March 2, 2022
Amazon has introduced its Just Walk Out technology to a new Whole Foods in Washington D.C. The store is 21,500 square feet and opened on February 23. It is the first of two Whole Foods expected to open this year that feature the cashier-less technology. The other is located in Sherman Oaks, CA and will open later in 2022.
Meanwhile, Amazon will open its 11th Amazon brick-and-mortar grocery store in California and its third featuring a fully autonomous checkout. The new 35,000 square-foot Amazon Fresh store is located in Moorpark, CA and is the first in Ventura County.
Amazon is building a fulfillment center in Los Lunas, NM. The one million square-foot facility is scheduled to launch in 2023.
About a month after Hy-Vee announced its first Indiana store, the Company said it is expanding into Kentucky, with its first store in the state coming to Louisville. The 150,000 square-foot store is slated to open in 2023. The store will be one of the Company’s first locations to open in the Southeast. Recently, Hy-Vee announced it would expand its footprint into several new states, including Indiana, Kentucky, Tennessee and Alabama. The Company currently operates more than 285 stores across eight Midwestern states. Click here to request a sample list of future openings.
In this second white paper on the supply chain, we discuss the current state of the supply chain, how retail has responded, and the longer-term impact and outlook. Click here to request this report.
Bath & Body Works reported 4Q21 sales of $3.03 billion, an 11.4% increase year over year, driven by comps of 15.1%, an increase in transactions and an increase in average dollar sale. During the quarter, e-commerce sales rose 1.9% to $764 million and represented 25% of 4Q21 sales. Margins were negatively impacted by inflationary pressure during the quarter; 4Q21 gross margin fell 370 bps to 48.1% but was up 70 bps compared to 4Q19. Similarly, operating margin fell 260 bps to 29.4%, but was up 190 bps from 4Q19. For the full year, sales were up 22.5% year-over-year and 46% compared to FY19. During the year, Bath & Body Works completed 133 North American real estate projects, including 54 new off-mall stores and 79 remodels. The Company also closed 35 stores, principally in malls. The Company provided guidance for FY22 with sales flat to up 4% and gross margin down 300 to 400 bps compared to FY21. The Company is planning to open 100 new off-mall stores, remodel 47 units, and close 40 to 50 mall locations. Click here to request a list of future openings and closings.
Pet Supplies Plus has acquired Wag N’ Wash, an emerging natural pet food, self-wash and grooming franchise with 16 locations. The purchase price was not disclosed. Each brand will continue to operate as a separate entity. New and existing franchise owners will have the opportunity to open a store under the Wag N’ Wash or Pet Supplies Plus name, depending on the market where they operate or intend to operate. Click here to request a sample list of future openings.
H.E. Butt continues to expand in the Dallas-Fort Worth area with its third H-E-B branded store, scheduled to open in Collin County (McKinney) in 2023. Stores in Frisco and Plano, each estimated at 110,000 square feet, will open later this year. The Company already operates Central Market stores in the Dallas area, including a North Dallas location that recently reopened after being heavily damaged by a tornado. There are plans for additional H-E-Bs in the area; the Company has reportedly purchased property in other parts of the Metroplex. Click here to request a sample list of future openings.
The board of Albertsons Companies announced it has commenced a review of potential strategic alternatives aimed at enhancing the Company’s growth and maximizing shareholder value. The review will include an assessment of various balance sheet optimization and capital return strategies, potential strategic or financial transactions, and development of other strategic initiatives to complement Albertsons’ existing businesses, as well as responding to inquiries. The Company has retained Goldman Sachs and Credit Suisse to serve as financial advisors to assist in this review.
The board has not set a timetable for the conclusion of this review nor has it made any decisions related to any further actions or potential strategic alternatives at this time. There can be no assurance that the review will result in any transaction or other strategic change or outcome.
