October 6, 2021
On October 4, Raley’s Holdings Company signed a definitive agreement to acquire Bashas’. As a fully formed operating company within Raley’s, Bashas’ will retain its corporate headquarters, stores and distribution center in Arizona, and will continue to serve customers throughout Arizona and New Mexico as well as its Tribal Nation partners. The deal, financial terms of which were not released, is expected to close by the end of the calendar year. Raley’s does not anticipate closing any stores, and Bashas’ employees will retain their current roles, compensation, and benefits. Our analysts estimate the combined entity will generate nearly $5 billion in pro-forma annual sales across its approximately 240 stores. Raley’s generated LTM sales of $3.40 billion across 126 stores, primarily under the Raley’s, Bel Air, and Nob Hill banners. Bashas’ posted around $1.40 billion in sales across 113 stores, primarily under the Bashas’, FoodCity, and AJ’s Fine Foods banners.Small and regional grocery chains are struggling to compete with national chains that can offer better pricing and omnichannel services; the income boost provided by the pandemic has offered an opportunity for regional retailers to acquire or merge with other operators. In February, Tops Markets and Price Chopper/Market 32 agreed to merge and create a chain generating almost $7 billion in volume operating nearly 300 stores across six Northeastern states (merger is pending). Click here for more info.
J.C. Penney will debut JCPenney Beauty shops in 10 stores this month, with plans to roll out the shops across all stores by 2023. The shops will feature more than 170 brands of makeup, skincare, haircare, styling tools, fragrance, nail care, and bath and body products. The Company joins competitors Target and Kohl’s in investing in in-store beauty departments. Target is opening in-store Ulta Beauty departments and Kohl’s has a partnership with Sephora to open in-store shops. Click here for a complimentary list of recent and future closures.
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.
Claire’s Holdings notified the SEC that it plans to raise up to $100 million in an IPO. The Company plans to list its stock on the NYSE under the symbol “CLRS.” In its IPO prospectus, Claire’s listed revenue of $356 million and a loss of $144.3 million for 2Q21. The Company intends to invest more than $150 million by year-end in its physical and digital presence. Claire’s previously filed for an IPO in 2013 but later withdrew the offering. The Company filed Chapter 11 in 2018 and eliminated most of its $2 billion in debt; ownership was transferred from Apollo Management to Elliott Capital Management and Monarch Alternative Capital. As of July 31, Claire’s operated 1,390 stores under its namesake and Icing banners in North America, 887 in Europe, and 324 franchised stores in the Middle East and South Africa.
Bi-Mart announced that Walgreens Boots Alliance (WBA) has agreed to acquire its pharmacy business from its 56 remaining pharmacy locations in Oregon, Idaho, and Washington, including patient files and related pharmacy inventory. Financial terms of the transaction were not released. Prescription files will be transferred to nearby Walgreens pharmacies beginning this month through January 2022. Bi-Mart had previously closed pharmacies in the Portland area and several other markets and also transferred those files to Walgreens. This follows a trend of other mass merchandise and grocery retailers divesting their pharmacy assets, including Target, Schnucks, Southeastern Grocers and even Ahold closing 19 in-store pharmacies last month. Reimbursement rates and the competitive landscape have made these operations unprofitable and much less attractive. Click here for more information.
Dollar Tree plans to begin adding new price points above $1 across all Dollar Tree Plus stores. The Company will also begin testing additional price points in selected legacy Dollar Tree stores. The Company’s experiments with higher prices could be tied to inflationary pressures in the economy. Last month, Dollar Tree reported that its gross margin was 29.4% of net sales for 2Q21, down from 30.5% in the year-ago period; the Company recently said it is experiencing significantly higher international and domestic freight costs, as well as significant shipping delays due to disruptions in the global supply chain. Dollar Tree has already announced that it is on track in 2021 to have 500 Dollar Tree Plus stores by fiscal year-end, offering an assortment of value-priced $1, $3, and $5 products. Another 1,500 stores are planned for FY22, and at least 5,000 Dollar Tree Plus stores are expected by the end of FY24. Click here for a sample list of future openings.
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Papa John’s International signed its largest domestic franchisee development agreement in the Company’s history with franchisee operator Sun Holdings, Inc. Under the terms of the deal, Sun Holdings will oversee 100 new stores opening in high-growth markets across Texas by 2029. Click here to request a sample list of future openings.
