September 1, 2021
Last week, Amazon opened its first Fresh grocery store in Maryland, in Chevy Chase. The 33,170 square-foot store is the 18th Amazon Fresh to open across the country and follows two other openings in the D.C. area earlier this summer. Click here to request a list of Amazon Fresh future openings.
Alimentation Couche-Tard is acquiring 35 convenience and fuel retail sites from ARS Fresno LLC and certain affiliated companies. The locations currently operate under the Porter’s brand and are located predominately in Oregon and Western Washington. The deal, terms of which were not released, is expected to close by the end of September.
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For the second consecutive quarter (2Q21 ended July 30), Dollar General’s sales and comps declined, falling 0.6% and 4.7%, respectively; two-year stacked comps were up 14%. A decline in store traffic drove the comp decrease; however, average ticket increased. While consumables managed a modest 2% gain, seasonal, apparel, and home products sales decreased. Similar to other discounters, margins were stressed by supply chain costs and higher wages. EBITDA fell 14%, EBITDA margin dropped almost 200 bps, and operating profit was down 19%.
Dollar General completed the initial rollout of DG Fresh and also opened its first pOpshelf store-within-a store. During 1H21, the Company opened 530 net new stores and plans a total of 1,050 new stores, 1,750 remodels, and 100 relocations for FY21.
During a conference call with analysts, CEO Todd Vasos said that the Company plans to make its stores health care destinations by offering telemedicine, prescription delivery and pickup, and mail order prescription. The Company appointed its first chief medical officer, Albert Wu, in July to lead its entrance into the rural health care business. Click here for a sample list of future openings and closings.
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Designer Brands’ 2Q21 sales were up 67%, with comps up 84.9%, following a 42.7% comp decline in the prior year period due to the pandemic. Compared to the pre-COVID 2Q19 period, sales were down about 5%. The top line improvement was driven by continued strength in athleisure and kids, and a recovery in seasonal wear. 2Q21 gross margin improved 430 bps over 2Q19 due to increased full price selling. Overall, operating income totaled $61.4 million, compared to an operating loss of $136 million in the prior year period. As of July 31, 2021, the Company had liquidity of $410.5 million, consisting of $46.5 million in cash and $364 million in remaining revolver availability. During the quarter, the Company closed one store in the U.S. and two in Canada. As of July 31, the Company operated a total of 515 domestic locations and 143 stores in Canada. Looking forward, the Company plans to close 65 domestic locations over the next four years, including approximately 24 in 2021.
Express’ 2Q comps increased 3% versus 2Q19, as the Company’s new merchandise initiatives are gaining customer acceptance and driving demand. Due to the higher sales, Express generated positive net income for the first time since 3Q18. At quarter end, cash totaled $34 million, reflecting an 83% decline from July 2020 due to debt repayments. Looking ahead, the Company expects 2H21 sales to be above 2H19 levels, and to open 17 and close 27 stores in FY21.
Williams-Sonoma continued to thrive in 2Q21, with sales up 30.7% compared to 2Q20. Comps rose 29.8% year-over-year, and 40.3% on a two-year stacked basis. Despite consumers returning to brick-and-mortar stores, e-commerce sales grew 8% year-over-year and remained at 65% of total revenues. Gross margin rose 710 bps, driven by higher merchandise margins and occupancy leverage, as the Company pulled back on promotions and closed less profitable stores. During the quarter, Williams-Sonoma closed six stores and opened three, ending 2Q21 with 581 locations. In 4Q20, the Company announced plans to close 25% of its store fleet over the long-term, indicating more closures are on the horizon. Click here to request a list of future store openings.
bebe stores agreed to purchase eight additional Buddy’s Home Furnishings rent-to-own franchises from Franchise Group. The eight units, located in Kentucky and Indiana, complement bebe’s existing footprint of 47 Buddy’s locations in the Southeast U.S., acquired in November 2020. bebe was previously a mall-based apparel retailer but shuttered its entire store footprint in the summer of 2017 at a cost of $65 million. Bluestar Alliance acquired its intellectual property rights, international wholesale agreements, and e-commerce site. bebe now distributes branded products through licensees in 100 stores globally, as well as online, in addition to the furniture business. Click here to request more info.
