November 27, 2019
On November 25, A.C. Moore announced plans to exit its retail operations, saying it retained the services of Gordon Brothers to close the chain (click here to request a list of closings). In connection with the move, the Company entered into an asset purchase agreement with The Michaels Companies, with Michaels acquiring theintellectual property and the right to lease up to 40 store locations (only a small portion of A.C. Moore’s estimated 140 stores currently in operation) for $58.0 million, subject to certain purchase price adjustments. The relevant store locations are expected to be reopened under the Michaels brand name in fiscal 2020 and will include the relocation of certain existing Michaels stores. Additionally, Michaels has leased a distribution facility in New Jersey, formerly occupied by A.C. Moore. Michaels operates over 1,260 stores and, according to our Store Overlap data, there are about 40 instances of a Michaels being within one mile of an A.C. Moore store and 90 instances of them being within three miles of each other (click here to request a store overlap analysis on two retailers of your choice).
Matthew Pascucci of Mackinac Partners was appointed as chief restructuring officer of A.C. Moore to assist in this effort. CEO Anthony Piperno commented, “For over 30 years, our stores have been servicing the creative community with a vast selection of art and craft materials, with one common focus, the customer. Unfortunately, given the headwinds facing many retailers in today’s environment, it made it very difficult for us to operate and compete on a national level. Plans for closing specific A.C. Moore locations will be shared in the upcoming weeks on our website. While we will stop accepting further online orders, and we will ship any previously placed orders in the ordinary course.”
LVMH inked a deal to acquire Tiffany & Co. for $135 per share in cash, for a total equity value of US$16.20 billion (€14.70 billion). The offer was increased from the initial unsolicited offer of $120.0 per share three weeks ago. The $135 per share deal is 37% more than Tiffany’s closing price on November 22 and more than double LVMH’s $7.000 billion acquisition of Christian Dior in July 2017. The acquisition of Tiffany is expected to strengthen LVMH’s position in jewelry and further increase its presence in the U.S. The transaction is anticipated to close during the second half of mid-2020. LVMH indicated that it has secured acquisition financing through an $8.50 billion bridge loan, a $5.75 billion commercial paper back-up line, and a €2.50 billion revolver credit facility, to be refinanced on bond markets. The Company estimates leverage to be limited to +1.6x Net Debt to EBITDA in 2020 and net income accretion around 5% that same year. As of June 30, 2019, LVMH had ample liquidity supported by €3.99 billion (approximately US$4.43 billion) in cash and full availability under its €5.90 billion (about US$6.55 billion) unsecured credit lines. Net debt levels increased 16.6%, to €9.48 billion due to acquisition related borrowings, but the balance sheet remained healthy with minimal leverage, as evidenced by a debt to TTM EBITDA ratio of slightly over 1x. Tiffany's net revenues declined 3% to $1.00 billion during the fiscal 2019 second quarter ended July 31, 2019. Comparable sales were down 4%, on weak demand from foreign tourists amid an environment of geopolitical and currency uncertainties. As of July 31, 2019, the Company operated over 300 stores worldwide including 124 stores in the U.S., Canada, and Latin America, 90 stores in Asia-Pacific, 56 stores in Japan, and 47 stores in Europe.
H&M opened a 26,000 square-foot store in downtown Detroit, MI; the store spans across three buildings owned by real estate firm Bedrock-Detroit. H&M claims the store is the first downtown Detroit establishment to offer a full range of men’s, women’s and children’s apparel in decades. Click here to request a list of future openings.
On November 20, Lowe's Companies announced the closure of 34 underperforming stores across Canada, which will leave the Company with 466 stores in Canada. The Company will close 26 of its 411 RONA locations, six of its 67 Lowe's stores, and two of its 22 Reno-Depot locations. The closures are part of the Company's efforts to simplify its multiple store banners across Canada. The Company will also rationalize its product assortment in order to offer a more consistent product line across its stores. Lowe's estimates it will take a pre-tax charge of $175.0 million – $225.0 million in the fourth quarter related to the closing activity.
Lowe's also announced its third quarter results, reporting revenue fell a modest 0.2%, with comps improving 2.2%. However, earnings surged 67% to $1.05 billion, from $629.0 million. The increased earnings were driven by a 156 basis point improvement in gross margin and a 126 basis point reduction in SG&A.
Amazon announced plans to open a one-million square-foot fulfillment center in Auburndale, FL, which will be used to pack and ship large items.