Floor & Décor’s 4Q21 sales increased 26.4% to $914.3 million, and comps were up 14%. Adjusted EBITDA rose 3.3% to $100.8 million. The Company opened seven new stores during the quarter, ending with 160 warehouse locations and two design studios. Looking ahead, Floor & Décor plans to open 32 new locations in FY22 and currently believes there is a path to operating at least 500 warehouse-format units over the next eight to 10 years. Its previous expectations called for operating at least 400 stores.
In other news, the Company promoted Ersan Sayman to EVP of merchandising from SVP of merchandising. Click here to request a sample list of future openings.
Party City’s 4Q21 (ended December 31, 2021) net sales were $698.3 million, an increase of 7.7% compared to 4Q20, primarily driven by strong retail sales growth, partially offset by the divestiture of a significant portion of the Company’s international operations in 1Q21.
Total retail sales increased 12.6% versus 4Q20, driven by a strong comparable sales increase in its core everyday categories. The total number of corporate Party City stores was 759 as of December 31, 2021, compared to 746 in the prior-year period. 4Q21 brand comps increased 17.8% versus 4Q20 and 10.8% compared to 4Q19. In 4Q21, the Company opened one new store, and four locations were purchased from franchisees. During FY21, the Company opened 10 new stores and closed seven, while 10 locations were purchased from franchisees. The Company opened or remodeled 21 NXTGEN stores during 4Q21, bringing the total to 95. The Company remains committed to an aggressive rollout plan in FY22 and beyond, as it expects to open or remodel 100 – 125 NXTGEN stores in FY22.
TJX Companies’ 4Q22 revenue increased 27% and only-open comps rose 10% compared to 4Q20. Management noted that stores in Canada, Australia and Europe were closed for 13% of 4Q21. By segment, comps (versus 4Q20) rose 22% at HomeGoods and 10% at Marmaxx (Marshalls and TJ Maxx); Canada and International reported a 1% increase and a 2% decrease in comps, respectively. TJX Canada and TJX International’s 4Q22 net sales and open-only comps were negatively impacted by government-mandated shopping restrictions throughout the quarter. During FY22, the Company increased store count by 117 stores to a total of 4,689 stores and increased square footage by 2% versus the prior year.
As part of C&S Wholesale Grocers’ acquisition of a dozen Tops stores that were sold off in the merger between Tops and Price Chopper, the Company has now reopened all but one under the Grand Union supermarket banner (one in Watertown has been rebranded to Piggly Wiggly, another brand supported by C&S). Ten of those stores are in New York State, and one is in Vermont.
Hudson’s Bay will close a store in Toronto that served as its flagship between 1974 and 1991. The Company stated, “Given the unique proximity to the Hudson’s Bay Queen Street flagship location in Toronto, Hudson’s Bay has made the decision to close its Bloor Street store on May 31, 2022.” The Queen Street flagship store is the Company’s largest in Canada and joins one other flagship in Ontario, in Ottawa. HBC stopped paying rent for certain locations that were closed due to the COVID-19 pandemic; last year, a judge ordered the Company to start paying portions of its rent on a scale on par with Ontario’s government-phased reopening plan, with the outstanding amounts to be paid by March 2022.
Meanwhile, a Hudson’s Bay store in Vancouver, located within a landmark building built in 1927, will be redeveloped to add a 12-story office tower on top of the existing six-story building. This will create total floor area of nearly 1.4 million square feet, up from existing floor area of about 650,000 square feet. Roughly one million square feet of space will accommodate up to 5,000 office workers. Another 400,000 square feet will be available for retail and restaurant functions, including a downsized Hudson’s Bay flagship store of about 350,000 square feet. The redevelopment is still in the approval stage, with construction scheduled to begin in 2024 and completion likely in 2027 or 2028.
The Company is also closing a Saks OFF 5th location in Markville, ON, Canada on April 16. Saks OFF 5th has four nearby locations, and Saks Fifth Avenue has a store in downtown Toronto.
