September 15, 2021
Save A Lot sold 32 of its stores in the greater Cleveland, Chicago and Milwaukee areas to Yellow Banana, LLC, which is a part of the minority-ownership holding company 127 Wall Holdings LLC. Yellow Banana will operate the acquired locations under the Save A Lot name. Each store is slated for a significant remodel next year to showcase Save A Lot’s branding and will see an expanded assortment of local and regional products. The sale of the stores, which generate annual revenues of more than $130 million, converts them to local ownership and furthers the Company’s efforts to transition to a wholesale model. Click here for a complimentary list of current locations.
Publix signed a lease for its first store in Kentucky, marking its eighth state of operations. The 55,700 square-foot store and adjacent Publix Liquors (the first located outside of Florida) is anticipated to open in 4Q23. Click here to request a list of future store openings.
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Last week, Amazon announced that its “Just Walk Out” technology powering its Amazon Go stores will debut at two Whole Foods stores in Washington, D.C. and Sherman Oaks, CA in 2022. The technology allows customers to pick up items and simply walk out of the store, avoiding checkout lines. Click here to request a list of future store openings and closings.
After recently opening its first Public Lands store, a format going against the likes of REI with its focus on the outdoors, at a recent investor conference Dick’s Sporting Goods management said it is also focused on upgrading its golf experience. To date, 20 Golf Galaxy stores have been remodeled, and last month it opened its first Golf Galaxy Performance Center, offering enhanced services and customer experience. As we have been reporting, the Company plans to open six legacy stores, and eight specialty concept stores in FY21, including the conversion of two former Field & Stream stores into Public Lands stores. Commenting on its inventory and industry-wide supply chain issues, management said the COVID outbreaks and factory closures abroad may pressure the supply of athletic apparel and footwear as well as golf equipment. Neither container shortages nor the backup in Asia are expected to abate any time soon and will likely result in price increases in 4Q21 and early FY22 for athletic apparel and footwear. Click here to request a list of future store openings and closings.
Meijer is opening a new, small-format grocery store called Rivertown Market in Detroit, MI. The 42,000 square-foot location will carry a vast assortment of fresh and prepared foods, including about 2,000 local artisan products. It is the second small-format store in the metro Detroit area and fourth overall. Click here to request a list of future store openings.
Checkers Drive-In Restaurants signed four multi-unit deals with franchisees on the East Coast, and is looking for franchisees in the Connecticut, New York and New Jersey markets to continue its expansion. The Company signed a six-unit deal in Rhode Island, marking the 26th state where it has a presence, as well as a five-unit deal in Maryland, a five-unit deal in South Carolina, and a five-unit deal in Georgia. The news follow Checkers’ recent announcement of its expansion efforts on the West Coast, with a 15- restaurant development agreement in Orange County, CA. Click here to request a list of future store openings.
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The Canadian economy suffered from various lockdowns in its FY 2Q22. Dollarama eked out a small 1.6% revenue increase; however, comps declined 5.1%. Comps in 2Q21 and 2Q20 were 5.4% and 4.7%, respectively. The comp decline was primarily driven by the restriction on sales of non-essential items in Ontario, where the Company has 40% of its stores. The ban was in place for the first 5.5 weeks of the quarter. After the ban was lifted, comps actually grew 5.1%. Even with the see-saw quarter, EBITDA was up almost 6%. Dollarama opened 13 stores during quarter, bringing the YTD store growth to 25. The Company has its work cut out in 2H22 to hit its goal of 60-70 new stores. The Canadian economy is slowly bouncing back, and the labor market reported stronger-than-expected August job growth. Unemployment fell to 7.1% from 7.5% in July.
Our Hot Market Report takes a closer look at the Washington D.C. real estate landscape, and provides visual competitive analyses as well as key real estate metrics such as future openings, store count, market share, digital insights, and demographics. Click here to request a copy of the full report.
Walgreens Boots Alliance and VillageMD are expanding their partnership in Arizona with the opening of 18 Village Medical at Walgreens locations in Phoenix, with plans for four more by the end of the year. Click here to request a list of future store openings.
Hy-Vee has partnered with online retailer Pair Eyewear to bring in-store kiosks to select locations across the Company’s eight-state region. The first kiosk will be located inside the new store in Grimes, IA. Hy-Vee plans to open more than a dozen in-store Pair Eyewear kiosks over the next year.
