October 19, 2022
Kimco Realty, North America’s largest publicly traded owner and operator of open-air, grocery-anchored shopping centers, reported that, based on the announced value of the merger, its existing stake in Albertsons has an implied valued of $34.10 per share, representing a significant premium of more than 37% to the closing share price on September 30. The merger announcement further specifies that part of the cash consideration be paid in the form of a $6.85 per-share special cash dividend on November 7. Subsequent to the announcement, Kimco sold 11.5 million of its 39.8 million shares in Albertsons, generating net proceeds of $301.1 million. Kimco still retains 28.3 million shares of Albertsons, which it agreed not to sell for a period of up to seven months.
Separately, Albertsons released its 2Q22 results. Net sales increased 8.6% to $17.92 billion, driven by higher fuel sales as well as a 7.4% uptick in identical sales, boosted by retail price inflation. Digital sales jumped 36%. Adjusted EBITDA was up 8.6% to $1.05 billion, and EBITDA margin was 5.8%. Operating income rose 9.3% to $531 million. The Company had total debt of $7.93 billion, down from $8.34 billion in the prior-year period. Year to date, sales were up 9.1% to $41.23 billion, operating income increased 10% to $1.29 billion, and adjusted EBITDA advanced 8.6% to $2.49 billion. Albertsons operated 2,272 stores at the end of 2Q22, six fewer than a year earlier.
Amazon opened its second Amazon Style clothing store, a 28,000 square-foot unit in Columbus, OH. Like the first in Glendale, CA, outside of Los Angeles, the store “features curated and regularly updated 'lookbooks' from Amazon stylists and influencers, and only displays one of each product, with all sizes and styles stored in the back of the house to increase the selection available on the floor.” Customers scan a QR code using the Amazon Shopping app, select size and color, and tap to add the item to their fitting room or for pickup.
Amazon said that “tens of millions” of members shopped its Prime sales event last week, with customers purchasing more than 100 million items from third-party sellers on its Marketplace. Some estimates have the event falling short of results for the traditional Prime Day in July. Average order size for last week’s event was $46.68, down nearly 23% from Prime Day in July. Another estimate cited $8 billion in gross merchandise volume, a 25% decline from $10.70 billion for the July sale, which translates to revenue of $5.70 billion, compared to the $7.50 billion revenue estimate for Prime Day in July. Amazon said apparel, home, toys, and the Company’s devices were the best-selling categories, with more than eight million toys sold in the U.S. during the sale.
In other news, a group of workers at an Amazon air freight hub in San Bernardino, CA that has been pushing for a $5-per-hour pay increase and more robust safety measures accused the Company of unfair labor practices in a filing last week with the National Labor Relations Board (NLRB). The group, which calls itself Inland Empire Amazon Workers United, alleged in the filing that Amazon had interrogated employees about their union-related activities, issued write-ups to other employees in retaliation for wearing stickers in support of the wage increase, and surveilled workers engaged in organizing. Dozens of Amazon workers at the air freight hub walked off the job Friday, demanding raises of $5 per hour and better working conditions, the latest sign of employee unrest for the Company. The one-day strike at the facility, in which 150 of the 1,500 employees there participated, followed summer protests. Workers said they gave Amazon an October 10 deadline to meet their demand for raises that would increase the starting wage at the facility to about $22 per hour. Last week, about 30 workers at a Joliet, IL Amazon warehouse walked out amid the Company’s second Prime sale of the year, demanding “a safer and healthier workplace and a living wage of $25 per hour.” The plant is one of 10 cross-dock facilities that funnel merchandise to fulfillment centers, enabling Prime’s two-day shipping. An Amazon spokesperson downplayed the action, noting it is investing $1 billion in front-line employee wage hikes this year.
Representatives from the NLRB will be counting ballots cast by workers at a facility in the town of Schodack, near Albany, NY today. Approximately 800 people are employed at the warehouse. This is the fourth union election at an Amazon warehouse this year. The union secured an unexpected win at a warehouse on Staten Island in April, suffered a loss shortly thereafter at a facility nearby, and an election at a warehouse in Bessemer, AL remains too close to call. Workers at Amazon facilities near Atlanta and Chicago staged similar protests in recent weeks, demanding better pay.