Planet Fitness’ business continued to recover, with 4Q21 sales up 37% over the prior-year period, driven by a 12.3% increase in system-wide comps, as consumers returned to the gym. The top line was still down about 4% compared to 4Q19. Franchise segment revenue was up 29%, corporate-owned club revenue was up 15%, and equipment segment revenue was up 116% over the prior-year period. The Company added 1.7 million new members during the year and had 15.2 million members as of December 31, 2021. During the year, Planet Fitness opened 132 new clubs, including 62 in 4Q21. EBITDA totaled $63 million, up 23% year to year but down 18% compared to 4Q19. The Company had ample liquidity of over $600 million, supported by positive YTD free cash flow generation of $135 million. Subsequent to FY21, in January 2022, the Company agreed to acquire Sunshine Fitness Growth Holdings, LLC, owner and operator of 114 Planet Fitness clubs in the Southeast, in a cash and stock transaction valued at $800 million. Click here to request a sample list of recent and future openings and closings.
Dom’s Kitchen & Market plans to open a second location in Chicago, IL in late 2022 and expects to operate as many as 15 stores by 2025. Similar to the first Dom’s location, the new unit will be about 27,000 square feet and will utilize local suppliers, placing an emphasis on prepared foods. The new chain’s founders include Bob Mariano, founder of Kroger’s Mariano’s banner.
Krispy Kreme is planning to build delivery-only locations in the U.S. and Mexico this year. This follows a pilot in the U.K., which grew to include more than 50 “dark shops.” Fresh doughnuts will be sent to these dark shops to be picked up by third-party delivery drivers. The Company believes this additional access to the brand will generate double-digit revenue growth in 2022. Krispy Kreme’s 2021 e-commerce revenue reached $134 million, a 15% increase over 2020. Click here to request a list of future openings.
The ODP Corporation’s 4Q21 sales were $2 billion, a decrease of 2% and 19% compared to 4Q20 and 4Q19, respectively. The year-over-year decrease in revenue was largely driven by 116 fewer retail stores as well as lower traffic in the Retail unit, partially offset by higher revenue in the B2B unit. The Company ended the period with 1,038 locations, compared to 1,154 stores at the same time last year, a drop of 10%.
On January 14, 2022, the Board delayed the previously announced separation into two separate entities, originally intended to facilitate a merger of the Company’s retail business with Staples’ retail unit. The delay in separation was implemented after an unnamed third party submitted a competing offer for the Company’s retail business. Click here for more info.
Wendy’s 4Q revenues declined 0.2% to $473.2 million, primarily driven by lapping the 53rd operating week in 2020, which resulted in a roughly $28 million impact. Excluding the 53rd week, revenues increased year over year, driven by higher franchise fees as well as an increase in franchise royalty revenue and advertising funds, both of which were largely due to higher comps. These increases were partially offset by lower sales at Company-operated restaurants, primarily due to the sale of the New York market during 2Q21 and lower franchise rental income as the result of Wendy’s acquisition of restaurants in the Florida market during 4Q21.
In December 2021, the Company completed a transaction to acquire 93 franchised restaurants in Florida for $128 million, part of Wendy’s ongoing system optimization initiative. Following the acquisition, the Company operated 408 Florida restaurants as of year-end. The Company remains committed to maintaining its ownership percentage of approximately 5% of all system restaurants. Click here to request a sample list of future openings.
Jack in the Box’s 1Q total sales rose 1.8% to $344.7 million, driven by comp growth and partially offset by a slight decline in net restaurant count. System comps rose 1.2%, comprised of franchise comps of 1.4%, with increases in average check partially offset by a decrease in traffic, and a Company-operated comp decline of 0.3%, with decreases in traffic partially offset by increases in average check.
In 1Q, there were 26 development agreements signed for 98 future restaurants, bringing total agreements to 50 and future restaurant commitments to 201 since the franchise development program launched in mid-2021. The Company had a 1Q net restaurant decline of ten restaurants, comprised of 2 openings and 12 closures, including two Company-operated, six related to early terminations, and four agreement expirations. Click here to request a sample list of future openings.
