September 8, 2021
Walmart opened its first “virtual food court” in its Rochester, NY Supercenter, under a deal announced in March with Toronto-based Ghost Kitchens to launch omnichannel foodservice in Walmart stores across North America. Under the deal, Ghost Kitchens will open food courts in Walmart stores in Texas, California, Illinois, and Georgia over the coming months and into 2022. Shoppers select items from the menus of up to 25 national and regional restaurant and CPG food concepts, place orders via touchscreen kiosks, and receive order progress by text while they are shopping. The sites also serve as delivery hubs via third-party delivery services like DoorDash and Uber Eats. Brands available at the Rochester location include Cinnabon, Dickey’s Barbecue Pit, Frutta Bowls, Kraft Mac & Cheese, Nathan’s Famous, Red Bull, Saladworks, and The Cheesecake Factory Bakery. The ghost kitchens operate with two to three employees per location and hold licensing / distribution agreements with each of its partners, using the same ingredients, training, marketing, and operational support as the brands’ brick-and-mortar locations. A Ghost Kitchens representative reported plans for six Walmart installations in New York and more than 30 under construction. Walmart Canada’s first Ghost Kitchen opened in its St. Catharines, Ontario store earlier this year, and additional sites slated for Woodstock and Toronto, Ontario, and Lachenaie and Saint-Constant, Quebec.
In other news, Walmart will be hiring 20,000 new associates across more than 250 Walmart and Sam’s Club distribution centers, fulfillment centers and transportation offices. The Company also announced its third pay increase of the year for hourly employees, raising wages for more than 565,000 store employees in the front-end, food & consumables, and general merchandise work groups by at least $1.00 per hour. The increase is effective September 25.
Dick’s Sporting Goods will open the first Public Lands store on September 24 in the Pittsburgh, PA suburb of Cranberry Township. The 50,000 square-foot location occupies a former Field & Stream location, and it will focus on outdoor activities and land conservation, featuring a 30-foot rock wall, an in-store gear repair and rental department, and specialized shops for biking, camping, fishing, paddling, skiing, climbing, running, and hiking. Publix Lands also launched The Public Lands Fund, to support land conservation. Public Lands will donate 1% of gross sales to The Public Lands Fund.
On September 1, the Company opened an additional location of its off-price store concept Going, Going, Gone! in Royal Palm Beach, FL. The concept was introduced in May 2021 with openings in Monroeville, PA and Avon, IN, and then additional locations have opened in Olathe, KS and Orland Park, IL. Click here for a sample list of future openings and closings.
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Conn’s continues to recover from previous operational difficulties related to overexpansion and lax underwriting guidelines. 2Q22 revenue increased 14%, reflecting: (i) a 16.4% increase in same store sales, which followed a 13.2% decrease in the same period last year, and (ii) the opening of 14 new stores during the last 12 months. Comps increased 3.2% compared to 2Q20. Retail revenue increased 24%, however credit revenue fell 18%, due to a lower average outstanding balance on the customer receivable portfolio. E-commerce sales increased 210.9% but totaled only 4% of sales. Reported 2Q22 operating income totaled $54 million, up 31%, and operating margin increased 170 basis points. Liquidity of $372 million was adequate to fund capital requirements at the end of 2Q22. The Company opened three new stores during the quarter, all within the state of Florida. A total of nine new stores were opened during 1H22, bringing the total count to 155 in 15 states at July 31, 2021. During FY22, the Company plans to open between 11 and 13 new stores, including the nine which have already opened during 1H22. Click here for a sample list of future openings.
Signet Jewelers delivered strong 2Q22 results, with sales more than doubling to $1.79 billion and comps up 97.4%. Compared to pre-pandemic 2Q20, sales increased 31.1% and comps rose 38%. E-commerce sales were up 24.5%, and brick and mortar comps were up 130.8%. Operating income was $225.4 million, compared to a loss of $89.7 million last year. The Company currently operates 2,837 stores, including 2,486 in North America and 351 internationally. During 2Q22, 27 stores were opened in North America and 22 underperforming locations were closed, as was one international unit.
