Openings, Closings, & Other Key Industry Highlights

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November 6, 2019

 
 
 

On October 9, it was reported that certain assets and liabilities of Olympia Sports Center, Inc., were acquired by Jackrabbit, an omni-channel retailer of athletic footwear, apparel, and accessories. JackRabbit is owned by affiliates of private equity firm CriticalPoint Capital. The acquired assets include 75 stores, the online presence, and the “Olympia Sports” brand. We confirmed that the approximately 76 remaining Olympia locations will be closed. On November 1, Olympia identified the 76 closing stores, which we have displayed in the map below (click here to request the list).

 
 

On November 1, reports indicated that Forever 21, Inc., DIP plans to keep open more than 60 of its U.S. stores, which it previously anticipated closing, after securing rent concessions from its largest landlords. On October 2, we reported that the Debtors provided a list of 178 stores (click here to request the list) they considered for closing, as part of GOB sales which have already commenced and are scheduled to conclude by December 31. At that time, the Debtors noted that they did not anticipate closing all 178 units; the number of closings depended on the amount of rent concessions and other operational improvements, which were subject to negotiations with landlords. The Debtors are now targeting about 111 closures, although “the number is still in flux, and the final count could change.” Reports also stated that the Company’s Riley Rose unit will close all of its 15 freestanding stores, terminate its website, and transfer its operations into existing Forever 21 locations as a store-within-a-store concept. Riley Rose was the Company’s attempt to enter the beauty and home décor sector.

2018/19 Mergers & Acquisitions Report

Global merger and acquisition activity in 2018 broke its two-year streak of declines; deal volume grew 16% to $3.870 trillion. Thus far in 2019, the megadeal trend has continued, with the top ten U.S. deals totaling almost $510.00 billion; the smallest transaction in the top ten was $25.94 billion. This report outlines significant merger and acquisition activity, including notable asset sales within the supermarket/food wholesale, convenience store, foodservice, drug retail/wholesale, casual dining/restaurants, and mass merchandise sectors. 

 
 

On October 23, it was reported that Sears Hometown Stores completed the sale of the Sears Outlet unit and Buddy’s Home Furnishing Stores businesses to Franchise Group, Inc. for $119.9 million in cash. In connection with the Outlet sale, the Company’s revolving credit facility was irrevocably terminated. Additionally, in accordance with the Company’s agreement to be acquired by Transform Holdco LLC, the amount of the consideration for that transaction was adjusted upward to reflect the proceeds received by the Company from the Outlet sale. On October 29, the Company announced that it entered into an $80.0 million secured revolving credit facility with PNC Bank. The facility is available to be used by the Company and its domestic subsidiaries for general corporate purposes, including to finance a portion of the merger consideration. The Company and each of its material subsidiaries is a borrower, and jointly and severally liable under the facility, which matures on October 23, 2024. The credit agreement requires the Company to comply with a minimum excess availability covenant. Borrowings under the new facility to help fund the merger consideration will ultimately create an even more highly leveraged financial condition for Transform Holdco once the transaction is completed.

Click here to request the latest list of Sears and Kmart closures.

 
 

Ascena Retail Group announced that store-closing sales at all of Dressbarn’s remaining 544 locations started on November 1. Fixtures, furnishings, and equipment in the stores are for sale as well. All stores are expected to go dark no later than December 26 (click here to request a list). Ascena has sold the intellectual property assets of Dressbarn to a subsidiary of Retail Ecommerce Ventures LLC and has begun the process of transitioning its e-commerce business. Dressbarn.com will launch a new platform and look on or about January 1, 2020.

 
 

On November 1, J.C. Penney opened a revamped location in the Dallas suburb of Hurst, TX, featuring a reimagined format and the shortened name of Penney’s. The merchandise layout has been reorganized, with the clothing assortments organized by occasion (for example, “All Day” for casual workwear and “Shine” for weekend wear). The store also includes a showcase for fashion jewelry and accessories, a Sephora shop, an updated beauty salon called Salon and Spa by InStyle, and the Company’s first-ever barber shop, The Barbery. Fitting rooms are equipped with technology that allows shoppers to get new sizes or colors without leaving the space. In home goods, Penney’s partnered with Pinterest to help customers find inspiration. The store also includes the first Penney’s fitness studio, a kid’s clubhouse, 11 lounges, and a café called Pearl Cup Bistro.

