May 19, 2021
Last week, Amazon confirmed plans to open an Amazon Fresh grocery store in Paramus, NJ, the second of two former Fairway sites in New Jersey it purchased out of bankruptcy. In November, the Company confirmed it would convert the Woodland Park, NJ site to Amazon Fresh. Also last week, local sources indicated the Company is planning a 35,000 square-foot Fresh store in Boca Raton, FL in a former Lucky’s Market. In late March, building permit applications revealed plans to open Fresh stores in former Fairway sites in Plainview, NY (Long Island) and Plainville, CT (outside of Hartford), both around 33,400 square feet. The Company has been accelerating its move into Long Island in the past year; in February, it filed an application to convert two buildings in Melville, NY into a 300,000 square-foot last-mile warehouse and indicated plans to open a 91,000 square-foot distribution center in Westhampton, NY. Amazon opened its first Fresh store in September in Los Angeles and subsequently added 11 more in California and Illinois. Recent published reports further state Amazon is renaming its Amazon Go grocery brand to Amazon Fresh and is closing its Amazon Go store in Redmond, WA. The other Amazon Go store in Seattle will remain open and will be rebranded to Amazon Fresh.
Amazon will give $100 to new hires with proof of COVID-19 vaccination, part of its plan to employ 75,000 workers at its fulfillment and logistics operations. The Company will pay new hires an average starting wage of more than $17 per hour, reflecting recent hikes of $0.50 - $3 per hour for about half a million U.S. fulfillment-center workers. It will also pay sign-on bonuses of up to $1,000.
In other news, Amazon is expanding in Louisiana with a new 650,000 square-foot high-tech fulfillment facility in Shreveport. Construction on the $200 million facility will start in fall 2021, with completion slated for September 2022. The Company has invested more than $250 million in the state in the past decade. Last month, a longtime Amazon development partner announced it has started work on an 181,500 square-foot built-to-suit distribution facility in Memphis, TN.
Across the pond, published reports claim that Germany’s Federal Cartel Office, the country’s antitrust watchdog, has launched an investigation into whether Amazon is exploiting its market dominance. A spokesperson commented, “In a first step, we are looking at whether Amazon is of outstanding, cross-market importance for competition. Should it find that such a marketing position exists, new rules for digital companies would allow it to prohibit any anti-competitive behaviour at an earlier stage.” Changes to Germany's antitrust laws for e-commerce went into effect earlier this year, giving the Federal Cartel Office more power. Click here for a list of Amazon future store openings.
Mexican retailer Grupo Comercial Chedraui agreed to buy Smart & Final for approximately $620 million, including assumption of debt. Private-equity firm Apollo Global Management is selling Smart & Final, which operates 256 total stores, including 16 in Northwestern Mexico through a joint venture, to Bodega Latina Corp., the U.S. subsidiary of Chedraui. The combination creates a diversified chain in Mexico and a multi-format food retail platform in the U.S., with consolidated pro forma sales in excess of US$11 billion. Smart & Final will retain its existing management team. The acquisition will boost Bodega Latina’s footprint in the Western U.S., including California, Nevada and Arizona. Bodega Latina opened the first El Super store in 1997 and acquired Fiesta Mart in mid-2018; the two chains comprise about 125 stores in the Southwest, from California to Texas. The chart below illustrates that there are 103 Smart & Final Stores within a 5-mile radius of 60 El Super stores. Click here to request additional information.
In other Amazon news, last week Whole Foods announced it is reorganizing three of its key operating divisions. It will merge its global and regional merchandising teams to centralize purchasing, and create new leadership roles for local products and supplier relationships. The Company is also realigning its team member services division to “provide more consistent, strategic support across all regions” and shifting its technology team to “focus more on skills required for software engineering and technical product and program manager roles.”
In a recent press release outlining growth strategies, Whole Foods indicated it has 40 new stores in the pipeline. Through its 2020 new store openings, the Company reached about 1.4 million additional people within a 10-mile radius of its U.S. stores. The openings include two new concepts: an online-only location in Brooklyn, NY and Ideal Market in Denver, CO. The “dark store” in Brooklyn, which came online in September and is situated in the borough’s Industry City neighborhood, exclusively fulfills Brooklyn-based delivery orders. The Ideal Market has an expanded selection of organic produce and more local brands, a beauty bar, a bottle bar, an updated look and feel, and digital signage promoting local vendors. The store is named after the Boulder grocer that Whole Foods took over in 2007 when it acquired the Wild Oats chain.
Whole Foods launched 950 new local brands, 10,000 local items and 650 new exclusive brands in 2020, with more planned for 2021. Click here to request a list of future store openings.