The Company said it is also planning to open Amazon Go supermarkets and pop-up stores, an expansion of its cashier-less ambitions that include the possibility of licensing the technology to other retailers. According to published reports, a person familiar with the project said the new store formats and licensing initiative could launch as soon as the first quarter of 2020. Amazon is testing a supermarket equipped with Go technology in a 10,400 square-foot retail space in Seattle, WA. The chain would be separate from both the company's Whole Foods chain and the new chain of supermarkets that it has confirmed it will begin opening early next year (and which, it has said, will not have checkout-free technology).
Amazon has filed a lawsuit in the U.S. Court of Federal Claims challenging the Pentagon’s award of a $10.00 billion cloud contract to Microsoft Corp. It is its latest move in the dispute, which began months ago. Amazon Web Services was once considered the favorite for the contract, in part because it had built cloud services for the CIA, and is the market leader.
Ahold Delhaize’s Retail Business Services division has developed a new frictionless store technology, piloted under the name lunchbox; the technology enables individuals to shop a small format store quickly by scanning in, shopping and walking out, similar to Amazon Go technology. The Company says that “compared to other frictionless store concepts, lunchbox is efficient. The solution carries a lean cost and can be implemented in a matter of weeks."
Walmart announced that it will shutter Jet.com’s fresh grocery delivery service in New York City. The announcement comes just a year after the service debuted to great fanfare, along with the Company opening a 205,000 square foot grocery fulfillment center in the Bronx. Jet.com will close the facility at the cost of some 200 to 300 jobs, among other costs, but will continue to sell dry groceries and other merchandise. The operation was troubled from the start. The Company opened the facility before it was fully operational to a host of service issues, including keeping sufficient fresh produce in stock. The initial idea was to compete on price, but the Company soon had to raise prices to cover the high delivery costs. Reports indicate the Company was losing about $20.00 per order.
In other news, Walmart announced that it will renovate produce areas with new signs highlighting prices, and shorter merchandise bins to create an “open market feel” for customers. Aisles will be widened and Walmart will also move all of its organic items into a single area of the department to make them easier to find. The revamp, which Walmart has dubbed Produce 2.0, has already started at more than 200 stores. Walmart expects to complete it at the majority of its 4,700 U.S. stores by next summer.
Kum & Go LC opened four convenience stores in Denver, CO since August and is set to open nine more by the end of 2020. Including the new stores, Kum & Go will have 75 locations in Colorado.
WinCo is looking to open a third store in Eugene, OR in a former Shopko. The Company has submitted plans and is waiting on approvals.
99 Ranch Market will open a store in Boston, MA, its fifth on the East Coast. The other East Coast units are in New Jersey and Maryland. Management said it could open more stores in Massachusetts if this one is successful. The majority of the Company's 52 stores are on the West Coast.
7-Eleven is looking for franchisees for more than 20 sites in the Pittsburgh, PA metro area. The c-stores are currently branded Sunoco A-Plus and were part of 7-Eleven's acquisition of 1,100 stores from Sunoco in 2018. The stores will be rebranded as 7-Eleven locations prior to franchising.
Northgate González Market opened a new store in Riverside, CA. The Company operates 40 full-service supermarkets in three California counties: Los Angeles, Orange, and San Diego.
Domino's Pizza has opened its first store in the Czech Republic through a partnership with master franchisee Dauffod Czech Republic S.R.O. Additional locations are planned for next year. Click here to request a list of future openings.
Kroger has partnered with Europe-based Infarm to bring modular living produce farms to North America to provide fresh produce to its stores. The living produce farms will launch this month at two of the 15 planned QFC banner stores, located in Bellevue and Kirkland, WA. Using hydroponic technology, the produce will grow on site, removing the need for extended transportation and storage.
In other news Chicago-based barbecue sandwich shop chain, Pork & Mindy’s, has filed for Chapter 7 bankruptcy. In March 2019 Kroger’s Roundy’s Supermarkets announced a deal with the PHI Holdings-owned restaurant brand to open 28 locations inside Mariano’s grocery stores. Kroger issued a statement saying, “Mariano’s is no longer offering Pork & Mindy’s products, as Pork & Mindy’s has filed for relief under the Bankruptcy Code.” In its place, Roundy’s intends to launch a new food concept, Mariano’s Smokehouse.
