May 10, 2023
Christmas Tree Shops, LLC, DIP filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware on May 5. The Company faced a severe downturn in performance during 2022, amended its bank line eight times, and sold and leased back its Middleboro, MA distribution center in February 2023, raising $105 million in proceeds, but could not avoid a Chapter 11 filing.
Management has characterized the bankruptcy as a “financial restructuring,” during which it plans to close 10 underperforming locations and exit Chapter 11 by August 2023. The Debtors have no plans to seek a buyer as owners Marc and Pam Salkovitz, who are also creditors of the Company, plan to retain an ownership interest in the restructured business. Some of the Christmas Tree Shops leases are subleased from Bed, Bath & Beyond, DIP, which filed for bankruptcy last month and has rejected those leases. Management said, “The Christmas Tree Shops will have to negotiate those leases directly with landlords for the first time.”
On May 8, the Debtors filed motions seeking interim authorization to engage Restore Capital LLC (a unit of Hilco Global Merchant Resources, LLC) to manage sales of inventory at 10 closing stores.
We are actively monitoring the bankruptcy case. Click here to request case updates and store closings.
According to reports, Macy’s will open five more stores in strip centers, as it closes more of its giant mall anchor locations. The Company has already launched the concept of mini versions of its namesake banner as well as Bloomingdales, with 10 shops called Market by Macy’s or Bloomie’s, located outside the traditional mall space. The stores under this format are about one-fifth the size of the usual department stores and have drawn younger and more diverse customers, giving a boost to sales and leading to the smaller stores outperforming the rest of the Company in the holiday quarter. Macy’s is planning for four of the new off-mall stores to be under the Market by Macy’s banner, with site information yet to be revealed, and the fifth store, a Bloomie’s, slated for Seattle, WA.
The Athlete’s Foot is opening a new “neighborhood” concept store in midtown Atlanta, GA, which is designed to drive hyper-localized product assortment and community engagement efforts. The Company is partnering with several streetwear brands including Polo Sports, Sergio Tacchini, and PRPS. The Company also has a similar store located in Dallas, TX and plans to open a third such location in Greenville, SC. Five existing stores will be converted to the new format in June, followed by five more in September, with two new stores opening in December. The chain operates 550 stores in 30 countries.
In the Bed Bath & Beyond, DIP case, the Debtors requested authorization to sell 475 unexpired leases on their remaining stores through the sale of designation rights at an auction. The leases subject to this motion include any that are not sold as part of a Section 363 sale of assets. The Debtors engaged A&G Realty Partners, LLC as real estate advisor to assist in appraising, marketing, and negotiating the sale of their leases. A&G has identified approximately sixty parties which have expressed interest, including institutional investors, owners, or investors. In a sale of designation rights, a third-party purchaser pays an initial sum to the Debtor and pays the lease carrying costs until assignment. The proceeds from the assignment are then divided between the purchaser and Debtor.
Jenny Craig, which operates 500 North American locations, filed Chapter 7 on May 5 in the U.S. Bankruptcy Court for the District of Delaware. The Company has ceased operating and begun liquidating its operations. The Company operates in the weight loss and nutrition business and had been evaluating a shift to an online-only model.
Aldi announced it plans to add 120 locations in 2023, increasing its nationwide store count to more than 2,400 by the end of the year. In 2022, the Company opened and remodeled 139 units, and it has been continuing that momentum in 1Q23, with 35 store openings. Following the previously reported opening of a regional headquarters and distribution center in Loxley, AL in January, Aldi said it intends to expand its brick-and-mortar presence into the new markets of Baton Rouge and New Orleans, LA.
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Weis Markets announced plans for a $160 million capex budget in 2023, including remodeling projects for 20 stores, a store expansion for one location, and a brand new supermarket slated to open in 2024. The Mid Atlantic food retailer operates 197 stores in Pennsylvania, Maryland, Delaware, New Jersey, New York, West Virginia, and Virginia.
On May 3, Darden agreed to acquire Ruth’s Hospitality Group for $21.50 per share, representing a 34% premium to Ruth’s closing stock price as of May 2, 2023; the total transaction value is $715 million, and the deal is expected to close in June. Ruth's Chris Steak House operates 154 locations worldwide, including 80 Company-operated and 74 franchised restaurants. In addition to Darden's main Olive Garden (893 units) and LongHorn Steakhouse (554 units) banners, it operates seven fine dining concepts, bringing its total store count to 1,890.
Nordstrom plans to close its two locations in downtown San Francisco, CA this summer. The department store retailer plans to shutter its 40,000 square-foot Nordstrom Rack on July 1 and its 312,000 square-foot Nordstrom by the end of August. In an in-house message, chief stores officer Jamie Nordstrom maintained that brick-and-mortar stores continue to play a critical role in the Company’s strategy, with 20 new Rack store openings planned this year, and more to come in 2024, including a number in California.
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Carter’s plans to open 50 new stores in the U.S. this year, with expectations that it will reach 1,000 locations by 2027. Noting that approximately 70% of purchases are made via brick-and-mortar locations, managementsaid that these locations will be tied into “high-traffic centers that provide convenience for online shoppers and enable the same-day pickup of digital purchases.” The 50 new units will be offset by 10 store closings as leases expire this year. Currently ,the Company maintains 800 stores nationwide.
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Big 5's sales decline in 1Q23 reflected a 7.1% comp decrease and the net closure of one store during the year. During the quarter, the Company closed two stores, ending the period with 430 units. For the remainder of FY23, the Company expects to open five new stores, relocate one store, and close three stores.
Amazon announced its new 3.8 million square-foot robotic fulfillment center in Windsor, CT is now operational. The facility specializes in smaller customer items such as books, electronics, small household goods, and toys.
