September 7, 2022
Bed Bath & Beyond secured commitments for new financing. The Company amended its $1 billion asset-based revolving credit facility, increasing the commitments by $130 million to $1.13 billion and providing for a $375 million FILO term loan facility, which was used to reduce borrowings under the ABL revolver. The ABL still matures on August 9, 2026, while the FILO facility matures on August 31, 2027. Together, these loans are expected to increase liquidity by about $500 million, bringing pro-forma 2Q22 liquidity up to around $1 billion.
Additionally, after closing more than 200 stores during the past two-plus years, the Company is again “right-sizing” its store base and has commenced the closure of approximately 150 lower-producing Bed Bath & Beyond banner stores; specific locations and other details have yet to be released. Capital expenditure plans for the year were reduced to approximately $250 million versus the Company’s original plans of $400 million, with future remodels and new store openings remaining paused for FY22. The Company began implementing additional SG&A reductions to right-size its cost structure, reduce its commitment to Owned Brands, and defer longer-term strategic initiatives, including laying off approximately 20% of its corporate and supply chain staff. The Company expects these actions will reduce SG&A by approximately $250 million in FY22.
Bed Bath & Beyond has also decided to not sell the buybuy BABY business. The brand is believed to be included in the collateral package for the new debt.
Finally, Gustavo Arnal, CFO of Bed Bath & Beyond since May 2020, has died after falling from a NYC apartment building on Friday. This comes two days after the Company announced the aforementioned changes, including closures and layoffs. Effective yesterday, Laura Crossen, the Company’s SVP of finance and chief accounting officer, was appointed interim CFO.
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Previously we reported that Kohl’s management was considering sale leaseback transactions of its owned real estate, which includes 410 stores, 13 distribution and e-commerce fulfillment centers and its headquarters in Menomonee Falls, WI. Reports indicate the Company is considering up to a $2 billion sale leaseback transaction with Oak Street Real Estate Capital LLC. Click here for more info.
Amazon Fresh reportedly plans to open a new grocery store in Willlow Grove, PA in a former Barnes & Noble location. The Company opened its first Philadelphia region Amazon Fresh in August 2021, in a 35,000 square-foot space in Warrington and has since been in expansion mode there. Amazon is planning to open another store in Bucks County at a former Kmart in Bensalem, in addition to a location in Langhorne. Construction also continues on a planned site in Philadelphia’s Northern Liberties neighborhood. Click here to request a sample list of future Amazon Fresh store openings.
On September 1, Meijer introduced a new brick-and-mortar store concept called Meijer Grocery, which will provide more convenience and easier access to fresh foods. The first two Meijer Grocery stores will open in early 2023 in southeast Michigan’s Orion and Macomb townships. The new concept is the Company’s latest since introducing the neighborhood market small-format concept in August 2018, with the opening of Bridge Street Market on Grand Rapids’ west side. Meijer Grocery stores will range from 75,000 square feet to 90,000 square feet and will include a condensed and quick-to-navigate footprint. The Company’s traditional supercenter format ranges between 155,000 and 200,000+ square feet. Meijer operates 262 supercenters and grocery stores throughout Michigan, Ohio, Indiana, Illinois, Kentucky and Wisconsin. Click here to request a sample list of future store openings.
During a conversation with our analysts, management at GoDigital Media Group (GDMG), the new parent of Bob’s Stores and Eastern Mountain Sports, made the following comments:
- Bob’s and EMS are currently part of a single holding company controlled by GDMG, operating under their own individual brand names.
- Synergies are expected between Bob’s and EMS; details may be forthcoming in early 2023. Management plans to capitalize on the existing and relatively loyal customer base.
- None of the 43 acquired stores (22 Bob’s and 21 EMS) were closed as part of the acquisition.
- Management is considering: (i) opportunistic purchases of stores closed by other retailers, or (ii) occupying market areas which have been vacated by other retailers, for example Olympia Sports, which is closing its last 35 stores (market area between Maine and Virginia).
- Two new EMS stores and one Bob’s unit are planned to open in the core New England area, although timing and details are not available.
- GDMG acquired the rights to the “Sport Chalet” name, and it plans to “relaunch” it. No details were provided, although an online presence and some stores are being contemplated. We note that Sport Chalet operated 47 sporting apparel and footwear stores in Southern and Northern California, Arizona, Nevada, and Utah until 2016, when it terminated business operations.
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Last month Conn’s opened five in-store shops in Belk locations under the name “Conn’s x Belk.” The in-store shops are located within Belk stores in Knoxville, TN, Raleigh, NC, Charlotte, NC, Ridgeland, MS, and Charleston, SC. The Conn’s x Belk locations feature a name brand assortment of all major Conn’s product categories including furniture, home electronics, and appliances; the in-store format ranges from 10,000 to 25,000 square feet, depending on the Belk location. They also offer white glove next-day delivery and in-house repair service. The companies indicated that additional in-store shops are coming soon. Belk operates 290 locations in 16 Southeastern states, and Conn’s HomePlus operates 184 locations in 15 states, with nearly half of its stores in Texas. In the states where Conn’s x Belk in-store shops are opening, Conn’s operates just a handful of stores (TN – 8, NC – 13, MS – 2, and SC – 5). The geographic overlap of Conn’s and Belk provides an opportunity for Belk to gain access to Conn’s distribution capabilities in existing markets and brings in new customers. As shown in the adjacent Store Overlap map, 31 Conn’s stores are within five miles of a Belk, or roughly 16% of its store base. Click here to request a sample list of future store openings.
