November 11, 2020
J. C. Penney announced that the Bankruptcy Court approved the asset purchase agreement (APA) with Brookfield Asset Management, Inc., Simon Property Group, and the Company’s DIP and First Lien Lenders. The agreement, which is supported by the Creditors’ Committee, provides that Brookfield and Simon will acquire substantially all of J.C. Penney’s retail and operating assets (OpCo) through a combination of cash and new term loan debt. The transaction, which remains subject to additional closing conditions, is expected to be completed later this month.
Separately, the Debtors filed an amended Chapter 11 Plan, which incorporates the terms of the APA, and provides for the wind down and liquidation of the Debtors’ estates after the effective date. The Plan is supported by the Debtors, the Creditors’ Committee, and the consenting First Lien Lenders. Holders of allowed administrative and 503(b)(9) claims are projected to be paid in full, while general unsecured creditors are expected to receive a recovery of less than 1% of their claims. The Plan states that purchasers of the Opco assets will acquire avoidance / preference actions, but they have agreed not to pursue them.
The Pension Benefit Guaranty Corporation (PBGC) assumed responsibility for J.C. Penney’s pension plan. The PBGC noted that the pension plan, which covers 36,000 participants, is underfunded by $270.0 million. The plan termination was effective as of Friday. Click here to request a list of store closures.
Amazon opened three more logistics centers in Brazil to take advantage of the boost the COVID-19 pandemic has given to e-commerce. The new units increase the number of Amazon logistics centers in Brazil to eight, expanding its reach to all corners of the country. The expansion, which adds 807,000 square feet of distribution space, is Amazon’s biggest since it began operating in Brazil in 2012.
Amazon also said it would invest about $2.80 billion in India (Telangana) to set up its second data center region in the country. The investment will allow Amazon to launch an AWS Cloud region in Hyderabad by mid-2022.
European Union regulators have filed antitrust charges against Amazon, accusing it of using data to gain an unfair advantage over merchants using its platform. The EU’s executive commission said it takes issue with Amazon’s systematic use of non-public business data to avoid “the normal risks of competition and to leverage its dominance” for e-commerce services in France and Germany. The EU started looking into Amazon in 2018 and has been focusing on its dual role as a marketplace and retailer.Click here for a list of Amazon future openings.
Camping World announced the openings of Camping World SuperCenters in Spring, TX and Breaux Bridge, LA. It also plans to open a Gander RV SuperCenter in Pocatello, ID on December 1. Camping World owns and operates over 160 SuperCenters nationwide, with most locations specializing in RV sales and service. Click here to request a list of future store openings.
On November 9, Casey’s General Stores agreed to acquire Buchanan Energy, owner of Bucky’s Convenience Stores, in a $580.0 million all-cash transaction. The purchase price includes tax benefits valued at $80.0 million, for a net after-tax purchase price of $500.0 million. Buchanan Energy operates convenience stores primarily in Illinois and Nebraska, including 94 retail stores and 79 independently owned dealer locations, as well as multiple parcels of real estate for future new store construction. This will increase Casey’s footprint to more than 2,300 stores. Going forward, Casey’s will manage fuel supply agreements for the dealer locations. Click here to request a list of future store openings.
REI plans to open a new, 15,000 square-foot store in Jackson, WY in Summer 2021. The store will have a full-service bike and ski and snowboard shop for maintenance and repairs. This will be the Company’s first physical store in Wyoming. Meanwhile, REI will open a new, 23,000 square-foot store in Boca Raton, FL on November 13. It will join three existing Florida stores in Jacksonville, Winter Park, and Gainesville. In addition, REI plans to open a store in Tampa, FL in 2021. Click here to request a list of future store openings.
Back on August 2, 7-Eleven, Inc., a wholly owned, indirect subsidiary of Seven & i Holdings Co., announced it had agreed to acquire Speedway’s approximately 3,900 stores in 35 states from Marathon Petroleum Corp. for $21.00 billion in cash; the transaction is expected to close in 1Q21. 7-Eleven is now reportedly looking to sell as many as 300 gas stations following the deal and is working with investment bank Nomura Holdings Inc. to solicit buyers. Seven & i said in August it expected net proceeds of $1.00 billion, without disclosing how many stations it would sell. TDR Capital, the private equity firm that owns British petrol station operator EG Group and lost out to Seven & i in the race for Speedway, plans to make an offer for the gas stations.Click here to request a list of future store openings and closings.