The Company described the store as “experiential” and “brand-defining,” built around data and insights collected from over a year of customer research. CEO Jill Soltau said, “This store is more than a renovated location, it is the fullest articulation of our customer-centered strategy, an investment in our future and a lab to inform decisions to return JCPenney to sustainable, profitable growth.”

 
 

On November 1, Authentic Brands Group LLC completed its purchase of Barneys New York Inc., DIP, after other potential bids did not materialize. In a last-minute deal, Authentic Brands reached an agreement with the landlord of the NYC flagship store to keep the store open for at least 12 months. Nevertheless, liquidators Great American Group and Tiger Capital Group said that store-closing sales will begin this week at five flagship Barneys’ locations (including the Madison Avenue store) and two off-price warehouse stores. Following liquidation, the Madison Avenue store is expected to be downsized to four floors and transitioned into a pop-up retail shop. At the same time, the Company announced that Barneys’ CEO Daniella Vitale has left the Company. As we previously reported, Authentic Brands intends to license the Barneys name and allow Saks Fifth Avenue (a subsidiary of Hudson’s Bay Company) to operate Barneys as a store-within-a-store.

 
 

Duluth Holdings announced the opening of a location in Sandy, UT, its first store in the state and 58th store overall. Sporting goods retailers with a presence in the greater Salt Lake City metro area include Big 5 Sporting Goods (6 stores), Camping World (1), Dick’s Sporting Goods (1), REI (2), and Sportsman’s Warehouse (2). Duluth operates 55 stores nationwide. As shown in the Retail Openings & Closings map below, Duluth has another seven stores in the works, including four units before year end, one in 2020, and two with no opening dates yet (click here to request a list).

 
 

Kroger plans to update investors on how the Restock Kroger initiative is repositioning the Company to create shareholder value at an investor conference today. CEO Rodney McMullen commented, “Restock Kroger sets Kroger up for a stronger future. Momentum is returning to our core grocery business as a result of our customer obsession and renewed intensity around operational excellence, plus the asset-light, margin rich alternative profit streams that enrich our core supermarket business.” The Company is reportedly planning a major rebranding effort as it has concluded that its current branding approach needs refinement since customers do not have a firm enough grasp of what the chain stands for. Kroger’s efforts might also be a response to heightened competition from traditional, discount, natural food and online grocers.

The Company reconfirmed 2019 guidance and continues to expect identical sales of 2% – 2.25%, adjusted operating profit of $2.90 billion – $3.00 billion, adjusted EPS of $2.15 – $2.25, and capital investments of $3.00 billion – $3.20 billion. Kroger also set financial targets for 2020 that include identical sales growth to be greater than 2.25%, alternative profit businesses to grow incremental operating profit by $125.0 million – $150.0 million, adjusted EPS of $2.30 – $2.40, and capital investments of $3.20 billion – $3.40 billion. Beyond 2020, Kroger is targeting total shareholder return of between 8% – 11%. The Company also announced its board has approved a $1.00 billion share repurchase program, replacing the existing authorization that has approximately $546.0 million remaining. On the news the Company’s stock shot up more than 10%, trading at about $27.85 midday.

In other news, Kroger seems to be giving in and is reversing its ban on Visa credit cards. The Company will now allow Visa cards to be accepted in all of its stores, several months after the chain stopped accepting them at hundreds of its locations. Kroger had said it was banning Visa to save money on processing fees and keep prices low.