Meanwhile, Hy-Vee has also partnered with Johnson Fitness & Wellness, a U.S. specialty wellness retailer, to open in-store fitness equipment showrooms in select locations across its store base. The first opened today inside the Hy-Vee store in Grimes, IA. Several additional locations are slated to open by the end of the year.
Hy-Vee recently opened a 93,000 square-foot new prototype store in Grimes, IA that includes both of these partnerships, as well as DSW shoes and accessories; Joe Fresh clothing; The W Nail Bar; a beauty department; and an expanded Candy Shoppe department. It also offers a new type of dining experience for customers, with a large, open food hall dining area for fast-casual dining; pub with full bar and outdoor patio that includes Mia Italian; HyChi; Nori Sushi; Chowbotics; Long Island Deli; and a Wahlburgers. Click here to request a list of future store openings.
We reported last month that Hudson’s Bay Company (HBC) partnered with WeWork on an initiative called SaksWorks, to convert parts of current and former Saks and Lord and Taylor department stores into co-working spaces. Recent reports indicate that several SaksWorks locations will be in suburbs, to be more convenient for those working remotely. The first SaksWorks location will open in the Tribeca neighborhood of New York City, and there will also be three more New York locations in Manhattan, Manhasset, Scarsdale, and one in Greenwich, CT. All five locations are due to open this month. The SaksWorks in Tribeca is replacing a former Saks Fifth Avenue Men’s store, while the SaksWorks in Midtown Manhattan will replace the children’s department on the 10th floor of Saks’ flagship location. The Manhasset, Scarsdale, and Greenwich locations will each replace former Lord and Taylor stores. HBC indicated that it plans to open more SaksWorks units across North America, including in Los Angeles, Seattle, Philadelphia, and Boston.
Dave and Buster’s (D&B) operations recovered in 2Q21, with all 142 stores open as of quarter-end. 2Q sales rose to $377.6 million, compared to just $50.8 million in the prior-year period when most stores were closed due to the pandemic. In comparison to pre-COVID 2Q19, sales were up 9.6%, and comps increased 3.6%, with the difference partly attributable to five new stores opened over the past year. In 2Q21, the Company generated $119.2 million in adjusted EBITDA at a 31.6% margin, versus a loss of $46 million in 2Q20 and positive $86 million at a 25% margin in 2Q19.
D&B’s improvements have continued into 3Q21, with two-year comps up 1.3% in the first five weeks of the quarter. Management expects full-quarter comp growth will stay around that level, and 3Q EBITDA will be significantly higher than the $39.8 million recorded in 3Q19. The Company upped its full-year capital expenditure guidance to $95 million - $100 million, compared to $65 million - $70 million previously. 49% of this spending will be for new stores, 14% for game refreshment, and 38% for maintenance. FY21 new store guidance was unchanged at four new openings and one relocation. Click here for a sample list of future openings.
Party City is looking to hire approximately 17,000 seasonal workers for the Halloween season. Positions are available nationwide in both Party City stores and Halloween City pop-up locations. The Company announced last month that it will open 80 to 100 seasonal Halloween stores this year, compared to 25 last year. In addition to the seasonal Halloween positions, Party City is hiring hundreds of temporary and full-time positions at its manufacturing and distribution centers in Chester, NY and Naperville, IL. Full-time positions will become available after Halloween. Click here to request a list of future store openings.
RH reported 2Q21 sales of $989 million, a 39% increase from 2Q20 and 40% increase from 2Q19. However, the Company noted that shipping delays and supply chain disruptions, particularly in Vietnam, led to increased inventory backlog. The Company’s adjusted gross margin increased 180 bps to 49.3% driven by occupancy leverage and favorable product mix. On the back of strong results, the Company raised its outlook for FY21, projecting sales growth of 31% to 33%, versus its prior outlook of 25% to 30% and adjusted operating margin in the range of 24.9% to 25.5%, versus its prior outlook of 23.5% to 24.3%. As of July 31, the Company operated 66 RH Galleries, 38 RH outlet stores and 14 Waterworks Showrooms. In May 2020, RH opened its 24th Design Gallery in Dallas, TX and has plans to open three more in FY21. The Company announced that as a result of accelerating demand, supply chain challenges, and uncertainty around the Delta variant, it will be delaying the launch of RH Contemporary and the opening of RH Guesthouse (NYC) until spring 2022. The Company ended 2Q21 with combined cash and revolver availability of $680.6 million; total debt declined to $587.2 million from $714.1 million at the end of the prior-year period. In July 2021, the Company amended and extended its revolving credit facility agreement, which provides $600 million in capacity and includes a $300 million FILO accordion feature. The facility matures on July 29, 2026. As of July 31, 2021, there were no borrowings outstanding and $20.1 million in LCs, leaving $389.1 million in revolver availability.