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Destination XL Group’s 2Q21 revenue increased 81%, and comps grew 21.6% compared to 2Q19. The comp increase was driven by increases of 52.2% in direct sales and 13% in-store sales. Management noted that sales accelerated throughout the quarter, with substantial month-over-month increases. Wholesale contributed $0.9 million in sales compared to $5 million in 2Q20, last year included $4.1 million of sales of protective masks. Gross margin expanded 2,360 bps (740 bps compared to 2Q19) due to fewer markdowns and lower occupancy costs. As a result of the sales and gross margin increases and lower expenses, DXL generated $29.8 million of EBITDA compared to negative EBITDA of $4.3 million in 2Q20 and the $7.1 million of EBITDA generated in 2Q19. The Company ended the quarter with $71 million of liquidity, including $5.8 million of cash and $65.1 million of revolver availability. DXL generated $40.5 million of free cash flow in 1H21 compared to $11.1 million of cash burn in 1H20, primarily due to improved operating results and faster inventory turn. Debt decreased nearly 80% year-over-year to $16.8 million as the result of lower revolver borrowings.
During the year-to-date period, the Company closed 14 stores and currently has 119 locations with either a natural lease expiration or a kick-out option over the next two years. DXL stated it is looking to right-size its store portfolio through lease negotiations or lease-term expirations.
Due to unprecedented pandemic-fueled demand, Ollie’s Bargain Outlet faced a tough comparison from last year, when 2Q20 sales and comps soared 58% and 43%, respectively, a record quarter for the Company. Sales fell 21% despite an additional 43 stores, and comps were down 28%, as the effects of the stimulus wore off; sales were up 25% compared to 2Q19. Gross margin was essentially flat, as better merchandise margin was offset by supply chain deleveraging and transportation costs. Similar to other discounters, the Company is experiencing supply chain disruptions, as a major port in the Far East was closed due to COVID-19 and freighters are backed up in West Coast ports. SG&A margin deteriorated 590 bps on the deleveraging from the sales decrease. Company-provided EBITDA fell 46%, and EBITDA margin contracted 580 bps. Click here to request a list of future store openings.
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Bloomingdale’s, a subsidiary of Macy’s, opened its first location under the “Bloomies” banner, a 22,000 square-foot store in Fairfax, VA. The location offers a select assortment of contemporary and luxury brands, tech-enabled stylists, convenient services such as BOPIS and personalization/alteration, and an onsite restaurant. By comparison, a typical Bloomingdale’s store is 150,000 square feet – 200,000 square feet. The Company also operates two other smaller locations at 80,000 square feet, one in Manhattan, NY and the other in Glendale, CA, but this is its smallest location to date. Bloomingdale’s operates 33 full-line stores and 21 outlet locations. Click here to request a list of future store openings and closings.
Schnuck Markets recently debuted a smaller-format design at a new store in Jasper, IN called Shnucks Fresh. The concept focuses on fresh departments, including produce, meat, seafood and bakery. In partnership with Instacart, Schnucks Fresh offers customers a curbside pickup option.
In other news, Schnuck Markets will be bringing Simbe Robotics’ Tally robots to all 111 of its stores. The multi-year rollout will allow the grocer to utilize AI-powered inventory management technology at scale. Schnucks first piloted Tally in July 2017 and expanded to additional stores in 2018 and 2020.
CKE Restaurants reached a master franchise agreement with Nevada Russia Franchising Company LLC (NRFC) to further expand Carl’s Jr.’s presence in the Russian Federation. CKE and NRFC are aiming to develop 300-plus restaurants throughout Russia during the initial term of their agreement.
CVS Health opened the first MinuteClinic locations in Washington state. The new clinics can be found inside CVS HealthHUB, the Company’s new store format. Click here to request a list of future store openings.
Big Lots’ 2Q21 sales fell 11.4% to $1.46 billion, driven by a comp decline of 13.2%, as the Company lapped 31.3% comp growth last year. Net new stores and relocations contributed approximately 180 basis points of sales growth. On a two-year basis, comparable sales increased 14%. President and CEO Bruce Thorn said that comp growth was seen across all merchandise categories other than food, with strong double-digit two-year growth in furniture, soft home, hard home, apparel, and electronics. E-commerce demand rose 10% compared to 2Q20, representing over 400% growth over 2Q19. Demand was driven by strong sell-through in the lawn & garden assortment. Big Lots added eight net new stores, bringing its count to 1,422 at the end of July.