Finally, the Company plans to test a new delivery service, called Kroger Package Services (KPS), in some 220 stores later this year. Under KPS, participating Kroger stores accept packages, including those that require signatures, from major carriers including UPS, USPS, and FedEx, and store them in a secure area until customers pick them up. The program also allows shoppers to drop off pre-labeled packages or bring in unboxed items for shipping anywhere in the U.S. Automated kiosks enable shoppers to print or purchase shipping labels as well. 

 
 

Century 21 Stores opened a holiday pop-up shop on November 1 in Manhattan’s Herald Square. The shop, which will be open through January 11, 2020, features a full range of merchandise across several categories including men’s and women’s apparel, footwear, outerwear, accessories, beauty, and luggage. Century 21 is headquartered in downtown Manhattan and operates additional locations in Lincoln Square, Brooklyn, Queens, Yonkers, and Long Island, as well as three stores in New Jersey, one in Philadelphia, and one in Sawgrass Mills, FL.

 
 
 

Last week, Starbucks opened a new smaller-format store in Manhattan’s Penn Station, a 300 square-foot space that has no menu boards, no pastry case, and room only for a cash register. Walk-in orders are available, but the space is designed to accommodate digital preorders. Similar openings are planned for Boston, Chicago and Los Angeles.

Starbucks’ fourth quarter consolidated revenues increased 7% to $6.75 billion. Global comps increased 5%, driven by a 3% increase in average ticket and a 2% increase in comp transactions. Americas and U.S. comps were up 6%, both driven by a 3% increase in average ticket and a 3% increase in comparable transactions. International comps rose 3%, from a 3% increase in average ticket and a 1% increase in transactions; China comps increased 5%, with comp transactions up 2%. The Company opened 630 net new stores during the fourth quarter, bringing its total store count to 31,256 stores, a 7% increase over last year. Starbucks’ Rewards loyalty program increased to 17.6 million active members in the U.S., up 15% year-over-year.

For fiscal 2020, the Company expects global comp growth of 3% – 4%, revenue growth of 6% – 8%, operating income growth of 8% – 10%, and capex of $1.80 billion. The Company expects to open 2,000 net new Starbucks stores globally, consisting of 600 in the Americas (3% – 4% growth in the U.S.) and 1,400 internationally. Click here to request a sample future openings list.

 
 

Demoulas’ Market Basket will open a new store in Penacook, NH. Construction of the 80,000 square-foot unit could begin in 2020, with doors opening by 2021. The Company recently opened a 69,000 square-foot store in Plymouth, NH; a 72,500 square-foot store in Pawtucketville, MA is slated to open shortly, and a 70,000 square-foot store in Maynard, MA is also expected to open during the first quarter of 2020.

 
 

In the Fred’s, Inc., DIP case, the Court approved two real estate sale transactions following the Debtors’ designation of the following parties as the successful bidders at an auction: Perry Ellis International, Inc., with a bid of $15.7 million for the Company’s distribution center in Dublin, GA; and R.A. Wilson Enterprises, Inc., with a bid of $22.3 million for 56 stores, including 53 owned units, and the assumption of three leases. The closings of both transactions are scheduled for November 18.

 
 

Pier 1 Imports announced the appointment of Robert Riesbeck as CEO. Mr. Riesbeck will also continue to serve as CFO. As planned, Cheryl Bachelder, who has served as interim CEO since December 2018, stepped down on November 4, and will continue as a board member. Mr. Riesbeck has served as CFO since July 2019, and previously was CFO of FULLBEAUTY Brands as well as an operative executive at private equity firm Sun Capital Partners.

Management also noted that the NYSE has accepted the Company’s business plan to regain compliance with NYSE continued listing requirements. We previously reported that Pier 1 was notified by the NYSE that it was no longer in compliance with NYSE continued listing standards, due to the fact that the Company’s average global market capitalization over a consecutive 30 trading-day period was less than $50.0 million and its total stockholders’ equity was less than $50.0 million. The Company continues to experience operational deterioration, with sales down 14.3% in the second quarter ended August 31, and negative TTM EBITDA margin. The balance sheet is highly leveraged and cash burn was almost $230.0 million on a TTM basis. Management continues to work with A&G Realty Partners to lower rent expense and “determine an ideal footprint.” The Company plans to close approximately 70 stores in fiscal 2020, 13 additional units from previous guidance of 57 planned store closures for the year (click here to request a list of recent and future store closings). Pier 1 reiterated that if it is unable to achieve its performance goals, sales targets, and reductions in occupancy and other costs, it could close up to 15% of its portfolio. We previously noted that if operational deterioration and cash burn continue unabated, liquidity may become significantly depleted by year end.