Minneapolis, MN Metro Area – Hot Market Report
The Minneapolis-St. Paul Metro Area, also known as the Twin Cities, consists of 13 counties in Minnesota and two in Wisconsin. The area is home to 3.6 million residents as of 2018, making it the 16th largest metropolitan area in the U.S. Since 2010, the area’s population has grown 8.4%, including 11% growth in Minneapolis and 7.8% growth in St. Paul. The region also ranked 15th in total GDP for fiscal 2017 (the most recent year available) and between 2012 and 2017, Minneapolis’ GDP was up 21.6% to $260.11 billion. Food retailers that are headquartered in Minneapolis operate roughly half of the 351 stores in Minneapolis, and make up more than half of the area’s total market share. Our report takes a closer look at Minneapolis’ real estate landscape, and provides visual competitive analyses as well as key real estate metrics such as future openings, store count, market share and demographics.
Ross Stores reported third quarter sales rose 8.4% to $3.85 billion, and comps grew 5%, on top of a 3% increase in the third quarter last year. Higher sales and leveraged expenses outpaced a slight decrease in gross margin and lifted quarterly EBITDA 8% to $566.3 million. EBITDA margin fell 10 basis points but the TTM EBITDA margin of 15.5% remains one of the highest in the sector and well above our monitored industry average of 7.9%. Due to the better than expected results, management raised its fiscal 2019 guidance. It now expects EPS of $4.52 – $4.57, up from prior guidance of $4.41 – $4.50. During the quarter, Ross Stores completed its fiscal 2019 growth plans to open 75 Ross and 25 dd’s stores, with the opening of 30 new Dress for Less and 12 dd’s Discounts stores in September and October (click here to request a list of future openings).
Stage Stores reported third quarter revenue increased 15% to $399.3 million, as having 50 fewer stores in operation since 3Q18 was outpaced by a 17.4% surge in comps. The comp increase was driven by a 40% sales rise at converted Gordmans stores, higher sales in the revamped home department, and accelerated improvement in women's apparel. The greater sales and gross margin expansion lifted quarterly EBITDA into positive territory at $15.3 million. TTM EBITDA also turned positive at $17.5 million. Credit metrics improved, but still reside in critical territory, with TTM interest coverage of 1.1x. Based on the better than expected quarterly results, management raised its fiscal 2019 EBITDA guidance for the second consecutive quarter. The Company expects sales of $1.64 billion – $1.67 billion (guidance is unchanged), with a comp increase of 7% – 9% (compared to previous comp guidance of a 1% – 3% increase). EBITDA is now projected to be $35.0 million – $40.0 million (compared to original guidance of $10.0 million – $15.0 million). Click here to request a list of future openings and closings.
Macy’s reported third quarter sales decreased 4.3% to $5.17 billion, and comps on an owned basis fell 3.9%, while comps on an owned plus licensed basis declined 3.5% (breaking a string of seven consecutive quarterly increases). The comp decline was primarily the result of lower international tourism, weak sales at lower tier malls, and unseasonable weather. Management noted that online sales slowed in the quarter, partially due to some site changes. Although gross margin improved sequentially, it eroded year-over-year, and combined with the lower sales to push quarterly EBITDA down 15.4% to $301.0 million. EBITDA margin decreased 80 basis points, but TTM EBITDA margin of 8.6% remains above the department store sector average of 7.9%.
Nordstrom’s third quarter sales decreased 2% to $3.67 billion. Sales declined 4.1% in the full-price segment (63.7% of total sales), but increased 1.2% in the off-price segment (36.3% total sales). E-commerce sales grew 7% and represented 34% of total sales, up from 31% last year. Gross margin increased 100 basis points to 34.3%, primarily due to fewer markdowns from continued inventory discipline in off-price, and higher sell-through of anniversary product in full-price. The Company’s loyalty program, Nordy Club, had more than 12 million active customers, which represented an increase of 13% over last year and nearly 65% of quarterly sales. Earnings before interest and income taxes rose 83.8% to $193.0 million, and EBIT margin expanded 50 basis points. The Company opened two full-price stores in October, and two Nordstrom Local stores and one Nordstrom Rack in September, ending with 381 stores in operation. Fiscal 2019 EBIT is now expected to be $815.0 million – $855.0 million, narrowed from its prior outlook of $805.0 million – $855.0 million. EPS is projected to be $3.30 – $3.50, narrowed from $3.25 – $3.50. Click here to request a list of future openings and closings.
