September 22, 2021
AutoZone’s 4Q21 sales increased 8.1% to $4.91 billion, and U.S. comps were up 4.3%. The Company’s retail business ended the quarter with virtually flat same store sales on top of last year’s growth of over 20%. Its commercial business experienced sales growth of 21.2%. Gross margin decreased 82 bps to 52.3%, driven by initiatives to accelerate growth in its commercial business. Expenses also grew due to higher payroll to support sales and customer service initiatives. EBIT rose 2.6% to $1.04 billion. During the quarter, the Company opened 76 new stores in the U.S., 29 in Mexico, and five in Brazil, ending the year with 6,051 U.S. stores, 664 stores in Mexico, and 52 units in Brazil. Click here for a sample list of future openings.
This whitepaper discusses the pandemic-induced and lingering supply chain constraints, and their impacts on inventory levels, costs, retail pricing and profits, and overall inflation. Click here to request a copy of the full report.
Sears’ last department store in its home state of Illinois, located in Simon Property Group’s Woodfield Mall, will close on November 14. Transformco (New Sears) also manages the real estate for the store and indicated plans to revive the space with a new tenant. Sears continues to operate 34 department stores nationwide. Click here to request a list of future closings.
Primark opened a 34,200 square-foot store in Philadelphia, PA on September 16. This is the Company’s 13th U.S. location and third in Pennsylvania. Primark has no e-commerce site, and thus relies entirely on brick-and-mortar sales; the Company maintains that the high costs of selling online would mean it could no longer offer its signature low prices. Primark operates more than 395 stores in 14 countries; it made its U.S. debut in 2015 in Boston, MA. Earlier this year, it opened its first store in the Midwest, in downtown Chicago, IL. Looking ahead, Primark has signed leases in Tysons, VA and Valley Stream, NY.
Texas Roadhouse signed its first franchise agreement to develop 10 units in east and central Texas and Tulsa, OK under the fast-casual Jaggers brand, with Dallas, TX-based The Saxton Group, a McAlister’s Deli franchisee. Jaggers currently has three Company-owned restaurants in Greenwood and Noblesville, IN, and Louisville, KY; a fourth is scheduled to open this fall in the Indianapolis metro area. The first Jaggers under the Texas Roadhouse agreement will open in 2022, with the location still being determined but likely “in a legacy market in Texas.” Jaggers’ restaurants average 3,000 square feet, with drive-thru access, and its menu features burgers, chicken tenders, salads and shakes. The Saxton Group reportedly has four McAlister’s Delis under construction and is looking to develop Jaggers alongside its current holdings. Click here to request a list of future openings and closings.
Southeastern Grocers (SEG) is opening two new stores under its Fresco y Más Latin-focused banner – one each in Tampa and Deltona, FL. The latter store is the Company’s first north of Orlando. The two new units bring the total to 29 locations, including the most recent Fresco y Más opened last October in Lehigh Acres, FL. The stores feature full-service Latin butcher shops (carnicerías) and bakeries (panaderías). SEG cited the U.S. Census Bureau’s recent findings that approximately 26% of Florida’s population is Hispanic and that this segment is growing at a rate significantly above the broader population.
Giant Eagle will close its store in Lewis Center, OH on October 2. The Company said the building’s size (94,000 square feet) made it difficult to operate given the way customers now shop. The Company’s nearby GetGo convenience store and gas station will remain open. Giant Eagle has closed four central Ohio stores since 2017; it currently operates 21 stores in the area.
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Online intimates retailer Knix plans to open three stores in California, in Santa Monica, San Diego, and San Francisco. The Santa Monica store is 2,500 square feet with an additional 2,500 square feet of outdoor space for community events. The San Diego and San Francisco stores will be about 3,000 square feet and emphasize experiential components. In June 2021, Knix closed on a $50 million Series B funding round, led by private equity firm TZP Group. Knix indicated that the funding would support product innovation and retail expansion in North America. Currently, Knix has two stores, in Toronto and Vancouver, Canada.
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On Sunday, Amazon opened its newest fulfillment center in Fargo, ND, its first in the state. The more than one million square-foot facility services customers in North Dakota, South Dakota and Minnesota. The facility is non-sortable; associates pick, pack, and ship larger-sized items like patio furniture, outdoor equipment, or rugs. The Company’s first investment in the state was a delivery station in West Fargo, which is still operational.
The Teamsters Union has launched campaigns to organize employees in at least nine Canadian Amazon facilities. The union took the first step last week at a facility in Alberta and is reportedly widening its efforts across the Great White North, where the Company employs about 25,000 workers and plans to add 15,000 more.
Separately, Amazon will create 1,500 direct and indirect jobs in the United Arab Emirates this year, as it expands its presence in that country. The Company has plans to open four new delivery stations in the UAE.
Back stateside, a new report from Pitney Bowes found that Amazon Logistics now handles more packages than FedEx and nearly as many as UPS. The shipping division delivered 4.2 billion parcels in 2020, compared with 1.9 billion the prior year, representing 21% of the total delivery market, compared with 16% for FedEx, 24% for UPS, and 38% for USPS. Click here for a sample list of future openings.
Bubble tea retailer Gong cha, which operates nearly 1,600 international locations, will open its first corporate-owned U.S. store in early 2022 inside an H Mart in Naperville, IL. At least four additional corporate-owned units are planned for downtown Chicago and the surrounding suburban areas, with a long-term goal of more than 50 new locations in the market. Gong cha currently has over 130 franchised stores across California, Massachusetts, New York, New Jersey and Texas.