 
 

On October 30, Stater Bros. reopened six of its Southern California supermarkets. In addition to updated exterior signage featuring its refreshed logo, the stores have interior upgrades and expanded offerings.

 
 
 

Walmart has begun offering online shopping for alcohol as part of its Grocery Pickup service, with more than 2,000 Walmart locations across 29 states, allowing customers to pick up wine and beer without leaving their cars. The alcohol pickup service has to abide by local laws, which limits its expansion in some cases. In addition, Walmart says that now more than 200 stores in California and Florida are also offering alcohol delivery, and it will continue to expand. Click here to request a list of future openings.

 
 

H.E. Butt has begun construction on a new 106,000 square-foot store in Kerrville, TX, to open in late 2020. It will replace an existing 35-year old store next door. Click here to request a list of future openings & closings.

 
 

Marathon Petroleum Corp. (MPC) announced it is seeking to spin off nearly 4,000 Speedway gas stations. The retail network would become an independent, publicly traded company by end of calendar 2020. Upon completion of the spinoff, Speedway would be the largest U.S. convenience store operator. MPC began its strategic review in January, following its tie-up with Andeavor. The $23.30 billion transaction closed on October 1, 2018. Greg Goff, the former Andeavor CEO who leads Marathon’s pipeline and storage terminal arm MPLX LP, will be retiring effective December 31. MPLX President Michael Hennigan has been named as Mr. Goff’s immediate successor.

Meanwhile, MPC also announced that CEO Gary Heminger will retire after the first quarter of 2020. Mr. Heminger served as president and CEO of MPC since the Company’s spinoff from Marathon Oil in June 2011, and as chairman and CEO since 2016. He also served as chairman and CEO of MPLX GP LLC since 2012. A search for his replacement is currently underway. 

 
 

Last week, CVS Pharmacy opened its first standalone store in Oregon, located in Portland. It is the first of three retail locations to open in the Greater Portland market in 2019, with one more store opening in 2020. Throughout the state of Oregon, CVS Pharmacy already has a presence with 19 pharmacies located within Target stores.

 
 

Walgreens will transfer seven of its existing Company-managed clinics in the Cincinnati area to Ohio-based health system TriHealth. The clinics, which are set to open in the first quarter of 2020, will be owned and operated by TriHealth and staffed by their nurse practitioners. TriHealth at Walgreens clinics will offer access to treatment for common illnesses and injuries, without the need for an appointment.

In other news, published reports indicate that Walgreens is developing more than 30 small-format pharmacies for urban areas that will have a strong self-care and wellness component. The move follows similarly heath care-driven efforts by CVS and Walmart, though those new operations appear to be larger than the Walgreens format.

In other news, Walgreens named Patrick McLean SVP and CMO. Mr. McLean joins Walgreens from his role as TD Bank’s EVP, CMO and head of corporate and public affairs. 

Click here to request a list of future closings.

 
 

PriceSmart announced that Maarten Jager, EVP and CFO, has resigned, citing personal reasons. Mr. Jager, was appointed CFO in April 2018. A successor has not been named.

PriceSmart also announced fiscal 2019 fourth quarter and full-year results. Fourth quarter revenue grew 3% to $801.3 million, on 1.5% comp improvement. For the year, revenue improved 1.8% to $3.17 billion; however, comps for the full year declined 0.6%. The Company added two new warehouse clubs during the fiscal year, bringing the total to 43. Currency fluctuations continue to impact sales, with a negative $96.0 million effect for the full year. This contributed to the 1.2% decline in net income to $73.5 million, from $74.4 million in fiscal 2018.