Burlington Stores reported third quarter sales increased 8.6% to $1.78 billion, and comps were up 2.7%. Gross margin was flat at 42.4%. Merchandise margin increased 30 basis points, but that was offset by a 20 basis point increase in freight costs and a 10 basis point negative impact from inventory write offs at temporarily closed stores. Adjusted EBITDA rose 18.1% to $192.5 million. The Company now expects fiscal 2019 sales to increase 8.8% – 9.1%, narrowed from its previous outlook of 8.8% – 9.3%. Comps are expected to increase 2.1% – 2.4%, narrowed from its prior outlook of 2% – 2.5% growth. Adjusted EPS is projected to be $7.28 – $7.33, up from $7.14 – $7.22. The Company operated 726 stores at the end of the quarter. Click here to request a list of future openings.
Gap’s third quarter sales fell 2.2% to $4.00 billion, and comps fell 4%, primarily due to ongoing weakness in the Gap global brand. Segment comps fell 7% at Gap, 4% at Old Navy, and 3% at Banana Republic, the result of poor traffic. The comp decline suggests tepid consumer spending across all price points, or a broader issue about the Company’s merchandising strategy. Gross margin was down 70 basis points to 39%. Adjusted operating margin of 7.5% was down 140 basis points from last year and excludes costs related to the proposed separation and restructuring. EBITDA fell 17.5% to $439.0 million, and EBITDA margin dropped 200 basis points to 11%. Fiscal 2019 sales are now expected to decline in the low-single digits, versus prior flat guidance, and comps are anticipated to decline in the mid-single digits, versus prior guidance of a low single digit drop. The Company expects to close about 15 Company-operated stores during the year, net of 85 Old Navy and Athleta store openings, and the 140 Janie & Jack stores that were acquired in March 2019. This guidance includes about 230 closures related to the Gap brand fleet restructuring, the majority of which are expected to close in the fourth quarter of fiscal 2019. The Company is spending about $250.0 million – $300.0 million to conduct the closures.
Destination XL Group’s third quarter sales decreased 0.5% to $106.6 million, primarily due to a $3.2 million decline from a net seven store closures in the last year, partially offset by comps inching up 0.2%. Gross margin fell 290 basis points to 41.1% due to a 310 basis point decline in merchandise margins, partially offset by a 20 basis point improvement in occupancy costs. The merchandise margin erosion was from higher clearance selling and promotional activity. As a result, adjusted EBITDA dropped 74.2% to $1.7 million. For the TTM period ended November 2, direct sales were 22.4% of total sales, up from 21.2% in the prior year period. Over the past year, 15 Casual Male retail and outlet locations were converted to the DXL banner, and four Casual Male stores and three Rochester Clothing locations were shuttered. The Company ended the quarter with 326 stores in operation.
In other news, DXL named Ujjwal Dhoot as chief digital officer, effective December 16. Prior to joining DXL, Mr. Dhoot held senior marketing positions with FSAstore.com, Charming Charlie, and PetCareRx.com.
Foot Locker’s third quarter sales increased 3.9% to $1.93 billion, and comps were up 5.7%. Gross margin increased 50 basis points to 32.1%, and SG&A margin improved 10 basis points to 21.3%. Operating income rose 13.9% to $164.0 million. Results benefited from a $4.0 million gain in connection with the acquisition of a Canadian distribution center lease and related assets, which was partially offset by a $1.0 million charge related to a pension litigation matter. The Company opened 11 new stores and closed 25 underperforming locations during the quarter, ending with 3,160 Company-operated stores and 138 franchised locations.
Shoe Carnival’s third quarter sales increased 2% to $274.6 million, and comps were up 3.5%. Gross margin increased 70 basis points to 30.9%, with merchandise margin up 0.5% and buying, distribution and occupancy expenses down 0.2%. Operating income rose 13.3% to $18.2 million. The Company opened one new store for the fiscal year during the third quarter (in Jeffersonville, IN), but it also closed one underperforming store (on top of four other closures during the year). The Company raised its fiscal 2019 outlook based on its year-to-date results. It now expects EPS of $2.85 – $2.89, up from its previous guidance of $2.77 – $2.83.
Urban Outfitters reported third quarter sales increased 1.4% to $987.5 million. Retail comps increased 3%, driven by online sales growth, partially offset by negative retail store sales. By brand, retail sales increased 9% at Free People (20.8% of total sales), 4% at Anthropologie (40.4% of total sales), and were flat at Urban Outfitters (37.9% of total sales). Gross margin decreased 217 basis points, driven by higher markdowns, deleverage in delivery and logistics expenses, and lower wholesale segment margins. The higher markdowns were largely driven by underperforming women’s apparel at the Urban Outfitters brand. Operating income fell 21.9% to $75.3 million. The Company opened 19 new stores year-to-date, including nine Free People stores, six Anthropologie units, and four Urban Outfitters locations. It also closed five underperforming locations, including one Free People unit, two Anthropologie stores, and two food and beverage locations.