Tractor Supply Company received FTC approval to close on its previously announced acquisition of Orscheln Farm and Home. The acquisition includes 166 Orscheln Farm stores for $320 million. As part of the agreement, Tractor Supply will divest 85 stores to Bomgaars Supply (73 stores) and Bucheit Enterprises (12 stores) for $72 million, leaving the Company with a net 81 stores. Tractor Supply also agreed to sell the Orscheln Farm headquarters building to Bomgaars for $10 million. This brings the net purchase price down to $238 million for the 81 locations, which are anticipated to generate about $75 million in 4Q22 sales and about $300 million in FY23 sales (total Tractor Supply sales are expected to be just over $14 billion for FY22). Stores will be rebranded to the Tractor Supply brand over the next 15 months. See the map below for Orscheln locations that are within five miles of a Tractor Supply store. 3Q22 results will be released October 20. Click here to request a list of future store openings.
Walgreens Boots Alliance (WBA) posted lower 4Q22 sales and EBITDA, as it ramped up investment in its bourgeoning U.S. Healthcare business. Sales dropped 5.3%, including a 210-bps foreign currency headwind, while operating income plummeted 40%, which reflected lower contribution from COVID-19 vaccines and testing, and U.S. Healthcare operating losses.
U.S. Retail Pharmacy 4Q22 sales fell 7.2%, as a 1.6% increase in comps was more than offset by the underperforming AllianceRx (specialty) business. The Company also pointed to lapping 4Q21’s strong performance (comps up 8.1%), which benefitted from the higher COVID-19 vaccinations and testing. The current period saw front-end comps fall 1.9%, and pharmacy comps up 3%. However, pharmacy script comps fell 0.1% excluding vaccinations, as management noted reduced hours from staffing shortages. The Company is focused on returning about 3,000 stores to normal operating hours, and also now has eight micro fulfillment centers supporting 1,800 stores, which are expected over time to reduce working capital investment. U.S. Healthcare sales grew to over $600 million in 4Q22, with pro forma (for acquisitions) growth of 34%. Segment adjusted operating income was a loss of $151 million in the quarter. As noted, WBA ramped up investment in this segment, opening 340 VillageMD clinics, including 150 co-located with Walgreens, with 200 planned by CYE22, and 70 Health Corners, with 100 planned by CYE22. Walgreens Health also accelerated the full acquisition of post-acute and home service care coordination platform CareCentrix and Shields specialty business. Click here to request a list of Walgreens' future store openings.
Wawa is closing two convenience stores in the Center City neighborhood of Philadelphia, PA due to safety and security challenges. The decision follows an incident on September 24 at a Wawa in Northeast Philadelphia in which the store was ransacked by a group of juveniles that caused thousands of dollars’ worth of damage. According to the Company, “These two closures do not necessarily impact or limit potential for future stores in Philadelphia County.” Over the past two years, Wawa closed two other stores in Center City, as well as a North Philadelphia location. In addition, the Company previously ended 24-hour operations at multiple c-stores in Center City. Click here to request a sample list of future store openings.
A published report claims Dollar General is “facing another $1.68 million in fines after government safety inspectors found violations at four of the chain’s stores…. During inspections in April 2022, the Occupational Safety and Health Administration found dirty and disorderly storage areas and materials stacked unsafely at locations in Mobile and Grove Hill, AL; Tampa, FL; and Dewy Rose, GA. OSHA said those conditions put workers at risk of slipping, tripping and getting struck by falling objects. The Company was also cited for fire hazards, including failing to keep exit routes and electrical panels clear and unobstructed, and neglecting to mount and label fire extinguishers.” This comes two months after OSHA proposed $1.3 million in penalties for similar violations at three Dollar General stores in Georgia, with OSHA claiming the Company “has faced more than $9.6 million in initial penalties after 182 inspections since 2017.”