Alimentation Couche-Tard’s 1Q22 sales increased nearly 40% to $13.58 billion, primarily on higher fuel volume and prices. Total merchandise and service revenues rose 5.4% to $4.10 billion. Same-store merchandise revenues decreased 0.2% in the U.S. and 9.6% in Canada, and increased 5.9% in Europe and other regions. On a two-year basis, same store merchandise revenues increased at a compound annual growth rate of 3.7% in the U.S., 4.9% in Europe, and 4.2% in Canada. Same-store fuel volume increased 11.8% in the U.S., 6.3% in Europe and other regions, and 10.4% in Canada due to higher fuel demand compared to last year. During the quarter, the Company completed the sale of 48 sites in Oklahoma to Casey’s General Stores for $40.3 million in cash. Click here to request a list of future openings.
Fareway Stores’ estimated sales increased to about $1.60 billion for FY20, up mid-teens from the prior year due to gains associated with COVID-19. Profitability also likely got a boost due to improved product margins and operating efficiency. This pickup is a welcome change of pace for Fareway, primarily a value player, as sales had remained roughly flat for the prior few years; since then, the Company has been on the defensive, fending off Walmart and ALDI. Not historically a fast-growing business, unit growth is picking up, with Fareway looking to open eight stores over a two-year period. Building on the Company’s strength in meat, a couple of the new locations are a new smaller format, essentially butcher shops that carry a small assortment of grocery items. UCC searches do not indicate a secured borrowing relationship, suggesting financial flexibility. Click here to request a list of future store openings.
Having lapped the extraordinary top-line benefits provided by COVID-19 in 2020, Kroger posted a 0.6% ID sales decrease, excluding fuel, in 2Q21. However, on a two-year stacked basis, ID sales advanced 14%. Total sales (including fuel) advanced 3.9% to $31.68 billion but dropped 0.4% excluding fuel. As expected, digital sales have declined from pandemic-aided highs, falling 13% but were still up 114% on a two-year stack.
With regard to e-commerce, during 2Q21 Kroger introduced Kroger Delivery Savings Pass in Florida (where it has no brick-and-mortar presence), offering customers unlimited delivery for $79 annually from its new Ocado fulfillment center; the Company expanded online service to 2,239 pickup locations and delivery to 2,546 locations, covering 98% of Kroger households.
In other news, Kroger has rolled out the “Fresh Cart” as part of its logo (see above), reflecting its brand mantra of “feed the human spirit” through easy access to fresh food for all.
The Company also announced earlier today that it has partnered with Instacart to launch “Kroger Delivery Now,” offering groceries and other essentials in 30 minutes. The service purportedly offers more than 25,000 items and reaches as many as 50 million homes. Kroger CEO Rodney McMullen commented, “Last year, Kroger achieved more than $10 billion in e-commerce sales, and we’re committed to doubling both our digital sales and profitability rate by the end of 2023 and expect Kroger Delivery Now will help us reach that target.”
Homeland, a banner of employee owned HAC, Inc., recently opened a new 30,000 square-foot store in the underserved northeast Oklahoma City, OK area.
Del Taco Restaurants signed a deal with franchisees Bharat Patel and Steve Kissel of Virginia Taco, LLC to open 10 units in the state of Virginia, marking its entrance into a new state. Click here to request a list of future store openings.
The Chaudhary Petroleum Group (CPG), a 7-Eleven franchisee, opened a new concept store in Westlake, FL. The new convenience store features a Fusion Fresh restaurant, the Wine Cellar, a nitro cold brew and iced tea bar, and a car wash. Click here to request a list of future store openings.
GameStop’s management once again failed to provide details of its plans to transition to a digital format; management shunned questions during its conference call and declined to provide forward guidance. 2Q21 sales increased 26% to $1.20 billion, due to the launch of new video game consoles from Sony and Microsoft and continued sell-through of the Nintendo gaming product lines. The unfavorable shift in mix to less profitable hardware categories pressured gross margin; however, sales leveraging enabled a narrowing of EBITDA loss. Management said it permanently closed 480 stores during the last 12 months. Free cash flow was negative, but proceeds of $1.70 billion from the sale of common stock enabled liquidity to improve to $1.80 billion.