Petco’s private equity and sponsors, CVC Capital Partners and Canada Pension Plan Investment Board, have been exploring a sale of the Company or an initial public offering. On November 5, Petco announced that it has confidentially submitted a draft Registration Statement to the SEC, relating to the proposed public offering of its common stock. The number of shares to be offered and the price range have not yet been determined.
Walmart continues to tweak its international footprint with the announcement of the sale of Walmart Argentina to Grupo de Narvaez. While no purchase price was disclosed, Walmart indicated it will take a $1.00 billion, non-cash, after-tax loss when it reports its 3Q21 earnings shortly. Walmart Argentina has about 90 stores under various banners. The Company will continue to provide services through the transition period.
At a recent conference, Walmart CEO Doug McMillion said that another wave of pantry loading is underway, as COVID-19 infections surge across the country. According to an October report from market research firm Sports and Leisure Research Group, roughly 52% of Americans plan to stockpile groceries this fall due to COVID-19 surges. Click here to request a list of future openings and closings.
VF Corp., parent of Timberland, The North Face, Vans and Dickies, announced plans to acquire global business Supreme for $2.10 billion, after current investors Carlyle Group and Goode Partners are selling their stakes in the brand. Founded in 1994 as a skatewear brand, Supreme sells apparel, accessories and footwear through direct-to-consumer channels, primarily digital, and through 12 stores. Founder James Jebbia and senior leadership will remain with the Company, headquartered in New York City, but the deal, slated for completion in late 2020, will “maintain [Supreme’s] culture and independence.” VF expects the acquisition will be “accretive” to its adjusted EPS in its fiscal year ending in April and is expected to contribute at least $500.0 million of revenue in VF’s fiscal year 2022. Supreme has also entered into collaborations with luxury brands like Louis Vuitton.
Today, Target and Ulta Beauty announced a strategic partnership to create a "shop-in-shop" experience. Beginning in 2021, Ulta Beauty will debut at more than 100 Target stores nationwide and online at Target.com. Each shop-in-shop location will consist of approximately 1,000 square feet of retail space, and will be located next to Target's existing beauty section.Click here to request a list of store openings.
J Sainsbury Plc is closing 420 Argos stores and starting a massive workforce restructuring plan in the midst of the pandemic in a bid to boost profitability. The Company said it plans to cut as many as 3,500 positions, though net job losses should be limited as it also creates 6,000 new roles. Sainsbury is shutting most of its standalone Argos stores and instead adding counters or collection points at every Sainsbury’s location to integrate the electronics and houseware chain it bought in 2016. The job cuts also reflect plans to close fresh meat and fish counters in stores, a step Tesco took previously at some of its supermarkets. New roles to be created will be in the faster-growing parts of Sainsbury’s business, such as its online division where there are requirements for more truck drivers and store pickers who gather items for online orders. The Company will book a £438.0 million (US$570.0 million) charge based on the restructuring. According to Sainsbury, excluding the restructuring charge, pretax earnings should rise at least 5% on an underlying basis this fiscal year and should be even better next year. Click here to request a list of store closures.
NPC International Inc. the nation’s largest franchisee of Wendy’s and Pizza Hut restaurants, entered into a stalking horse asset purchase agreement (APA) under which Flynn Restaurant Group LP will acquire all of NPC and its affiliates’ assets for $816.0 million. The agreement is subject to higher and better offers and requires Bankruptcy Court approval. A hearing to consider approving Flynn Restaurant Group as the stalking horse bidder will be held this Friday (November 13). NPC intends to continue soliciting bids from other interested parties for some or all of its assets in accordance with the Court-approved bidding procedures and expects to hold a sale hearing on December 4.
It is likely to face competition from other interested buyers, including possibly Wendy’s Co. itself, people familiar with the matter said. Wendy’s said it was considering making an offer for nearly 400 Wendy’s restaurants operated by NPC as part of a consortium with other Wendy’s franchises.