The deadline set by Britain’s largest drugstore chain Boots for interested parties to place indicative bids expired last Thursday. A sale could value the Company at up £8 billion (US$10.88 billion). Bidders are said to include Asda, TDR Capital, CVC Capital, Bain Capital, Sycamore Partners and Apollo. The sale will see Walgreens, which has backed Boots since 2012, cashing out from Boots, which operates more than 2,200 stores. It will also lead to the dismantling of Walgreens Boots Alliance (WBA), which was set up in 2014 when Walgreens took full control of the health and beauty chain, creating a global behemoth with overall revenues of $132.50 billion in 2021. Click here to request a sample list of Walgreens' future openings.
IKEA announced plans to invest £1 billion (US$1.40 billion) in London, U.K. over the next three years. The Company is in the midst of a strategic shift toward smaller inner-city locations and more digital and other services. As part of this strategy, Ingka Group (IKEA’s parent and owner of IKEA-anchored shopping malls across Europe, Russia and China), opened its first smaller-format store in Paris in 2019. Last month, the Company opened a store in London, anchoring its first-ever inner-city mall that it had purchased in 2019 and redeveloped. Going forward, IKEA’s planned investments in London consist of new and existing stores, distribution and delivery services, and various pilot trials for new formats and initiatives. The next inner-city IKEA store in London is due to open in fall 2023. Meanwhile, IKEA will open another urban location in San Francisco, CA, where it purchased a mall in 2020 and just began redeveloping earlier this year following COVID-related delays. IKEA plans to take up about 25% of the 250,000 square-foot shopping center in San Francisco, which is significantly smaller than its traditional store size of 300,000 square feet. Click here to request a sample list of future openings.
AutoZone’s 2Q22 sales increased 15.8% to $3.37 billion, and domestic comps were up 13.8%. Commercial sales grew 32.1%, and retail sales were up 10%. Gross margin decreased 59 bps to 53% due to efforts to accelerate commercial growth. Operating income rose 30.1% to $626.8 million. During the quarter, the Company opened 26 new stores and closed one underperforming location in the U.S., opened three stores in Mexico and two stores in Brazil, ending with 6,091 U.S. stores, 669 in Mexico, and 55 in Brazil. Click here to request a sample list of recent and future openings.
Pet Valu Holdings has expanded into the Québec market with the acquisition of Les Franchises Chico Inc. (Chico). The purchase price was not disclosed. The acquisition, which closed on February 25, was funded with cash on hand and is expected to be immediately accretive to Pet Valu’s adjusted net income. Chico is Québec’s largest franchisor of pet specialty stores, with 66 locations across the province. Pet Valu plans to operate Chico as a separate subsidiary and intends to preserve the banner in Québec.
Target was up against a steep comparison to 4Q20 when sales and comps each grew about 21%. Still, the Company finished the year on a solid note, with sales improving 9.4% and comps expanding 8.9%. Comps continue to be driven by traffic growth, although, average ticket growth turned slightly positive during the quarter. The Company posted 9% digital growth in 4Q and almost 20% for the FY. Full year comps advanced 12.7% and the Company reported that all five core merchandise categories saw double-digit comp growth.
Meanwhile, Target is rolling out an option for shoppers to add a Starbucks order and make returns through its Drive Up service. Pickup time windows and membership fees are not required. These services will debut in select cities in the fall, with more locations added in 2023. The Company also expanded its “backup item” function, where shoppers can designate secondary item substitutions for Drive Up and Order Pickup. Customers can indicate they are on their way to a Target location through the retailer’s app and will have an option to place an order from the Starbucks menu. Shoppers will also be able to initiate a return through the app and complete it at a store’s Drive Up lane.
In other news, Target announced that it will lift starting wages to $15 – $24. Nearly two years ago, Target raised its starting pay to $15. The new pay range will apply to all hourly workers across stores, the supply chain and more, and puts the retailer in a position to be a “wage leader in every market where it operates,” the Company said in a statement. Target is also expanding its health benefits alongside the new cycle in April. Hourly workers who clock 25 hours or more will now be eligible to enroll in the medical plan, down from 30 hours. Access to the medical plan will now begin three to nine months sooner, and there are new benefits, including no-cost virtual physical therapy and enhanced fertility benefits. Target will invest up to $300 million on these changes. Click here to request a sample list of future openings.