The Company’s stock fell 5% on Friday after Big Lots warned its 2021 comparable sales and margins will be lower than those of the previous year due to supply chain disruptions and higher freight costs, and are expected to decline in the low-single-digit range on an annual basis. Click here to request a list of future store openings and closings.
Southeastern Grocers recently opened its first standalone Winn-Dixie liquor store in Miramar, FL located in the Miramar Shopping Center. Click here to request a sample list of openings and closings.
Pizza Inn, a portfolio company of RAVE Restaurant Group, announced August 25 it has executed an international development agreement with Ziad Suwan and Ibrahim Sawan of Z.I.S. General Trading Company, who will open three new locations in Palestine. The first store is projected to open in the city of Ramallah/Nablus in March 2022. The three-year development agreement includes an option to open additional stores in new countries.
Albertsons and Instacart are expanding their e-commerce partnership with a pilot offering a pickup option in six cities in the Southwest. The pilot, which began last week, involves 40 stores across five of Albertsons’ banners located in Las Vegas, NV; Phoenix, AZ; and Denver, Dallas, Houston, and Austin, TX. Instacart’s service will be offered alongside Albertsons’ in-house Drive Up & Go offering. Click here to request a list of future store openings.
Dick’s Sporting Goods reported record 2Q results, and with momentum remaining strong into 2H21, management again raised its FY21 outlook, with comps now expected to grow 18% - 20%. Original guidance assumed comps would decline 2% to up 2%. 2Q comps rose 19.2%, on top of a 20.7% increase in the same period last year, with total sales up 21% from 2Q20, or 45% from 2Q19. Margins were also stronger, with Company-reported operating income up nearly 70%. As management expected, e-commerce sales fell 28% compared to 2Q20 (which included a period of temporary store closures) but increased 111% compared to 2Q19.
E-commerce penetration has grown from 12% of sales in 2Q19 to 18% in 2Q21; e-commerce penetration was approximately 30% in 2Q20. The Company ended 2Q21 in a $1.80 billion net cash position, with $2.24 billion of cash, and no outstanding borrowings under its $1.86 billion revolving credit facility. Inventory increased 7% at the end of 2Q21, compared to the end of 2Q20. However, management said it continues to chase inventory to meet demand, noting lower inventory levels across the store, including in golf, apparel and footwear. The Company expects to open six new DICK’S Sporting Goods stores and eight specialty concept stores in FY21, including the conversion of two former Field & Stream stores into Public Lands stores. It also expects to relocate 11 DICK’S Sporting Goods stores in FY21. Click here to request a list of future store openings and closings.
Ace Hardware opened 110 new stores so far this year, and is planning to open 60 additional locations by year-end. The Company operates more than 5,500 hardware stores nationwide and in 70 countries. Over the past five years, Ace has opened more than 900 stores. Click here to request a list of future store openings.
Chico’s delivered meaningful improvements during the quarter, both to the top and bottom line. Each banner grew sales in the range of 48% to 58% from the prior-year period. On a two-year stack, comps at Soma (27% of 2Q21 sales) rose 38.1%, while Chico’s (47% of 2Q21 sales) and White House Black Market (26% of 2Q21 sales) comps fell 14.3% and 5.4%, respectively. 2Q21 gross margin improved to 38.4%, due to full-price selling and reduced markdowns; this was the highest level in 13 consecutive quarters. From the higher sales and gross margin, quarterly operating margin was 7.5%; 1Q18 was the last time that the Company had a high-single-digit operating margin. To-date, the Company has closed 18 locations and officially opened 47 Soma shop-in-shops inside Chico’s stores. The Company also secured additional rent reductions and approximately $15 million in savings in 1H21, bringing the total to $80 million from FY20 to 1H21.