 
 

Amazon Web Services (AWS) will open an infrastructure region in Spain. The new AWS Europe (Spain) Region will consist of three Availability Zones at launch, and will be AWS’s seventh region in Europe, joining existing regions in Dublin, Frankfurt, London, Paris, Stockholm, and the upcoming Milan region launching in early 2020. The Spain Region is expected to open in late 2022 or early 2023. Currently, AWS provides 69 Availability Zones across 22 infrastructure regions worldwide.

In other news, Amazon has invested around 45.00 billion rupees ($634.20 million) into its Indian subsidiaries. Documents filed with the Registrar of Companies showed that Amazon had pumped the money into its retail, food and payments units. Founder Jeff Bezos has committed to spending more than $5.00 billion for the Indian market, where Amazon competes with Walmart’s Flipkart. In August, Amazon said it will pick up a minority stake in India’s Future Retail Ltd, which owns several supermarket brands, including Big Bazaar.

Published reports indicate that Amazon Go is working on a new 10,400 square-foot grocery concept in Seattle’s Capitol Hill neighborhood, though details about the format have not been disclosed. Permit drawings show that the site is split roughly 3-to-1 between shoppable space and back-of-house operations; this indicates about 7,000 square feet of shoppable space, much bigger than the 1,500 and 3,000 square feet of front-of-house space in other Amazon Go stores.

 
 

Big Lots completed the sale of its distribution center in Rancho Cucamonga, CA for $191.0 million. The facility has been operating since 1984 and is being sold as a result of the Company’s move to a new, 1.4 million square-foot distribution center in Apple Valley, CA. The Company will utilize the Rancho Cucamonga distribution center on a leaseback arrangement until the Apple Valley distribution center is fully operational in Spring 2020. Big Lots reinvested $69.0 million of the proceeds to exercise a purchase option on its corporate headquarters in Columbus, OH and approximately $90.0 million to pay down a portion of the outstanding balance on its unsecured line of credit. It will recognize a one-time, pre-tax gain of $179.0 million in 3Q19. Click here to request a list of future openings and closings.

 
 

Hibbett Sporting Goods has partnered with U.S. delivery service provider Shipt to introduce a same-day delivery service for its customers in four regional markets. The service is free for Hibbett Rewards VIP Members and available in Atlanta, GA; Birmingham, AL; Charlotte, NC; and Nashville, TN. Shipt also partners with Target, Lidl, Costco, Winn Dixie, H.E. Butt, Meijer, Dierberg’s, Piggly Wiggly, and Lowe's Foods

 
 

Save-A-Lot is partnering with Amazon to offer pickup and payment for Amazon purchases at more than 400 stores by the end of 2020. The Company said that some Save-A-Lot stores in the St. Louis, MO area already enable shoppers to pay in cash for Amazon orders using the Amazon PayCode service, and pick up / return Amazon packages at Amazon Hub Lockers. In October, Amazon expanded its Counter in-store pickup points to thousands more locations through partnerships with GNC, Health Mart, and Stage Stores. The Counter service launched in June at 100 Rite Aid stores, and there are plans to bring it to over 1,500 of the drug chain’s locations. Kohl’s recently rolled out an Amazon in-store return service to all of its 1,150 stores after a pilot that began in 2017. Meanwhile, the Amazon Locker program is available in more than 900 cities and towns nationwide, including Whole Foods and Stein Mart stores.

 
 

Bed Bath & Beyond announced plans to remain open on Thanksgiving Day for the first time. Stores will be open from 5 p.m. to midnight, and customers will receive a 25% off entire purchase in-store only coupon. Click here to request a list of future openings and closings.

Earning Reports

 
 

Weis Markets’ third quarter sales increased a slight 0.8% to $876.2 million, while comps rose 1.7%, benefiting from investments in its Low, Low Price (LLP) program which offers price reductions on 7,000 private-brand items. The Company’s sales also benefited from targeted loyalty marketing programs, varied promotions and advertising in key markets. Sales growth was partially offset by a net reduction of six stores over the past year, bringing its store count to 198.