Skogen’s Festival Foods plans to buy Trig’s stores in Wausau, Weston and Stevens Point, WI from the T.A. Solberg Co. Financial terms were not disclosed. With the acquisition, Skogen’s will operate 39 full-service supermarkets in Wisconsin.
Krispy Kreme signed a definitive agreement to take majority control of franchisee and operator Krispy K Canada. Financial details were not disclosed. Upon closing, Krispy K Canada’s revenue, which is currently reflected in Krispy Kreme’s market development segment, will consolidate into Krispy Kreme’s U.S. and Canada reporting segment. The acquisition is slated to close in 4Q21. Following the acquisition, Krispy Kreme will control 75% of sales across its global network. The Company stated that, with only 11 points of access across the country, Canada represents a significant opportunity for expansion. Click here to request a list of future openings.
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.
On October 2, a new ShopRite store (part of the Wakefern cooperative) opened in Poughkeepsie, NY.
On September 30, SPB Hospitality, an operator and franchisor of steakhouses, pizza, and craft brewery restaurants, completed the acquisition of J. Alexander’s Holdings. Upon closing, each share of J. Alexander’s stock was converted into the right to receive $14 in cash per share, or about $220 million. J. Alexander’s Holdings operates 47 upscale restaurants with brands including J. Alexander’s, Stoney River Steakhouse and Grill, Redlands Grill, Overland Park Grill, and Merus Grill.
Opie, a new startup in South Carolina, opened a grocery store in the Charleston area that is drive-thru only. The Company does not require shoppers to schedule pickup slots ahead of time, but scheduling is available, and there are no minimum orders or pickup fees. Customers pull into the drive-thru lane, order in the app or from a clerk, and receive groceries in minutes. The store is open 24 hours a day. The Company indicated it is looking for capital partners to support its “aggressive expansion plans.”
Marco’s Pizza announced the signing of a development agreement that will bring 15 new stores to the Tampa, FL metro area by the end of 2024. MPZ Holdings, LLC, which currently franchises 21 Marco’s Pizza locations across South Carolina and Georgia, aims to open five stores per year. Click here to request a list of future openings.
Last week, Genoa Healthcare opened its 600th pharmacy, located inside a clinic in Chandler, AZ. This marks the Company’s fourth pharmacy co-located with behavioral / community health provider Southwest Network. The clinic services about 1,500 adults. Most Genoa pharmacies operate inside clinics and other facilities providing patient care, and with the pandemic causing an uptick in mental illness, substance use disorders, and overdose deaths, co-locating pharmacies and health providers has been shown to improve medication safety, access and adherence. In September 2018, UnitedHealth purchased Genoa Healthcare (and its 435 pharmacies at the time) for a reported $2.50 billion; Genoa was subsequently rolled into UnitedHealth’s PBM, OptumRx. Click here for a sample list of future openings.
H&M’s revenue rose 9.3% to SEK 55.59 billion (US$6.35 billion) excluding VAT, increasing 14% in local currency but still down about 11% compared to 3Q19, primarily reflecting the pandemic and related store closures. Sales during the quarter were also impacted by disruption and delays in product flow. Around 180 stores were temporarily closed at the start of the quarter and about 100 remained closed at the end of the period. The Company continued to implement cost-mitigation measures which, when coupled with the gross margin improvement, resulted in operating income of SEK 6.27 billion for the quarter, compared to SEK 2.70 billion during 3Q20. On the real estate front, the Company opened 68 new stores and closed 230 during the YTD period. During 4Q21, the Company plans to open around 40 stores and close about 95. Net sales in September were slightly higher than the same month last year in local currencies; however, demand could not be fully met because of the aforementioned disruption and delays in product flow. Sales are also still affected by reduced foot traffic as a result of continued restrictions and store closures. At present, around 50 stores are still temporarily closed.
Staples announced a partnership with Happy Returns by PayPal to offer an in-person return service in more than 1,000 Staples locations nationwide. Online shoppers can return products for a refund or exchange without a box or label. By partnering with Happy Returns, Staples aims to improve the shopping experience, lower the cost of returns, and reduce the environmental impact of return shipping. More than 10% of all retail purchases were returned in 2020 nationwide. Happy Returns is now available at more than 3,800 retail locations.
Office Depot is closing its two remaining New Jersey stores, in Edison and Union, on November 13. GOB sales are currently taking place at both stores and will run through the closing date. OfficeMax does not operate any locations in the state. ODP Corporation operates over 1,100 stores under the two banners. Click here for a complimentary list of recent and future closures.
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