Shoe Carnival’s top-line momentum continued in the 2Q period ended July 31, with sales up 10.5% and comps up 11.4%. Gross margin expanded 1,340 bps as a result of decreased promotional activity, slightly offset by a 20 bps increase in SG&A margin due to higher store-level wages. Overall, the Company reported record 2Q operating income of $59.7 million, up from $14.4 million in the prior-year period. In addition to growing sales and increased profitability, the balance sheet remained debt-free at quarter-end. As of July 31, the Company had $164 million in cash, and full availability under its $100 million revolver. During 2Q, Shoe Carnival opened one new store, with 378 locations in operation as of July 31. For the remainder of FY21, the Company expects to close three stores. Looking forward, momentum continued through the first three weeks of August, with comps for the period up 23% compared to August 2019. The Company expects 3Q21 sales of $307 million to $315 million, with diluted net income per share of $1.10 to $1.15. For FY21, management expects sales of $1.21 billion to $1.23 billion, with diluted net income per share of $4.35 to $4.50.
Build-A-Bear’s 2Q21 revenues more than doubled to $94.7 million, driven by a strong merchandise mix, improved digital marketing, the benefit of government stimulus, and pent-up consumer demand. E-commerce sales decreased 27.8%, and commercial and international franchise revenues increased $2.4 million, to $3.4 million for the quarter. Gross margin expanded 3,450 bps, reflecting leverage of fixed occupancy expense and expanded merchandise margin. SG&A margin improved 1,010 bps. Ultimately, EBITDA improved to $12.5 million for the quarter, from an EBITDA loss of $9 million in 2Q20. The Company noted that its third-party retail model with Carnival Cruise Lines, Great Wolf Lodge Resorts, and Landry’s and Beaches Family Resorts were mostly reopened. However, its international franchise locations continued to be negatively impacted by COVID and experienced closures or operated under restrictions for a portion of the quarter. Looking ahead, the Company said it expects to exceed its previous guidance for the year; FY21 revenue is expected in the range of $375 to $385 million, exceeding FY19 revenue of $338.5 million. The Company noted that its 3Q21 sales trends remain strong and expects to report revenue growth over both 3Q19 and 3Q20 periods.
The Company now expects FY21 EBITDA of $45 million to $50 million, up from previous expectations of $28 million to $32 million. Capex is expected to be approximately $10 million for the year.
During 4Q21, Regis completed its fully franchised model two years after the initial announcement; during that time, franchise salon penetration increased to 95% of total salons in FY21 from 56% of total salons in FY19. 4Q comps rose 4.1% versus 4Q20, due to favorable year-over-year comparisons. Franchise-only sales (74% of 4Q21 sales) increased 65% to $74 million, driven by revenue growth in product, royalty and fees, and rental income.
7-Eleven opened its first store in Cambodia on August 30. CP ALL Cambodia Co., Ltd., which holds a master franchise agreement with 7-Eleven, has sole authorization to develop and operate stores in Cambodia. Click here to request a list of future U.S. store openings.
Krispy Kreme announced its entry into Egypt with its first shop in Cairo. The new unit was opened by franchise partner Americana Group, which currently operates more than 200 Krispy Kreme shops in five countries, including the United Arab Emirates, Saudi Arabia, and Kuwait.
Walmart plans to build a one million square-foot distribution center in Troutman, NC. The DC will expand Walmart’s supply chain network to help grow online sales. Click here to request a list of future store openings.
Hibbett’s 2Q22 sales fell 5% compared 2Q21 but rose 66% compared to 2Q20, while comparable store sales decreased 6.4% compared to 2Q21 but increased 72.8% versus 2Q20. The drop in 2Q22 sales was partially offset by the opening of three new stores during the last 12 months. Operating income increased 9.3%, and operating margin improved 200 basis points. FY22 comparable sales are expected to be in the positive mid-teens, up from previous guidance of positive high-single digits to positive low-double digits, while gross margin is expected to be lower in 2H22 than in 2H21. As of July 31, inventory increased 19%, the Company was in a net cash position, and there was full availability under the $100 million secured credit facility. During 2Q22, Hibbett opened 11 new stores and closed two underperforming units, bringing the store base to 1,080 in 35 states. Management plans to invest $70 million on “attractive organic growth opportunities” and on various infrastructure projects during FY22. Click here to request a list of future store openings.
Camping World announced plans to expand its national footprint by opening 20 or more new locations in new markets over the next three calendar years, in addition to strategic and opportunistic acquisitions. The Company said it currently owns and operates over 185 SuperCenters nationwide. Click here to request a list of future store openings.
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