In other news, Dollar General opened a new DG Market in Winchester in southern Illinois. The store, which is about a mile from the Dollar General it is replacing, offers an expanded selection of fresh meat and produce. The DG Markets format carries the top 20 items sold, or about 80% of the produce stocked, in traditional supermarkets, including lettuce, tomatoes, onions, apples, strawberries, potatoes, sweet potatoes, lemons, limes, and salad mixes. The Company indicated last year it wants to offer fresh produce in as many as 10,000 of its stores; currently, it sells fresh food in about 2,700 of its more than 18,000 stores.
Neiman Marcus delivered over $5 billion in gross merchandise value for the year ended July 31, 2022. Gross merchandise value (GMV) refers to all the merchandise sold through NMG stores and websites, owned, on commission and through consignment. On a comparable basis, sales were up 33%. It also reported year-over-year gross margin expansion supported by 80% full-price selling. This led to $495 million in EBITDA or an 11% EBITDA margin. The Company also revealed certain metrics about its customer performance. The top 2% of customers drive about 40% of total sales, and 80% of top customers have at least $1 million of net worth. Top customers spend on average over $25,000 annually across 25+ transactions. 75% of U.S. high-net-worth individuals live within 30 miles of a Neiman Marcus store.
Aritzia’s 2Q23 sales increased 50% to C$525.5 million, on comp growth of 28.3% compared to 2Q22. In the U.S., sales increased 80% to C$263.2 million, and represented 50.1% of net revenue during the quarter. Overall retail sales (representing 67% of total sales) rose 60% and e-commerce sales (representing 33% of total sales) were up 33%. For FY23, Aritzia expects sales of C$2 billion – C$2.05 billion, up 34% – 37% from FY22, and up from the Company’s previous outlook of C$1.875 billion – C$1.90 billion. Store activity plans include eight new boutiques, all but one in the U.S. (five U.S. and one Canada store have already opened), and five expansions or relocations, all but one in Canada.
Sportsman's Warehouse recently opened new stores in Seminole, FL, Eastgate, OH and Santee, CA. The Company also expects to open two additional locations this year, before the start of the holiday shopping season, in Montrose, CO and Jacksonville, FL. These five new stores will offer a combined 127,000+ square feet of retail space. Sportsman's stores are now located in 30 states across the U.S. With the opening of the five new locations, this will include 16 stores in California, 8 in Colorado, 3 in Florida, and the first ever store in Ohio.
Domino’s has sold 114 Company-owned locations in Phoenix, AZ and Salt Lake City, UT to 11 franchisees, three of them first-time operators, for $41.1 million. The units represent more than a quarter of Domino’s roughly 400 corporate locations, which is only 6% of its more than 6,600 U.S. restaurants as of the end of 3Q ended September 11.
3Q22 same-store sales for Company-operated units dropped 1.9%, compared with a 2.2% increase at franchise locations. Operating income decreased 2.1%, as thinning margins reflect higher labor and food costs. 3Q22 revenues increased 7.1% to $1.07 billion, while net income declined 16.5%.
In other news, Domino’s increased prices for its carryout Mix & Match Deal menu from $5.99 per item to $6.99 per item. The Company’s U.S. carryout business’ comps of 19.6% in 3Q22, compared to the year-ago period, are likely to jump in 4Q22 because of the price increase. Compared to 3Q19, comparable carryout sales were up 35%. Click here to request a sample list of future store openings.
Trader Joe’s announced a new location in College Park, MD, about four miles from Washington, DC, slated to open by the end of 2022. The Company already operates eight stores in Maryland, including in Annapolis and Bethesda, and has five locations in D.C. Trader Joe’s also expects to open one new store each in Tigard, OR and Providence, RI by the end of this year and announced a store in Draper, UT to open in 2023. Click here to request a sample list of future store openings.
H-E-B announced an opening date of November 2 for its new 118,000 square-foot store in Plano, TX. The location will have a full-service pharmacy with drive-thru, curbside pickup and home delivery service, a fuel station, a car wash, and a True Texas BBQ restaurant with drive-thru. The opening is part of the Company’s push into the most-populated areas of the Dallas-Fort Worth market, bringing it into competition with Kroger, Tom Thumb and Walmart. Last month, H-E-B opened its first Dallas location in Frisco and has additional metro area stores planned for McKinney and Mansfield; McKinney is slated to open next year, and the Company will break ground in Mansfield early next year. Click here to request a sample list of future store openings.