On May 14, Marathon Petroleum Corp. (MPC) announced it has completed the $21 billion sale of Speedway LLC to 7-Eleven, first reported last August. With the closing, 7-Eleven takes ownership of about 3,800 stores in 36 states, bringing its total North American portfolio to roughly 14,000 stores and expanding its presence to 47 of the 50 most populated U.S. metro areas. Nonetheless, a report published on Friday indicated the FTC would continue to investigate 7-Eleven’s acquisition of Speedway for violating antitrust laws. The report states, “7-Eleven and Marathon said in separate statements that they were legally allowed to close the deal after they negotiated an agreement with the FTC that allowed them to complete the transaction Friday if the agency didn’t move to stop it. Such so-called timing agreements are common in merger investigations by the government…. 7-Eleven negotiated a settlement with the FTC’s staff to resolve the agency’s concerns that the Speedway deal threatened competition. The agreement called for selling 293 stores, according to 7-Eleven.” The FTC’s two Republican commissioners issued a statement agreeing that the deal violates antitrust laws; thus, the FTC could go to court to unwind the merger.
In other news, San Francisco-based hedge fund ValueAct Capital took a 4.4% stake in Tokyo-based Seven & i. In a letter sent to investors, ValueAct said the 7-Eleven business could be worth more than double what it is currently valued at if the Company restructures to focus on its convenience stores or if the 7-Eleven chain is spun off. Click here to request a proximity analysis of Speedway and 7-Eleven locations within 0.5mi.
Macy's 1Q21 comparable sales rose 63.9%, significantly exceeding expectations. Digital sales grew 34% in the quarter and represented 37% of total revenue, up from 31% in 1Q20. Management commented that it believed sales were driven by stimulus checks, vaccine rollouts, and merchandising initiatives. Comps were down 10% from 1Q19.
Gross margin expanded by 2,150 bps compared to 1Q20 and 40 bps compared to 1Q19 due to fewer markdowns. As a result of the sales and gross margin increases and lower expenses, Company provided quarterly EBITDA swung into positive territory at $473 million. Debt decreased 14.2% year-over-year to $4.85 billion due to lower revolver borrowings and debt repayments made in 4Q20. Macy's ended the quarter with approximately $4.80 billion of liquidity, including $1.80 billion of cash. The Company continues to expect to close at least 125 stores over the next few years, and has closed or is in the process of closing 45 full-line locations. Click here to request a list of future openings and closings.
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.
During a recent interview with Southeastern Grocers’ CEO Anthony Hucker, he reported that the Company’s growth is being driven by innovative, data-driven rewards and personalization programs, and a leaner but healthier store base that he says is winning market share in fast growing but competitive Florida. He said SEG is currently in “growth mode,” having added eight new stores last year through acquisitions, and is continuing to look for similar deals as well as new construction. By the end of calendar 2021, the Company is on track to have renewed 70% of its store fleet, with the goal of renewing its entire fleet by the end of 2023, which puts it a full year ahead of schedule. In terms of e-commerce, historically it accounted for a relatively small percentage of sales, but the pandemic drove substantial renewed momentum, and the Company recognized a 400% increase in e-commerce sales in 2020. Finally, SEG has been taking advantage of “increasing commoditization of delivery.” The Company has an exclusive partnership with Uber and Uber Eats in over 165 Winn-Dixie and Fresco y Mas stores in Florida; more than 85% of its locations are covered by its current e-commerce programs, and SEG continues to “optimize this increasingly important option.” Click here to request a list of future store openings and closings.
Topgolf Entertainment plans to open a new location in Baltimore, MD in Fall 2022, the first in the Baltimore area but the third in the state, joining locations in Germantown and National Harbor. Topgolf Baltimore will break ground in the coming weeks and will be located adjacent to Horseshoe Casino Baltimore and M&T Bank Stadium. It will feature 90 hitting bays, a full-service restaurant and bar, and event space for corporate and social events. Topgolf operates 69 locations around the world.
On May 12, Ahold Delhaize opened a new Food Lion store in Warrenville, SC. Ahold Delhaize’s Stop & Shop has rolled out a pilot program at four stores in the Worcester, MA market that allows shoppers to use the Flashfood app to find deals in fresh produce, meat, seafood, dairy, deli and bakery perishables that are nearing expiration dates. Customers purchase directly from the app and pick up orders from a designated “Flashfood zone” inside participating Stop & Shop stores. In December, following a successful pilot program at four Lancaster, PA stores, the Company’s Giant Co. banner expanded its partnership with the Flashfood app to another 33 stores. Click here to request a list of future store openings and closings.
Natural Grocers will relocate its Midland, TX store to a larger location more than three miles east of its original site. The original store closed on May 17, and the new location will open tomorrow. Click here to request a list of future store openings.