 
 

Publix’s third quarter sales increased 6.3% to $9.34 billion, driven by new supermarket sales and 4.3% comp growth. The Company estimates sales increased 0.9% due to Hurricane Dorian. Comp growth was positively impacted by increased product costs, and the hurricane. Net earnings were down 15.3% to $574.0 million, mainly the result of net unrealized gains and losses on equity securities. The Company adopted a new accounting standard in 1Q19 that changed the accounting for operating leases and required it to recognize $2.90 billion of operating lease rights and obligations as assets and liabilities on the balance sheet. Effective November 1, Publix’s stock price increased from $44.10 per share to $47.10 per share. Publix stock is not publicly traded and is made available for sale only to current Publix associates and members of its board. During the year-to-date period, Publix opened 22 supermarkets (including four replacement stores), remodeled 120, and closed five. Click here to request a list of future openings.

 
 

Sproutsthird quarter sales increased 8.4% to $1.44 billion, driven by strong performance in new stores opened and a 1.5% increase in comps. Net income was $26.3 million, down from $37.5 million last year, impacted by the deleveraging of SG&A, including the effects of adopting a new lease accounting standard in 2019. This was partially offset by fewer shares outstanding due to the Company’s repurchase program. During the quarter, Sprouts opened nine new stores, resulting in a total of 335 stores in 21 states.

Looking ahead at the fourth quarter, the Company expects sales growth of 6.5% –7.5%, comp growth to be flat to up 1%, and EPS of $0.12 – $0.15. For the full year, EPS is expected to be $1.10 – $1.13 and the Company plans to spend $150.0 million – $160.0 million in capex.

During an analyst conference call, Interim CFO Chip Malloy said the Company saw traffic decrease but basket size increase, and home delivery sales rose 200% compared to the previous year. He said that testing of click-and-collect shows it is not as popular as delivery, but the Company plans to keep the program in place. CEO Jack Sinclair, who joined the Company in June, said Sprouts is on track to open 28 stores this year but will pull back next year to “potentially 20 stores in 2020.” While these stores will continue to have a new expanded format that includes Market Corner Deli and enhanced meat and fish departments, Mr. Malloy said that the Company will likely reduce the store size in 2021 or later. The larger stores have proven harder to build, more expensive to operate, and less profitable. The Company is trying to determine the proper format, although specifics were not disclosed.

 
 

Yum! Brands reported third quarter revenue fell 3.7% to $1.34 billion. Yum! Brands’ worldwide system third quarter sales, excluding currency exchange, increased 8%, with 7% net new units and 3% same-store sales growth, led by continued strong performances at KFC International and Taco Bell. Adjusting the prior-year base to include Telepizza, system sales growth would have been 6% worldwide and 2% for the Pizza Hut Division. Comps increased 3% at KFC, with demand especially strong in India, Russia, and Australia. Comps rose 4% at Taco Bell and were flat at Pizza Hut, falling 3% in the core U.S. market. The Company said growth decelerated in part because menu changes aimed at boosting franchisee margins ended up driving away customers. Net income was $255.0 million, down from $454.0 million last year. The Company recorded $60.0 million of pre-tax investment expense related to its investment in Grubhub, which resulted in a negative ($0.15) impact in EPS. Operating profit was $480.0 million, down from $553.0 million last year.

Yum! Brands affirmed its long-term growth model that calls for comp growth of between 2% - 3% and aggressive store expansion of about 4%, even after accounting for closures in the Pizza Hut brand. Revenue is expected to increase 10%. The Company expects EPS growth in the low double-digit range.

In a conference call with analysts, outgoing CEO Greg Creed and his team put those results into perspective, stressing the positives they see in the Taco Bell and KFC franchises, while warning that the rebound plan for Pizza Hut will bring “disruption and choppiness” over the next few quarters.