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New Seasons Market announced that a new store is coming to the Portland, OR area in 1H25. This will be the grocery chain’s second location in Hillsboro and 25th in the region. The new space, just over 27,000 square feet, was formerly the site of an Office Depot and will feature a full-service meat and seafood department, local craft beer, cider and wine, as well as a deli that will offer on-the-go meals and catering. Prior to this store opening, New Seasons expects to add a location in Vancouver, WA, later this year and another is slated for Milwaukie, OR in Spring 2024. Currently, the Company operates 19 stores in the Portland metro and Vancouver area.
The pending merger of Kroger and Albertsons made the news again this week with reports that the United Food and Commercial Workers (UFCW) has come out against the proposed $24.60 billion acquisition of Albertsons by Kroger. According to the story, the union's president, Marc Perrone, expressed concern about the lack of transparency on the plans including potential store divestures. According to security filings, the two grocery companies agreed to sell up to 650 stores to secure regulatory approval. In response a Kroger spokesperson was quoted reaffirming, “Kroger’s public commitment to invest an additional $1 billion to increase wages and expand industry-leading benefits starting on day one following close. This commitment builds on the incremental $1.90 billion Kroger has invested in wages and comprehensive benefits since 2018. Higher wages and more opportunities for our associates would help all grocery workers by raising the bar for compensation in areas in which we operate.”
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Planet Fitness’ business continues to execute and grow its membership base into 2023. Total revenue increased 19% in 1Q23, driven by a 9.9% increase in system-wide same store sales and 155 additional clubs in operation. The Company opened 36 new clubs during the period; bringing its total count to 2,446 at quarter-end; total membership continues to hit new records, with more than 18.1 million members (up from 17 million members at FYE22).
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Shoe City parent ESCO, Ltd., received court approval to auction off the bankrupt retailer’s intellectual property, store leases, and related assets, with a May 12 deadline to submit qualified bids, and an auction on May 15, if multiple bids are received. A sale hearing is scheduled to be held on May 25, and must close before the last day of the month. The retailer filed for Chapter 11 on March 31, and at the time, operated 39 Shoe City stores in Maryland, Virginia, and Washington D.C. as well as the YCMC e-commerce site, listing assets and liabilities of between $10 and $50 million. Gordon Brothers is conducting the sale.
Francesca’s acquired Richer Poorer, an Los Angeles-based women’s and men’s wholesale and direct-to-consumer brand of wardrobe essentials. Financial terms of the asset purchase, which will bring Richer Poorer under the Francesca’s umbrella as a wholly owned subsidiary, were not disclosed. According to reports, the acquisition will enhance Francesca’s channel reach, including leveraging Richer Poorer’s robust wholesale network and introducing new product categories to Francesca’s portfolio mix, which will allow it to expand its offerings to the Gen Z and millennial women’s segments. In 2020, the Company declared bankruptcy and the following year it was purchased by private equity firm TerraMar Capital, and under the new management it has focused on growing its tween brand, Franki by Francesca’s, and enhancing its e-commerce platform. Under the deal, Richer and Poorer will continue to operate in its wholesale and DTC channels, with plans for a full re-launch in 2024. Currently Francesca’s operates roughly 450 stores in 45 states.
Just over a year after announcing it was pausing several projects, including a new warehouse in Cumming, IA, HyVee has resumed construction of the Cumming location. The distribution center, located just south of Hy-Vee’s headquarters in West Des Moines, will be 635,000 square feet and house Lomar Distributing, the Midwestern food and drug retailer’s specialty products division. In addition, the nearly 145-acre site is also expected to include a Hy-Vee Fast & Fresh, the Company’s c-store banner, and a fuel station, and, according to reports, a 200,000 square-foot automated warehouse is scheduled to be built and connected to the distribution center in a later phase.
A month after we reported curbside drive-thru grocer JackBe raised $11.5 million in capital from several individual investors and strategic partners, including GP Investments LLC, the Company opened its second location in the same city as the first, Edmond, OK. The new JackBe, is more than 42,000 square feet in total and includes a test kitchen and other amenities along with a 22,000 square-foot store that can serve up to 200 orders per hour. A third location is slated to open in Mustang, OK by the end of 2023.
Canadian Tire Corporation is increasing its store footprint through its agreement to acquire 10 real estate leases, formerly held by Bed, Bath & Beyond in Canada, for C$1.6 million. Six of the locations will be for relocated Mark’s stores in Grande Prairie, Medicine Hat, Red Deer and Strathcona County (Alberta), Langley (BC), and Oakville (Ontario), and four will be converted to new Pro Hockey Life stores in Ontario. In total, the 10 locations are more than 240,000 square feet.
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Giant Food opened a new 82,000 square-foot Giant Delivers e-commerce fulfillment center in Manassas, VA. The facility services more than 140 zip codes across northern Virginia and offers options such as same-day delivery in as little as three hours and free midweek delivery. This is the Company’s second e-commerce fulfillment center; its existing Hanover, MD facility will continue servicing Giant Delivers customers across its local markets. Giant is headquartered in Landover, MD and operates 165 supermarkets in Virginia, Maryland, Delaware, and the District of Columbia.
In the Cineworld Group, DIP case, the Court authorized the Debtors to enter into a financing commitment and backstop agreement under which they would raise $2.26 billion as part of an exit from bankruptcy as a going concern. A hearing to consider approval of the Plan of Reorganization is scheduled for June 12. Separately, the Debtors filed a motion seeking to reject nine unexpired leases, and the Court entered an order authorizing the Debtors to reject 22 unexpired leases.
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Camping World intends to acquire I-90 RV in Billings, MT, which will be its first location in the state. The acquisition is slated to close in 3Q23. Upon entering Montana with a location in Billings, the Company is eyeing other markets in the state for potential expansion.
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.
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