On May 14, Casey’s General Stores closed on its acquisition of Buchanan Energy, owner of Bucky’s Convenience Stores. In November, the Company announced it would acquire the chain in a $580 million all-cash transaction. The deal includes Buchanan’s 94 stores, with 56 units in Illinois and 26 in Nebraska, bringing Casey’s total owned and operated stores to more than 2,300 units. As part of the consent order it agreed to with the FTC, the Company will divest six stores. The acquisition is part of Casey’s three-year strategic plan, announced in January 2020, to add 345 stores to the chain. Click here to request additional information.
Meijer has opened three new 155,000 square-foot supercenters, in Seven Hills and Boardman, OH, and Westfield, IN. The new locations offer Shop & Scan, allowing customers to use a mobile app to scan barcodes and bag items as they shop, as well as Meijer Home Delivery and Pickup for groceries and other online orders. With the new units, the Company operates a total of 259 supercenters and grocery stores across Michigan, Ohio, Indiana, Illinois, Kentucky, and Wisconsin.
The Company most recently opened five 159,000 square-foot supercenters in July 2020 in Manitowoc, WI; Sycamore, IL; Bad Axe, MI; and Brimfield and Lorain, OH, and expanded its neighborhood grocery concept in Michigan, opening the 41,000 square-foot Woodward Corner Market in January 2020 and the 37,000 square-foot Capital City Market in Lansing in October. Meijer will open its fourth small-format store, the 42,000 square-foot Riverfront Market, later this year in Detroit, MI. Click here to request a list of future openings.
This Friday, Demoulas’ Market Basket will open its first location in Rhode Island, in Warwick. The Company also has a store under construction in Johnston, RI, slated to open sometime in 2021. Click here to request a list of future store openings.
Walmart reported first quarter total revenue of $138.3 billion, a 2.7% increase. U.S. comp sales rose 6%, aided by grocery market share gains, and operating income jumped 26.8%. U.S. eCommerce sales surged 37%, with strong results across all channels, contributing approximately 360 basis points to comps. Sam’s Club comps were up 7.2%, eCommerce sales grew 47%, and membership income increased 12.7%. Walmart International net sales dropped 8.3% to $27.3 billion, negatively affected by $4.2 billion, or 14.1%, related to recent divestitures in the U.K. and Japan, and eCommerce sales jumped 49%. Looking ahead at FY22, Walmart expects consolidated sales to decline low single-digits (constant currency); excluding recent divestitures, the estimate falls to mid single-digits. Walmart U.S. and Sam’s Club comps are projected up low single digits. International sales are estimated to decline 20%-25% due to the divestitures. Operating income should be up mid-single digits. Walmart is planning about $14 billion in capital expenditures, up from $10.3 billion in FY21
Last week Walmart announced plans to acquire Israel-based Zeekit, a virtual fitting room platform, for an undisclosed amount. The platform will allow shoppers to virtually try on clothing from Walmart’s growing list of fashion brands. At closing, Zeekit’s team and three founders – CEO Yael Vizel, CTO Alon Kristal, and VP of R&D Nir Appleboim – will join Walmart. As part of the deal, Zeekit will reportedly stop working with other brands, though it is unclear when Walmart customers will have access to the platform.
Separately, as part of efforts to make access to working capital “affordable, transparent and more equitable,” Walmart has expanded its supplier program to offer qualified diverse or minority-owned suppliers faster payments at its lowest rates and significantly below bank financing rates. The Company promises payment in as little as 24 hours versus the typical 30 to 90 days.
Finally, a published report claims “Walmart’s former e-commerce chief Marc Lore said he’s ready to make big bets on digital retail as he teams up with baseball star Alex Rodriguez on a new venture capital firm.” Mr. Lore and Mr. Rodriguez plan to “write bigger checks and take bigger stakes in early-stage companies” and “will pay attention to ‘mega trends in retail,’ such as social commerce and conversational commerce as they pick companies.” The firm, called Vision Capital People or VCP, will start with $50 million of Lore and Rodriguez’s own money. Click here to request a list of future store openings and closings.
Save Mart recently finished remodeling its Lucky California store in Pleasanton. The store will act as the Company’s innovation lab and has been reinvented from the ground up to reflect the Bay Area’s unique and multicultural community. The Company debuted the Lucky California banner in mid-2015 as a one-stop shop that fuses “Bay Area culture and California grown products” and since has converted its 69 Bay Area Luckys to the banner. Lucky California stores have curated, merchandised “hubs,” expanded prepared foods sections with multicultural offerings, a multicultural product mix strategy including integrating the “ethnic aisle” throughout the store, the introduction of a new Rice & Spice Market, and a new International Market.
On May 22, Conn’s will hold grand opening events for two new locations in Tampa and Bradenton, FL, both roughly 87,000 square feet. The Company first announced its movement into the Tampa area at the beginning of this year. Since expanding into Florida last year, Conn’s now has six locations there, with the capacity to open more than 40 stores across the state. Earlier this month, the Company opened a 413,000 square-foot distribution center in Lakeland, FL to support growth in the area. Click here to request a list of future store openings and closings.