On the news, the Company’s stock fell 5.8% to close at $103.34 last Wednesday and continued its decline to close at $99.65 yesterday.

Click here to request a list of Yum! Brands future openings.

 
 

Denny’s third quarter revenues fell 21.4% to $124.3 million. Company restaurant sales were $63.6 million, compared to $103.6 million last year, primarily due to a reduction in the number of restaurants resulting from the Company’s refranchising and development strategy announced in October 2018. The Company is migrating from a 90% franchised business model to one that is between 96% and 97% franchised. It anticipates the sale of between 115 and 125 total Company restaurants, with between 70 and 80 attached development commitments, will be substantially complete by the end of 2019. During the quarter, 56 restaurants were sold to franchisees. In addition to refranchising, the Company plans to upgrade the quality of its real estate portfolio through a series of like-kind exchanges.

For the full year, the Company expects comp growth at Company and domestic franchised restaurants of 1.5% ­- 2.5% and adjusted EBITDA of $93.0 million – $96.0 million. It plans to have 30 – 35 new restaurant openings, with flat net restaurant growth.

 
 

Big 5 Sporting Goods reported third quarter sales decreased 0.1% to $266.2 million, reflecting a 0.3% increase in comps, partially offset by the net closure of three stores over the past 12 months. For the quarter, the apparel category comped up low single digits, the footwear category comped slightly down, and the hardware category comped slightly up, even with a challenging ammunition category. Softness in ammunition resulted from the forward of sales in the second quarter due to regulatory changes in California that became effective in the beginning of July. Gross margin improved 130 basis points, reflecting a shift in sales mix, including lower sales of firearms and ammunition products, and improved pricing and promotions. Management commented that operating cash flow for the 2019 fiscal year-to-date period was positive $13.7 million, compared to negative $8.1 million in the prior-year period. This $21.8 million improvement in operating cash flow contributed to reduced revolving credit borrowings year-over-year, with $60.6 million in borrowings at quarter-end, reflecting a $22.9 million, or 27%, improvement in revolver borrowings versus the prior year. During the quarter, the Company closed one underperforming location. Looking ahead to the fourth quarter, the Company anticipates opening two stores, including the relocation of one store that closed during the quarter. 

 
 

Floor & Décor’s third quarter sales increased 19.5% to $521.1 million, and comps were up 4.6%. Gross margin improved 10 basis points to 41%, and adjusted EBITDA rose 16.8% to $57.1 million. CEO Tom Taylor stated, “In the third quarter, we successfully opened seven new warehouse stores, ending the quarter with 113 warehouse stores, up 18.9% from 95 warehouse stores as of the 3Q18. As we look to the remainder of fiscal 2019, we expect to open seven new stores, leading to another year of 20% unit growth.” Click here to request a list of future openings.

 
 

Boot Barn Holdings reported second quarter sales increased 11.3% to $187.2 million, and comps were up 7.8% (retail comps up 8% and e-commerce comps up 7%). Gross margin increased 140 basis points to 31.7%, driven by a 200 basis point increase in merchandise margin, partially offset by 60 points of deleverage in buying and occupancy costs. Adjusted EBITDA rose 33.9% to $19.1 million.

The Company expects to open or acquire 25 stores over the course of the fiscal year, including eight opened during the second quarter (one new store opened in the first quarter, but that was offset by the closure of an underperforming unit). Boot Barn operates 248 stores in 33 states.

 
 

Tuesday Morning reported first quarter sales decreased 1.3% to $224.4 million, and comps fell 0.7%, primarily due to the net decrease of 12 stores over the last 12 months. Transactions increased 2.4%, and average ticket decreased 3%. During the first quarter, one store was relocated, one store was opened, and eight stores were closed, for an ending store count of 707 locations. Gross margin declined 20 basis points to 36.1% due to higher markdowns. SG&A margin rose 40 basis points to 40%. As a result, adjusted EBITDA loss widened to $1.5 million from $67,000.