L Brands reported third quarter sales decreased 3.5% to $2.68 billion, and comps were down 2%. By segment, comps at Victoria’s Secret (53% of total sales) were down 7% and comps at Bath & Body Works (40% of total sales) rose 9%. The Company recorded an operating loss of $151.2 million, compared to a profit of $54.4 million last year, negatively impacted by pre-tax charges of $284.7 million ($247.5 million related to certain Victoria’s Secret stores and other assets and $37.2 million to increase reserves related to ongoing guarantees for the La Senza business, which was sold in the 4Q18). In the prior year period, the Company recorded an $80.9 million charge related to Victoria’s Secret and a $20.3 million charge related to the closure of the Henri Bendel business. Excluding these charges, adjusted operating income was down 38.1% to $96.3 million. L Brands currently operates 2,944 Company-owned stores and 700 franchised locations, relatively unchanged during fiscal 2019. The Company opened 56 new locations (primarily Bath & Body Works and International locations) but shuttered 55 underperforming units (primarily Victoria’s Secret stores) over the course of the year. Click here to request a sample list of future openings and closings.
Citi Trends reported third quarter sales increased 4.4% to $183.1 million, and comps were up 2.6%. Operating loss widened 54.9% to $1.6 million, primarily due to $0.7 million of costs associated with the planned CEO transition (see below). As a result, the Company raised the high end of its EPS guidance, now expecting EPS of $1.40 – $1.50, narrowed from its prior outlook of $1.30 – $1.50. Comps are projected to rise 2% – 4%, up from its prior expectations for a 1% – 3% comp increase. During the quarter, the Company opened six new stores, relocated or expanded two stores, and closed two underperforming locations, ending with 566 stores in operation.
Citi Trends announced that CEO Bruce Smith will resign, effective December 9, 2019. Board member and special adviser, Peter Sachse, will replace Mr. Smith and serve as interim CEO. Mr. Sachse is currently a director at Mattress Firm and previously worked at Macy’s across various roles for over 30 years.
BJ’s Wholesale announced results for its third quarter and 39 weeks ended November 2. The Company reported modest improvements in the third quarter with revenue up just 0.2% on comp growth of 1.1% (excluding fuel). General merchandise sales faltered during the quarter as warmer weather put a damper on seasonal apparel and winter related items. Membership continues to be a bright spot, with revenue up 7%, primarily on growth of new members. BJ’s also lowered its full year guidance to sales of $12.90 billion (the lower end of its initial range) and comps down to 1.3% to 1.5% from the previous estimate of 1.5% to 2.5%.
During an investor call with analysts, chairman and CEO Christopher Baldwin said that the Company has been making strides in efforts to simplify its assortment and boost its private label. The initiative began in general merchandise, with comps up 5% on a two-year stack basis and for the YTD period, and will shift to food and groceries next. Mr. Baldwin also said the Company continues to increase private label penetration, which was about 20% during the quarter, and on track to get to 21% for the full year.
Target’s third quarter revenue grew 4.7% to $18.67 billion, driven by comp growth of 4.5% on top of 5.1% growth last year. Store traffic increased 3.1%. Comparable digital sales grew 31% (on top of 49% last year), contributing 1.7% to total comp growth. Apparel led the sales surge with comps up 10%. Same-day fulfillment services (Order Pick Up, Drive Up, and Shipt) accounted for 80% of Target's digital comp growth. Operating income was $1.00 billion, up 22.3% from $819.0 million 3Q18.
Target raised its full-year profit forecast after posting better-than-expected quarterly results, now expecting adjusted EPS of $6.25 – $6.45, up from its prior range of $5.90 – $6.20. The upbeat outlook signals a strong holiday season for the Company as it benefits from same-day delivery services and revamped stores.
During the quarter, the Company opened five of its mid-sized locations (50,000 to 170,000 square feet) and four of its smaller (less than 50,000 square feet) locations. Year to date Target has opened 18 new stores, on its way to its goal of 30 (click here to request a list). Most new stores will be of the smaller footprint.