Last week, Empire Company Limited closed on its C$357 million acquisition of a majority stake in Canadian grocer Longo’s, first announced in March. The deal includes Longo’s 36 fresh grocery stores in Ontario, which will join Empire’s Sobeys, Safeway, Foodland, FreshCo, Price Chopper and Farm Boy banners in Ontario, as well as its Grocery Gateway e-commerce arm, which will operate as a standalone business and collaborate with Empire’s Voilà online grocery service.
In other news, Empire announced the next three locations for the expansion of its FreshCo discount banner in the province of Alberta. The Company has now confirmed 40 of 65 planned locations in Western Canada, including 12 in Alberta. Empire has opened 15 stores in fiscal 2021, consistent with its Project Horizon strategy to open 10 - 15 FreshCo stores per year. The Company expects to have all of the 40 FreshCo locations confirmed to date open in Western Canada by the end of fiscal 2022. Click here to request additional information.
Kroger is constructing a 62,200 square-foot fresh grocery logistics operation — called a “spoke delivery center” — in North Jacksonville, FL. The project is described as cross-dock, meaning goods are brought in and quickly shipped out to their destinations. In mid-April, the Company began delivering groceries from its new Customer Fulfillment Centers in Groveland, FL and Monroe, OH. Delivery service is expected to be available to customers up to 90 miles from a CFC, and that distance can increase with “spoke locations” like the one in Jacksonville as well as another reportedly planned for Tampa. It is unclear if Kroger plans to open actual stores in Central Florida; the Company currently operates just one in the state — a Harris Teeter in Fernandina Beach.
At Home Group's largest shareholder, CAS Investment Partners LLC, which holds over 11 million shares and 16.9% of the Company's common stock, has indicated it will oppose At Home's recent deal to be taken private at $36 per share. At Home had entered into a definitive agreement to be acquired by funds affiliated with Hellman & Friedman, a global private equity firm, in an all-cash transaction valued at $2.80 billion. CAS has submitted a letter to the Company’s board stating the deal “grossly undervalues the Company and deprives stockholders of anything resembling a fair premium.” It suggested a price of $70 or more per share would be more realistic based on its projections and said it is prepared to try to block the deal if needed. The transaction was negotiated and unanimously approved on behalf of At Home by a Special Committee of its board, which also unanimously approved the agreement and recommended that At Home’s stockholders vote to approve the merger. The deal is subject to a 40-day “go-shop” period and still requires signoff from a majority of its shareholders. Click here to request a list of future store openings.
Ollie’s Bargain Outlet opened its 400th store, in Springfield, VT, its first in the state, officially expanding the Company’s footprint into 26 states. Ollie’s is on track to open 50 stores this year. Longer term, the Company has set a goal of expanding to more than 1,050 locations nationwide. Click here to request a list of future store openings.
On Monday, Focus Brands — parent of Auntie Anne’s, Jamba, Cinnabon, Carvel, Moe’s Southwest Grill, McAlister’s Deli and Schlotzsky’s — opened the first cobranded Auntie Anne’s and Jamba drive-thru location in Wylie, TX. The 1,500 square-foot unit features design elements from both brands, combo deals from both menus, as well as first and third-party pickup access. The location does not have a pickup window, but future cobranded sites will respond to demand. Cinnabon-Carvel are the next banners headed for cobranding, with menu innovation that integrates soft serve and Cinnabon cones. Chief Development Officer Brian Krause commented, “As we continue to move forward and evolve the brand out of malls, we know that drive-thrus will be a key in that part of development. All the locations we’re looking at will either be drive-thru or, and in some particular sites, will have walkup windows, or even food trucks.” Earlier during the pandemic, CEO Jim Holthouser, appointed in February 2020, indicated that Focus Brands would rethink its footprint strategy for mall brands, including alternative like traditional storefronts, pop-up shops and food trucks.
Cumulative sales for Cinnabon-licensed products in 2020 were approximately $620 million, marking a double-digit year-over-year growth. Historically, 60% of the Company’s sales were generated from its retail channel versus 40% from foodservice. Management noted that retail has grown to an even higher percentage in 2021 and up almost double digits from the Company’s goal. Focus Brands also plans to add delivery, debut new brick-and-mortar formats, identify growth categories in grocery (e.g., health and wellness with its Jamba banner), and ramp up its e-commerce presence.
Camping World acquired Boat-N-RV Superstore in Ridgeland, SC, bringing its South Carolina store base to five. The store recently underwent renovations and will reopen for customers as a Gander RV in a few weeks. The Company previously acquired two Boat-N-RV Superstore locations in Hamburg, PA and Albany, NY in February 2021. Camping World currently has operating dealerships, agreements to acquire existing RV dealerships, has new construction in process or has a land acquisition pending in 45 of the 48 contiguous states.