 
 

The Container Store’s consolidated revenue rose 5.3% to $236.4 million during the second quarter, reflecting a 5.4% increase in comps (following a 1.3% comp increase during the same period last year), and incremental sales from one new store opened during the year. Retail segment sales increased 5.9% to $221.2 million, with performance in the Custom Closets merchandise category up 9.3%, contributing 420 bps of the comp increase. Elfa third-party business sales (the Company’s Swedish subsidiary, which designs and manufactures shelving and drawer systems and custom sliding doors), declined 2.6% to $15.2 million, primarily due to unfavorable foreign currency translation. EBITDA decreased 16.3% to $20.1 million for the quarter, reflecting planned incremental spending for Custom Closets marketing and DC opening expenses ($3.4 million), a greater mix of lower-margin product, and higher direct material costs at Elfa, partially offset by ongoing savings and efficiency efforts.

The Company updated several components of its fiscal 2019 outlook, including (i) revenue slightly above its previous guidance of $915.0 million – $925.0 million; (ii) comps slightly above the previous guidance of a 2% – 3% increase; and (iii) adjusted EPS toward the low end of its previous outlook of $0.41 – $0.51, compared to $0.45 in fiscal 2018. 

 
 

Cinemark’s third quarter sales increased 9% to $821.8 million. Admissions sales were up 6.3% to $454.5 million, and concession sales were up 9.6% to $289.5 million. Attendance increased 5% to 73.3 million patrons, average ticket price increased 1.1% to $6.20, and concession revenues per patron increased 4.5% to $3.95. Adjusted EBITDA rose 0.8% to $169.8 million. As of September 30, the Company’s aggregate screen count was 6,082 and the Company had commitments to open seven new theatres and 63 screens during the remainder of 2019, and 22 new theatres and 214 screens subsequent to 2019.

 
 

Dine Brands Global reported results for its third quarter and nine months ended September 30. Quarterly sales increased 12% to $217.4 million. However, excluding the positive impact of 69 previously franchised restaurants acquired in December 2018, sales would have fallen 3.7%, reflecting weak comps at both of the Company’s banners. Applebee’s comps fell further into negative territory at 1.6%, and IHOP comps were nearly flat, as customer traffic to both chains continues to decline. Margin shifts followed the same trend as previous quarters this year, mainly attributable to the inclusion of lower margin revenues from Company-operated restaurants. The negative impact on gross margin was partially offset by the leveraging impact of the higher sales on operating expense. EBITDA grew 5.1% for the quarter but fell 190 basis points on a margin basis to 28.8%. Based on the lackluster comp and margin performance, management revised its fiscal 2019 guidance. The Company now expects Applebee’s comps to range from -1% to flat, compared to flat to up 1.5% previously, and IHOP comps to range from 1% to 2%, compared to 1% to 3% previously. Additional Applebee’s closures are expected, totaling 30 to 40 units globally, versus 20 to 30 announced previously, and IHOP openings will now only total 10 to 20, versus 20 to 30 previously. 

The Company also announced it has entered into a multi-unit franchise agreement with TravelCenters of America to develop up to 94 IHOP restaurants over the next five years. TravelCenters has over 260 full-service rest areas in 44 states and Canada under the TA, TA Express, and Petro Stopping Center banners. These rest areas include gas stations, car and truck maintenance/parking, and nearly 650 restaurants. TravelCenters currently operates four IHOP restaurants.

 
 

Aaron’s reported third quarter sales increased 1.1% to $963.8 million. The sales increase was due primarily to a 4.9% sales increase in the Progressive segment (55% of total sales) and the contribution of 152 franchised locations acquired by the Aaron’s Business segment (44% of total sales) in 2018. Growth was partially offset by a 2.9% comp decrease in the Aaron’s Business segment and the closure of 149 Aaron’s stores in the first half of 2019. Adjusted EBITDA rose 5.6% to $87.1 million. As of September 30, Aaron’s Business had 1,163 Company-operated stores and 341 franchised locations.