On March 23, Schnucks Markets will open a new store in Columbia, MO, its 112th store overall and fourth central Missouri location, joining two others in Columbia and one in Jefferson City. The leased 48,000 square-foot unit will heavily focus on fresh departments and include an expanded prepared foods section and an indoor seating area. In partnership with Instacart, the store will also offer Schnucks Delivers and curbside pickup options.
EG Group plans to begin re-bannering its Tom Thumb stores as Cumberland Farms this Spring. Plans call for all 113 Tom Thumb c-stores in the Florida Panhandle and southern Alabama, acquired from Kroger in 2018, to be converted to Cumberland Farms locations starting in May, with the full transition expected to take 18 to 24 months. Cumberland Farms has about 600 stores in New York, New Jersey, Connecticut, Rhode Island, Massachusetts, Vermont, New Hampshire, Maine and Florida. Click here to request a sample list of future openings.
Noodles & Company’s 4Q revenue increased 7.1% to $114.8 million. Company-owned average unit volumes were $1.31 million, compared to $1.15 million in 2020. Comps increased 11.2% system-wide, including a 9.5% increase for Company-owned units and a 20.8% increase for franchised units. The increase was driven by an increase in both digital and in-person channels as well as higher menu pricing, partially offset by temporarily reduced operating hours and temporary closures related to COVID-19.
Rent-A-Center’s 4Q21 revenue of $1.20 billion increased 63.5% year-over-year, due to the acquisition of Acima Holdings, LLC, which closed in 1Q21, and strong growth in the Rent-A-Center Business. On a pro-forma basis, revenue increased 10.5%, led by organic growth. Reported EBITDA increased 28% to $124 million, and EBITDA margin fell 290 bps to 10.6% in 4Q21.
The Company opened seven stores during the year, ending the period with 2,435 units. Its stock price fell 30% following release of the results, with only a small recovery afterward.
Chipotle Mexican Grill opened a new restaurant support center in the Downtown Arena District of Columbus, OH. Construction of the 130,0000 square-foot support center took more than two years to complete. Click here to request a sample list of future openings.
The Aaron’s Company, Inc. entered into an agreement to acquire Interbond Corporation of America d/b/a BrandsMart U.S.A. Aaron’s believes the transaction will enable it to generate more than $3 billion in annual revenue and over $300 million in adjusted EBITDA by year-end 2026. BrandsMart operates seven stores in South Florida and two in Georgia; the stores average 100,000 square feet. Aaron’s will acquire 100% of the outstanding equity interests of Interbond from the Perlman family for consideration at closing of $230 million in cash. The transaction is intended to be funded through a combination of cash on hand and debt financing, and is expected to close in 2Q22. Aaron’s has secured a commitment for a $200 million term loan, maturing on November 9, 2025.
Aaron’s 4Q21 sales increased 3.4% to $444.8 million, primarily due to the increased size and quality of its lease portfolio, partially offset by lower customer payment activity (which was expected) and the reduction of 72 franchised stores over the last 15 months. At quarter end, the Company’s overall lease portfolio size was $136.3 million, up 4.7% year-over-year. Comps were up 4.8%; e-commerce revenue rose 13% and represented 14.6% of lease revenue. The Company opened 30 new GenNext locations in the quarter. Adjusted EBITDA fell 23% to $41.3 million due to the expected lower lease renewal rates and high provision for lease merchandise write-offs. Click here to request a sample list of Aaron's future openings.
Texas Chicken and Church’s Texas Chicken, the international sister brands of Church’s Chicken, announced they will accelerate international expansion with 100 new restaurants slated to open in 2022 throughout the Americas, the Middle East and Southeast Asia. The brands’ major growth markets for this year include Canada, Mexico, Malaysia, Thailand and Saudi Arabia. The expansion planned for 2022 follows the late 2021 opening of Texas Chicken’s flagship restaurant in Qatar.
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