strategies and lower supply chain costs. With regard to e-commerce, during 4Q22 the Company increased delivery sales 22% driven by Kroger Boost and Customer Fulfillment Centers (CFC's). The Company also opened a new CFC in the Denver metro area during the quarter, one of the fastest-growing areas in the country.
CEO Rodney McMullen commented that the Company is getting good interest from buyers in stores that it expects to sell as it attempts to secure regulatory approval of its planned takeover of Albertsons. McMullen remains optimistic and said the deal is on track to close in early 2024.
Last week, Yesway added 10 new locations: opening five of its Allsup’s stores in Ruidoso, NM and Abilene, Springtown, Snyder, and Whitney, TX; and acquiring five existing Ranglers stores in Clifton, Hamilton, and Hico, TX. The Allsup’s banner is the new 24-hour, large-format stores Yesway has developed and is rapidly bringing to market. The Ranglers acquisitions will be remodeled and rebranded under either the Yesway or Allsup’s banner. With these 10 additions, the Yesway portfolio now includes 435 stores across nine states. The Company plans to open 28 new stores throughout 2023.
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Sam’s Club plans to open a new $142 million fulfillment center in Georgia, located in Douglas County along Interstate 20 west of Atlanta. The Company said the new facility will improve the warehouse club’s ability to distribute goods to customers in Georgia and across the Southeast. The announcement was made a month after Sam’s Club revealed plans to add more than 30 stores in the coming years in its first expansion since 2017; the first of the new stores will be located in Florida.
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Primark signed a lease to open a 55,000 square-foot multi-level store in the Queens Center mall in Elmhurst, NY. The Company currently operates 21 stores the U.S. Owned by Associated British Foods, Primark aims to have 60 U.S. stores by 2026. Other recent openings in New York include a 44,000 square-foot store on Long Island and a similar sized store in Jamaica, Queens.
During FY22, Burlington opened 113 new stores, relocated 22, and closed four, bringing the store count to 927. In FY23, The Company expects to open 70 to 80 new stores. After 2023, the Company expects it will open 500 to 600 new stores over the next five years.
Hibbett reported improved operational performance in 4Q23, due to a rebound in footwear sales following supply shortages last year. However, management warned about headwinds from the economy and competitive pressure in FY24. Sales in 4Q23 increased 19.6%, reflecting a comparable sales increase of 15.5% and the opening of 37 new stores during the year. During 4Q23, the Company opened nine new stores and closed two, bringing the store base to 1,133 in 36 states as of January 28, 2023.
According to reports, Lidl is opening a 23,000 square-foot grocery store in a building adjacent to a Long Island shopping center that already features an Aldi location. In February 2020, Aldi opened a store at the Green Acres Commons in Valley Stream, NY. The new Lidl is reportedly in a free-standing building on adjacent property owned by the mall, but it is not clear exactly where it will be located since the space it was approved for is already occupied by a Michaels which says it has no plans to leave.
Sheetz submitted plans to the city of Wilmington, NC for a 6,100 square-foot store and gas station. It is the first of two stores in the region that the Company is planning to open, as per an announcement last December. The Pennsylvania-based c-store operator has locations in Maryland, Ohio, Virginia,and West Virginia, as well as North Carolina and its home state.
Sporting Life Group will launch its third national banner, called Team Town Sports, with three locations scheduled to open in May and July in Alberta and Ontario, Canada. The Company aims to have 25 stores operating under the banner across Canada, catering to the underserved team sports market and featuring a section dedicated to youth sports. Sporting Life Group operates 47 Golf Town and 14 Sporting Life stores.
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