Express reported 2Q22 sales of $464.9 million, up 1.6% from 2Q21, with comps up a worse-than-expected 1% (comps up 4% vs. 2019). Comparable retail sales were flat, as a 6% increase in retail stores was offset by a 6% decline in e-commerce demand, while comparable outlet store sales increased 2%.
CEO Tim Baxter announced on an analyst call last week the Company will open six Express Edit stores in high-visibility locations within large cities during the next 90 days — in SoHo and the Flatiron District in New York City, on Newbury Street in Boston, in Brickell and South Beach in Miami, and near Rittenhouse Square in Philadelphia. The concept offers a pared-down product assortment and reduced square footage in off-mall locations. By the start of 2023, Express plans to have 11 total Edit stores. Last summer, Baxter commented, “Testing these smaller formats in the city center will allow us to read the impact on existing stores, e-commerce sales to these zip codes, and new and existing customer activity overall.” Baxter also noted that Express is running “an important pilot program” in roughly 25 stores, where the Company is “testing and learning [its] way into a reimagined customer experience.” Without providing details, he said the stores with the pilot were outperforming the rest of the fleet, with higher sales, increased customer engagement, and improvement to loyalty program sign-ups. Express plans to expand the pilot to a total of 70 stores during September.
Sportsman’s Warehouse’s 2Q22 sales decreased 3% to $351 million, including a 9.4% drop in comps. The net sales decline was primarily due to lower demand across most product categories, due to inflationary pressure on consumers and concerns over a recession. This decrease was partially offset by the opening of 12 new stores since July 31, 2021.
In a note to customers from Sam’s Club’s President and CEO Kathryn McLay, the Company said it will be raising its membership fees this fall for the first time in nearly a decade. Fees will increase from $45 to $50 for a basic membership, while the cost of a “Plus” membership will increase from $100 to $110. Customers who renew will receive store credit equivalent to the amount of the increase. The increase in membership fees brings Sam’s Club significantly closer to rival Costco’s membership costs of $60 per year for a basic plan and $120 for a premium membership. Costco indicated in May it had no immediate plans to raise its fees. BJ’s Wholesale Club charges $55 for a basic membership.
Big Lots is launching a Disney, Pixar and Star Wars pop-up shop in each of its more than 1,440 stores in the U.S. and on its website. The shops debuted on September 2 and will remain open through October 14. The assortment of licensed products will include toys, décor, apparel and accessories. Click here to request a sample list of future store openings.
Von Maur plans to open a two-level, 118,000 square-foot store at in Pittsburgh, PA. Scheduled to open in fall 2024, the store will be the Company’s first in Pennsylvania and will be located at a former Sears site. Von Maur is also planning to open its second location in Wisconsin, in Madison, next month. Earlier this year, the Company opened its fourth Michigan location in Rochester Hills. Von Maur currently operates 36 stores in 15 states.
Boosted by significantly higher retail fuel prices, Alimentation Couche-Tard’s 1Q23 revenue rose more than 37%. Total merchandise and service revenues were $4.07 billion, an increase of just 0.1%; same-store merchandise revenues increased 3.5% in the U.S. The Company indicated that comp fuel volume decreased 4% in the U.S., while gross profit of 49 cents per gallon was up 12.25 cents (33.3%). During 1Q23, the Company completed the construction of 23 stores and the relocation or reconstruction of seven stores, for a total of 30 net new units in YTD23. As of July 17, another 54 stores were under construction and are expected to open in the coming quarters.
Lululemon’s 2Q22 sales rose 28.8% over 2Q21, with strong performance across all products, channels and regions, despite strained global supply chains and inflationary pressures. Revenue was up 28% in North America, and 35% internationally. Comparable store sales rose 16%. In 2Q22, the Company opened 21 net new locations, bringing the total to 600 stores. Click here to request a sample list of future openings and closings.
Giant Eagle is reportedly planning to open a 49,600 square-foot Market District in Westfield, IN. The Company entered the Indianapolis market in 2015, when it opened a Market District store in Carmel. Giant Eagle also has several GetGo Café + Market stores in central Indiana; the locations were rebranded after the Company acquired Ricker’s convenience store chain in 2018.
Designer Brands’ 2Q sales grew 5.1% to $859.3 million, as a 6.2% comparable store sales increase was partially offset by the closure of nine net stores over the past year, representing a 1.7% reduction to 506 domestic locations at quarter-end. In 2Q, the Company closed six stores, including four in the U.S. and two in Canada, and did not open any new stores. U.S. retail sales (84% of total sales) were up 1.5%, while Canada retail sales (9% of total sales) increased 35.9%; comps were up 2.7% and 47.3% in those regions, respectively. The U.S. slowdown mainly reflected weaker consumer spending in a high retail inflation environment. The remaining 8% of sales came from the Brand Portfolio segment, which was up 31.3% year-over-year.
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Panera is testing OpenCity’s artificial intelligence voice technology in drive-thru lanes at two locations in the Rochester, NY region. According to the Company, it is looking to drive 5% – 10% improvement in speed of service and make incremental improvements in order accuracy. Panera has been placing more emphasis on drive-thru and loyalty over the past two years, as its off-premise sales remain strong. Click here to request a sample list of future openings.
The Buckle’s August sales increased 5.8% to $118 million, and comps were up 4.6%. For the year-to-date period, sales advanced 3.3% to $729.1 million, and comps rose 2.9%. The Company currently operates 442 retail stores in 42 states, unchanged from last year.
Williams-Sonoma announced the launch of Halloween season across its portfolio of brands. The Company moved up the season to accommodate the early increase in demand for seasonal items. In addition, the Williams Sonoma brand is selling its largest Halloween collection to date, as 25% more product is available compared to previous years.
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