Brinker International completed the acquisition of 23 Chili’s Grill & Bar restaurants located in the Mid-Atlantic region from its 37-year franchisee, Chesapeake Foods. Financial terms of the deal were not revealed. The transaction was funded with availability under Brinker’s existing credit facility and is expected to be EPS and cash flow accretive in FY22.
Starbucks has closed its three standalone Princi bakeries in the U.S. In 2016, Starbucks formed a partnership with Milan, Italy-based Princi, featuring various Princi bakery items at Starbucks Reserve locations. IN 2018, Starbucks opened three standalone Princi locations in Seattle, Chicago and New York City. The last day of operations for the Seattle and Chicago locations was September 3. Starbucks’ Princi location in New York City closed as a result of the COVID-19 pandemic and has not reopened. The Princi brand, which has an existing presence in Italy and the U.K., will continue operating.
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Barnes and Noble Education reported 18% sales growth in 1Q22, to $240.8 million, largely driven by a recovery in the retail segment following the re-opening of most of its campus stores, which had been temporarily closed in the prior year period due to the pandemic. The re-openings and the return of students to college campuses drove a 32.6% increase in retail sales and a 49.8% increase in retail comps.
This included an almost tripling of digital textbook and interactive courseware sales through the Company's "First Day" offering, which is now available at 65 campus stores. The comp growth was stronger for general merchandise (118%) versus textbooks (21.9%), in part due to the Company's partnership with the sports merchandisers Fanatics and Lids. Wholesale revenues declined 44.6% in 1Q primarily as a result of the shift back to sales through campus stores. In the prior year period, the Company temporarily converted over 300 of its stores to a "Custom Store Solutions" model to fulfill remote learning student orders, but those stores have now returned to regular retail operations. Management also indicated there was a decline in wholesale textbook demand across the board. Overall, the Company generated an adjusted EBITDA loss of $24.5 million in 1Q22, though it did narrow in comparison to losses of $38 million in 1Q21 and $30.1 million in 4Q21. Management reiterated its belief that it will generate positive adjusted EBITDA for the full year, but does not expect to approach pre-COVID EBITDA levels until FY23 at the earliest, assuming on-campus learning, events, and sporting activities are able to resume.
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ALDI opened a third store in the New York borough of Brooklyn, a 12,000 square-foot unit near Brooklyn College, on September 2. With more than 2,000 stores in 37 states, the Company is slated to become the third-largest U.S. grocery retailer by store count by the end of 2022. ALDI also indicated plans to further expand its curbside grocery pickup service to 500 additional stores this year, bringing the total to more than 1,200 curbside locations. Click here to request a list of future store openings.
Hy-Vee will open a new store in Grimes, IA on September 14. The 93,000 square-foot location is the Company’s first entirely reimagined grocery store. It will have an accompanying Hy-Vee Fast & Fresh convenience store in the parking lot, offering fresh on-the-go meal offerings, a Market Grille Express, and select grocery staples.
In other news, the Company has partnered with online retailer Pair Eyewear to roll out in-store Pair Eyewear kiosks at select Hy-Vee stores across the Midwest. The kiosks will debut at the new Grimes, IA Hy-Vee, which officially opens on September 14. The Company plans to open more than a dozen Pair Eyewear kiosks in stores across its market area over the next year. Hy-Vee customers can try on popular frames in person and browse the full collection digitally, and have the glasses shipped free to their homes in five to seven business days. Click here to request a list of future store openings.
Today, Ollie’s Bargain Outlet will hold a hiring event for over 3,000 full-time, part-time, seasonal, and leadership positions across its more than 400 store locations and three distribution centers in York, PA; Commerce, GA; and Lancaster, TX. In May, the Company opened its 400th store in Springfield, VT (its first in the state) and is scheduled to open one unit each in Houston and Del Rio, TX on September 15. Click here for a sample list of future openings.