Dollar Tree’s third quarter sales increased 3.7% to $5.75 billion. Enterprise same-store sales increased 2.5%, consisting of 2.8% growth at its Dollar Tree segment and 2.3% growth at its Family Dollar segment; its fourth straight quarter of positive comps. Comp growth in both segments was driven by increases in both average ticket and transaction count. Operating income was $358.4 million compared with $387.8 million last year. During the quarter, the Company opened 165 new stores, expanded or relocated 15 stores, and closed 42 stores. Additionally, the Company opened 39 Dollar Tree stores that were re-bannered from Family Dollar and completed 247 renovations to the Family Dollar H2 format.
Dollar Tree estimates that newly imposed U.S. tariffs will increase its cost of goods sold by approximately $19.0 million in the fourth quarter of 2019 and as a result lowered its fiscal 2019 guidance. Sales are now expected to range from $23.62 billion – $23.74 billion, down from previous guidance of $23.57 billion – $23.79 billion, based on low single-digit comp growth and 1.1% square footage growth. The Company now anticipates EPS will be $4.66 – $4.76, down from a previous estimate of $4.90 – $5.11.
Stein Mart’s third quarter sales fell 0.9% to $280.4 million, due to the closure of five stores since 2Q19 and a 0.1% decrease in comps. Comp trends improved from the first half of the year from the opening of the new kid's department and an 18% increase in omni sales (online sales regardless of fulfillment channel). The lower sales and higher advertising and e-commerce expenses outpaced gross margin expansion, and as a result, the quarterly EBITDA loss widened. TTM EBITDA was $30.6 million. TTM interest coverage was 3.2x, and remained just above our warning level of 3.0x. The Company operated 283 stores at the end of the third quarter of 2019 compared to 288 last year. Five stores were closed during the year-to-date period, which completed management’s announced store plans for the year.
Williams-Sonoma’s third quarter sales increased 6.3% to $1.44 billion, and comps were up 5.5%. By segment, comps rose 3.4% at Pottery Barn, 4% at Pottery Barn Kids and Teen, and 14.1% at West Elm, but fell 2.1% at Williams-Sonoma. Gross margin fell 60 basis points to 35.9%. Operating income rose 8% to $101.9 million, and operating margin improved 10 basis points to 7.1%. Looking ahead, the Company narrowed its fiscal 2019 sales guidance to $5.77 billion – $5.90 billion from $5.74 billion – $5.90 billion. Comps are expected to increase 3.5% – 6%, narrowed from its prior outlook of 3% – 6%. EPS is projected to be $4.65 – $4.80, narrowed from $4.60 – $4.80. The Company expects to close a net 25 stores during the fiscal year, down from previous expectations to close 30 net stores.
Hibbett Sports reported third quarter sales increased 27% to $275.5 million, with City Gear (acquired November 2018) contributing $43.7 million. Comps were up 10.7% and will not include sales from City Gear until the fourth quarter. E-commerce sales represented 10.5% of total sales, up from 8.8% last year. Footwear sales continued to drive the business, along with positive sales in activewear and accessories related to footwear products. Gross margin rose 20 basis points to 32.7% due to lower occupancy costs, but acquisition costs caused SG&A margin to erode 35 basis points to 29.1%. Operating income increased 42.5% to $2.6 million. The Company opened four new stores during the quarter, and rebranded four Hibbett stores to City Gear stores, while it closed 19 underperforming locations, bringing its store base to 1,097 in 35 states.
Best Buy’s third quarter sales increased 1.8% to $9.76 billion, and comps were up 1.7%. Domestic segment revenue (91.8% of total sales) rose 2.4% to $8.96 billion, driven by comp growth of 2% and revenue from GreatCall, acquired in 3Q19. Strength in computing, mobile phones and appliances drove sales, while tight expense control lifted adjusted operating margin to 4.5%. As a percentage of total domestic revenue, online sales increased 171 basis points to 15.6%, up from 13.9% last year. International sales (8.2% of total sales) decreased 0.4% to $800.0 million, driven by a comp decline of 1.9% and lower sales in Canada. EBITDA rose 15% to $612.0 million, with EBITDA margin up 70 basis points to 6.3%, aided by growth in higher-margin services from the GreatCall acquisition. Inventory was down 7% at the end of the quarter versus last year, due to the later timing of Black Friday and Cyber Monday. The Company ended the quarter with 1,230 stores.
The Company updated its fiscal 2020 outlook, now expecting sales of $43.20 billion – $43.60 billion, narrowed from $43.1 billion – $43.60 billion. Comps are expected to grow 1% – 2%, up from prior guidance of 0.7% – 1.7% comp growth. The Company now projects EPS of $5.81 – $5.91, up from $5.60 – $5.75.