On November 4, Franchise Group, Inc. announced that it withdrew its proposed $650.0 million note offering due to unfavorable market conditions. The Company also disclosed 3Q results, with total sales of $551.0 million and adjusted EBITDA of $50.0 million. Franchise Group’s business lines include Liberty Tax Service, Buddy’s Home Furnishings, American Freight, and The Vitamin Shoppe. On a combined basis, Franchise Group currently operates more than 4,000 locations predominantly located in the U.S. and Canada that are either Company-run or operated pursuant to franchising agreements.
On November 5, the Franchise Group announced the acquisition of FFO Home, a furniture retailer with 31 stores in the Midwest that is currently in bankruptcy. FFO Home will continue its normal business operations throughout the sale process until the transaction closes. The Company is also providing FFO with debtor-in-possession (DIP) financing. The transaction is expected to close at the end of 2020. At that time, the FFO stores will be rebranded and merged with the American Freight segment.
Costco’s October sales increased 15.9% to $13.82 billion. Comps, excluding the impacts from changes in fuel prices and foreign exchange, jumped 16.5%, consisting of growth of 16.4% in the U.S., 15.2% in Canada, and 19% in Other International. E-commerce sales rose 91%. For the YTD period, sales increased 16.4% to $30.66 billion. Total comps increased 16.8%, consisting of growth of 16.6% in the U.S., 16.7% in Canada, and 18.2% in Other International. E-commerce sales rose 90.5%. Click here to request a list of future store openings and closings.
PriceSmart’s October net merchandise sales increased 10.4% to $280.3 million, negatively impacted by 3.6%, or $9.1 million, due to foreign currency exchange fluctuations. Comps increased 4.1%. The Company’s Click & Go service, including curbside pickup and delivery, contributed 3% to sales during the month. Curbside pickup is available at all clubs, while delivery was expanded to all 13 markets in the latter part of the month, up from nine last month. Over the past year, the Company opened three new warehouse clubs bringing its store count to 46.
On November 9, YouFit Health Clubs LLC filed a voluntary Chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware. The proceedings have been designated as case number 20- 12841.
Management said it will continue operating while it works out a plan to repay creditors, which could include a sale of substantially all of its assets. The Chapter 11 petition indicates the Company had liabilities totaling as much as $500.0 million and assets of no more than $100.0 million.
YouFit operates approximately 85 locations in the U.S., many of which are located in Florida, where it is headquartered. Click here to request a list of store locations.
Kings Super Markets, Inc. filed an amended Disclosure Statement and Plan of Liquidation. The Plan provides for the closing of the sale on 27 stores to Acme Markets, a unit of Albertsons Companies, followed by a wind-down of the estate. Closing will occur after confirmation of the Plan (a confirmation hearing is set for December 3). Proceeds of the sale and cash on hand will be used to fund payments to creditors. The Disclosure Statement provides that administrative and 503(b)(9) creditors will receive an estimated recovery of 100% of allowed claims; however, general unsecured creditors are not projected to receive any recovery. The hearing to consider approval of the Disclosure Statement was adjourned to November 20 from November 9. Click here for more information.
Alimentation Couche-Tard announced its entry into Asia with the acquisition of all of the issued and outstanding shares of Convenience Retail Asia (BVI) Limited for HK$2.79 billion, or approximately US$360.0 million. Circle K HK, a subsidiary of Convenience Retail Asia Limited, operates a network of Circle K-licensed convenience stores, with 340 Company-operated sites in Hong Kong and 33 franchised sites in Macau. Circle K HK currently holds the second largest market share in Hong Kong. The transaction, which is expected to close by December 31, will be financed through available cash on hand and will be subject to usual closing conditions.
In the ascena retail group case, the auction for the intellectual property and related assets of the Justice unit began on November 6. Bluestar Alliance LLC is the stalking horse bidder, with a bid valued at more than $60.0 million, consisting of $44.0 million in cash, and the assumption of certain liabilities. Additionally, the Bluestar bid contemplates a cash deposit of $10.0 million. The Debtors will seek approval of the sale at a hearing scheduled for November 12. Bluestar formed a new entity (Justice Brand Holdings LLC) to effectuate the transaction. Separately, the Debtors filed a motion to reject additional leases of Lane Bryant stores (click here to request a list). The date for a hearing to consider the motion has not yet been set.