Aldi announced its fifth store in Louisiana will open in LaPlace on Thursday. The opening is part of the Company’s plan to add approximately 150 new units this year, with nearly 20 in the Gulf Coast (Alabama, Mississippi, the Florida Panhandle and Louisiana). The new location also pushes the Company toward its goal of becoming the third-largest U.S. grocer by store count by the end of 2022. Aldi currently has 2,200 stores in 38 states. Click here to request a sample list of future store openings.
Ollie’s reported an 8.8% sales increase and a 1.2% comp improvement in 2Q22. The Company opened 11 new stores during the quarter, finishing with 449 locations across 29 states.
Healthier Choices Management Corp. (HCMC) has acquired Green’s Natural Foods, which operates eight organic grocery stores that range from 10,000 to 15,000 square feet in New York and northern New Jersey. Financial terms were not disclosed. The deal adds to HCMC’s current grocery segment, comprised of Ada’s Natural Market, an 18,000 square-foot full-service grocery store in Fort Myers, FL (currently open and undamaged from Hurricane Ian); Greenleaf Grill, Ada’s fast casual in-store restaurant; three Paradise Health & Nutrition locations in the greater Melbourne, FL area; and two Mother Earth’s Storehouse locations in Hudson Valley, NY, acquired in February 2022.
Yesterday, Kroger announced a multi-unit deal with Dallas-based Zalat Pizza to open restaurants inside Kroger supermarkets, starting with two Marketplace stores in Houston. The first will open this Friday at the Cypress Towne Lake Marketplace; the second is slated to open in December at the Conroe Marketplace. The companies will announce 2023 openings in the coming months. The restaurants will span approximately 400 square feet and will offer pickup and on-demand delivery. Zalat Pizza operates 24 restaurants in the Dallas and Houston metro markets.
QuikTrip’s wholly owned subsidiary MedWise LLC plans to develop additional walk-in urgent care medical clinics in the Wichita, KS and Kansas City, MO markets. MedWise currently operates 11 clinics in and around Tulsa, OK, where QuikTrip is based. The Company opened its first MedWise clinic in Oklahoma in 2020.
QuikTrip is also reportedly planning three new convenience stores in the Chicago metropolitan area, with the first slated to open in 2023. The Company operates 957 c-stores across the country. Click here to request a sample list of future store openings.
Stewart’s Shops is in the process of opening seven locations in seven weeks in New York State, including four rebuilds and three new-to-market stores, as part of the retailer’s $50 million construction investment in 2022. The rebuilt shops include a Stewart’s in Malta that reopened on October 5, one in Amsterdam last week, a third in Carthage estimated to open on October 24, and Watertown, scheduled to open on November 8. The new-to-market stores will open in Schenectady on October 20, in Potsdam on October 26, and in Colonie on November 28. Stewart’s plans for 2023 include nine rebuilds and eight new-to-market Stewart’s Shops. The Company currently operates a total of 30 stores in the state of New York.
Sendik’s Food Markets will open its 18th location, in the Milwaukee suburb of Oconomowoc, WI tomorrow. The former Kmart has been remodeled to a 60,000 square-foot grocery store and will feature meat and seafood, gourmet cheese, and wine and spirits departments, as well as an in-store garden.
Cardenas Markets announced grand opening festivities for its six recently acquired and newly remodeled stores under the Rio Ranch Market banner in Banning, San Bernardino, Perris, Riverside, Fontana and Chino, CA. The Banning unit opened on September 28, San Bernardino opened on October 12, Perris and Riverside will open this Wednesday, and Fontana and Chino will open on October 26. In July, the Company acquired the six Rio Ranch Market stores, with plans to gradually integrate them into the Cardenas system.
Sprouts Farmers Market will debut its first in-store Press Coffee at a store in Phoenix, AZ. This new pilot location will feature a workspace area and a full drink menu. Press Coffee has 12 Valley locations in Scottsdale, Tempe, Phoenix, and Chandler.
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