Duluth Holdings' 2Q21 sales increased 8.6%, to $149.1 million as retail store sales were up nearly 74%, primarily reflecting easy comparisons with last year when stores were temporarily closed due to COVID; sales were up 22.3% compared to 2Q19. The Company did not provide comparable store sales for the period. Direct-to-consumer sales (website and catalog) fell 15.2% from a year ago, when consumers were under stay at-home orders and online shopping surged; however, direct-to-consumer sales increased 41.5% compared to 2Q19. Gross margin expanded 180 bps on a higher mix of full price sales, as well as overall margin improvement particularly within the Women’s division. SG&A margin deteriorated 20 bps largely on salary increases and the addition of fixed costs from three stores opened in the back half of 2020. Ultimately, EBITDA was up 29%, to $21.6 million at quarter end. On the balance sheet side, the Company ended the quarter with $18.9 million in cash and full availability under its $150 million credit agreement.
Five Below reported 2Q21 sales jumped 52% to $646 million, lapping 2Q20 that saw most of the Company’s stores closed for most of the quarter. However, sales were still up 55% from 2Q19, when all stores were open. Comps were up 21% compared to 2Q19. The increased store count contributed to the sales numbers, up 14% from 2Q20 and 35% from 2Q19. The Company did not miss a beat in terms of new stores during the pandemic, opening 120 new stores and another 102 so far this year, with a goal of 170 - 175 for the year. The Company will spend about $300 million in capex, up from $200 million last year. Five Below is still not providing full-year guidance but did offer limited 3Q21 guidance. Sales are estimated to be between $550 million and $565 million, up 15% - 18% compared to 3Q20 and up 46% to 50% from 3Q19. Click here to request a sample list of openings.
Genesco’s top line momentum continued; 2Q21 sales for the period ended July 31 were up 42% and 14% over 2Q20 and 2Q19, respectively, to $555 million. Top line growth was driven by a 97% increase in online sales compared to 2Q19 and wholesale revenue growth, slightly offset by lower in-store sales. Gross margin expanded 50 bps over 2Q19, reflecting increased full price selling at Journeys. Overall, operating income rose to $12.9 million, compared to an operating loss of $22 million in the prior year period. The balance sheet remains healthy, given a $284 million net cash position. During the quarter, the Company opened three stores and closed eight, ending the quarter with 1,476 locations. As of August 31, the Company had reopened substantially all of its locations.
After emerging from Chapter 11 in November 2018, Mattress Firm may be considering an IPO. The Company’s parent, Steinhoff International, which owns 50.1% of the Company, noted it is evaluating options but no definitive decision has been made. Steinhoff acquired Mattress Firm in 2016 for $3.60 billion. The Company said Mattress Firm’s revenue for the first nine months of FY21 rose 29% to $3.09 billion. Click here for more information.
Bojangles announced the signing of a franchisee agreement with newly formed franchise group Cedartown Chicken, LLC. Under the agreement, terms of which were not disclosed, Cedartown has acquired seven existing Bojangles locations in western Georgia from Robinson Holdings, a former franchisee. In addition to acquiring the restaurants, Cedartown has signed an agreement with Bojangles to develop 11 new restaurants in the same area.
Little Caesars is looking to grow its footprint in the St. Louis, MO metro area by about 35 new units, with the goal of opening at least 10 by the end of 2024. Click here to request a list of future store openings.
Domino’s Pizza is continuing to expand globally following the opening of the first Domino’s in Lithuania, with a second location opening soon and additional units planned for the future.
Yum! Brands completed its acquisition of Australian technology solutions provider Dragontail Systems Limited for A$0.235 per share or a total of about A$93.5 million (US$69.1 million). Dragontail is now a wholly owned subsidiary, and Yum! Brands estimates that the all-cash acquisition will have an immaterial impact on its 2021 financial results. Dragontail’s end-to-end AI-based solution automates the kitchen flow combined with the process of dispatching drivers, which helps restaurants sequence and time each order while planning optimal delivery routes.