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Foot Locker completed its acquisition of Eurostar, a U.S.-based athletic footwear and apparel retailer that primarily operates WSS stores on the West Coast, for $750 million in cash. WSS will maintain its name, operating as a new brand within Foot Locker’s portfolio. In connection, Foot Locker announced the appointment of Anthony Aversa to COO of WSS. Foot Locker expects WSS to generate low double-digit sales growth annually and low double-digits to mid-teens EBITDA margins over the next five years and be accretive to EPS in FY21. Click here to request a complementary list of store locations.
According to reports, Guitar Center has filed confidential registration papers with the SEC for an initial public offering. The filing reportedly follows sales and earnings improvements since emerging from bankruptcy. Guitar Center Inc. filed for Chapter 11 on November 21, 2020, and emerged quickly on December 17, 2020. Prior to filing, performance had been stable with FY19 sales of $2.30 billion, but the Company had a heavily leveraged balance sheet.
During the bankruptcy process, total debt was reduced by over $700 million, or about 54%. Ares, the prepetition equity sponsor, along with The Carlyle Group and Brigade Capital Management contributed $165 million in cash in exchange for 100% of the new Company’s common equity. Projections in the Plan of Reorganization anticipated $2.29 billion in sales and EBITDA margin of 6.1% for FY21.
At the time of bankruptcy filing, the Company operated 296 Guitar Center stores and 229 Music & Arts locations; during the bankruptcy process, it closed just four Guitar Center stores and nine Music & Arts locations. While the Company has not provided an update on recent performance, its $350 million in 8.5% Senior Secured Notes, due January 2026 (issued upon Emergence) were trading at $107.75 as of September 17, suggesting a positive outlook since emerging. Click here to request more information.
Noodles & Co. debuted its second ghost kitchen test in San Jose, CA, following its first test in Chicago, IL in May. The Company said testing a second ghost kitchen model provides the Company with the flexibility to expand access to the brand in new and emerging markets through its digital channels. Noodles & Co. indicated that digital sales grew 15% in 2Q21, accounting for 56% of total sales.
WOWorks debuted its first location in a Walmart Grocery store in Rochester, NY. The Ghost Kitchen location includes fast-casual entrée salad franchise Saladworks and superfoods café Frutta Bowls, alongside other brands. The opening comes after WOWorks signed a deal for 90 non-traditional retail presences with Ghost Kitchen Brands earlier this year. In addition to ordering in person at the Walmart locations, Saladworks and Frutta Bowls customers will be able to order online through the brands’ websites, by using the Ghost Kitchen website or third party delivery platforms.
Mattress Firm has filed confidential registration papers with the SEC for an initial public offering. The number of shares of common stock and the price range for such offerings have not yet been determined. Any such offering would take place after the SEC completes its review process, and be subject to market and other conditions.
Toys R Us Canada management stated that Putman Investments’ acquisition of Toys R Us Canada is expected to close at the end of the month; it will operate as a subsidiary of Putnam. All 81 stores (which average 40,000 square feet) are currently operating in Canada following last year’s lockdown due to COVID. Most of the stores are in Ontario. Management plans to open up to 30 stores in the future, mostly in Canada, but perhaps in other countries (not including the U.S., as it does not own the brand in the U.S.). The Company has access to a revolving credit facility, but management declined to provide details.
Ahold Delhaize USA opened a new, one million square-foot distribution center in Manchester, CT, which serves more than 450 Stop & Shop stores and e-commerce centers. The Company’s distribution and logistics operations, ADUSA Supply Chain, indicated the Manchester DC will receive, select and transport nearly 90 million cases of nonperishable grocery products each year. The facility, which will employ more than 500 people when fully operational, also leverages end-to-end forecasting and replenishment technology. The opening comes two months after Ahold Delhaize began operations at its new DC in Mauldin, SC, acquired from C&S Wholesale in May as part of its June 2020 acquisition of 62 BI-LO and Harveys stores from Southeastern Grocers. Click here for a sample list of future openings.
Rite Aid released additional details about its new “enterprise headquarters” in Philadelphia, which will host in-person collaboration and company gatherings rather than serve as full-time office space. Though no decisions or timelines have been finalized, the Company will likely sell a portion or all current Central Pennsylvania headquarters offices; in a public statement, VP of Communications Jeff Olson said Rite Aid will continue to maintain a collaboration hub in the Camp Hill and Harrisburg areas. The new enterprise headquarters will be located in Philadelphia’s Navy Yard district; the Company has leased about 23,000 square feet of the 92,000 square-foot building and is currently working on the buildout.
Hy-Vee is looking to hire 2,000 full and part-time pharmacy technicians to support its more than 275 Hy-Vee Pharmacy locations across its eight-state region. Click here for a sample list of future openings.
H.E. Butt’s top-line growth in FY20 reflects the benefits of COVID-19 on the grocery sector due to stay-at-home mandates as well as the Company’s recent store growth. H-E-B opened six stores in 2020 (following six in 2019), with four more slated to open this month. The Company also launched Express Delivery, a two-hour delivery service from its namesake, Central Market, and Joe V’s Smart Shop banners. Like other grocery retailers in the post-Amazon/Whole Foods world, H-E-B has been focusing on technology and omnichannel.
In other news, H.E. Butt has partnered with locally based James Avery Artisan Jewelry to open a jewelry outlet inside a League City, TX store. The 1,650 square-foot outlet offers jewelry as well as services like cleaning and charm soldering. H.E. Butt plans to open additional in-store James Avery locations amid elevated jewelry sales during the pandemic. Click here for a sample list of future openings.
Ball’s Price Chopper opened a new store in Leavenworth, KS on September 15. Price Chopper’s 52 Kansas City stores are locally owned by the Ball, Cosentino, McKeever and Queen families.
Grocery Outlet recently opened a new store in West Covina, CA. Click here to request a list of future store openings and closings.