Del Taco Restaurants announced a new franchising partnership with Bangars Management that will add five new restaurants to the Fresno, CA market.
After entering Florida this summer with the opening its 375,000 square-foot customer fulfillment center in Groveland, just west of Orlando, Kroger reportedly plans to serve southwest Florida via a “pure-play e-commerce model” by the end of 2022. A Company representative commented, “I don’t have a specific timeline, but I do expect it will happen within the next year.” Kroger already operates “spoke” locations in Jacksonville and Tampa, where products from refrigerated tractor-trailers from the Groveland DC are loaded into refrigerated vans for final delivery directly to customers within a 90-minutes radius. To serve the Naples-Fort Myers area further south, Kroger plans to create a new spoke location, noting that the Fort Myers and Miami areas would be future spoke locations with warehouses designed to serve customers within a 90-minute radius from each location.
Alimentation Couche-Tard’s 1Q22 sales increased nearly 40% to $13.58 billion, boosted by positive comps. 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 road transportation 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. The transaction resulted in a gain of $13.6 million.
Giant Eagle is not renewing the lease of a store in Orange Township, OH. It will close October 2; the adjacent GetGo convenience store and gas station will remain open. The Company said the store, which opened in 2000 and stands at 116,000 square feet, no longer fits today’s needs. Giant Eagle has 21 other supermarkets in the Central Ohio area. This is the second that has closed in the past year.
Big Y Foods has launched mobile checkout, called myExpress Checkout Scan & Go, in about a quarter of its stores. The service enables Big Y shoppers to use their smartphones to scan products, bag items, and pay via the app, skipping the checkout line. They also can view specials and redeem myBigY rewards program offers and digital coupons. Currently, myExpress Checkout is offered at 19 of 85 Big Y stores; the Company soon plans to roll out the service to another 10 locations.
Going up against a tough comparison from 2Q20, Kirkland’s reported a 2Q21 sales decline of 8% with comps down 5.2% and online sales falling 12.6%. Comps were up 5.2% vs 2Q19. E-commerce was 28% of sales for the quarter with management’s eventual goal still of 50%. Gross margin improved 600 bps largely due to the continued growth of direct sourcing of products and reduced discounting. However, these were offset by the reintroduction of costs that were significantly reduced last year along with COVID-related store closures; compensation and benefit costs, advertising and travel and professional fees were all up over last year, pushing EBITDA margin down to 4.4% for the quarter from 5.4% last year. The Company now believes its optimal store count is 350, on the high end of its previous range of 300 – 350 stores; currently there are 369 in operation. Only one existing store is 4-wall EBITDA negative versus 60 to 70 stores previously. Five to 10 stores may be closed this year and another 40 – 50 may be relocated over the next three to five years. The Company also has about 1/3 of its leases coming due for renewal at the end of the year, and expects to lock in the higher performing stores at flat rent or at a slight discount with others at a sharper discount. The Company is facing difficult comparisons in August and September from last year, though October was very weak due to a lack of available inventory, and 4Q also presents opportunity. The Company expects a mid-single-digit same-store sales increase for 2H21 and annual EBITDA margin to be in the low-to-mid double-digit range in the next one to two years. With no debt on the balance sheet and about $110 million of liquidity, the Company approved a new $20 million stock repurchase plan, after purchasing $13.4 million during 2Q21 and another $6.5 million subsequent to quarter end, completing the previous authorization. Based on the 2H21 outlook and ramped up repurchase activity, the Company’s stock is up about 20% since releasing earnings.
The Buckle’s August sales increased 43% to $111.6 million, and comps rose 42.7%. For the 30-week period ended August 28, sales were up 72.4% and comps were up 72%. The Company ended the month with 442 retail stores in 42 states, down from 446 stores a year ago.
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