May 4, 2022
Amazon’s 1Q22 net sales increased 7.3% to $116.44 billion, which excludes a $1.80 billion unfavorable impact in foreign exchange rates. By segment, Amazon Web Services (AWS) performed strongest, increasing 36%, which is roughly in line with the prior quarter’s 40% gain. Subscription services and physical store sales also performed well, advancing 23% and 17%, respectively (physical store results exclude the online component of sales fulfilled in Whole Foods stores). However, third-party sellers only advanced 7%, while online stores decreased 3% (down 1% in 4Q). The sales slowdown this quarter was primarily due to lapping a period of significant gain in the prior year, when sales advanced 44%; the top line is now up 54% from 1Q19.
The growing labor organizing efforts at Amazon faced a setback this week when workers voted by a wide margin to reject joining a union at the LDJ5 warehouse on Staten Island, NY, just weeks after the union won a landmark victory at a larger facility nearby. Employees cast 380 votes to be represented by the union and 618 against, according to the National Labor Relations Board. About 1,600 workers at the warehouse were eligible to vote. The Amazon Labor Union was weighing whether to file objections against Amazon related to the vote, and that organizing efforts would continue at the LDJ5 warehouse and elsewhere.
Amazon announced office leases to accommodate 2,500 new corporate and technology jobs in Santa Monica, Irvine and San Diego, CA. The Company said it has signed three leases, which combine for 439,000 square feet, for what it described as "tech hubs" in the three cities. The leases bring Amazon's office footprint in Southern California to more than 1.5 million square feet, representing an increase of more than 40%. The Company opened 15 sites in Southern California last year alone and added 17,000 jobs statewide, bringing the total Amazon workforce in California to 170,000.
Last week, Amazon opened its first suburban Amazon Go store in Mill Creek, WA, the Company’s largest Go store at 6,150 square feet, with the sales floor taking up roughly 3,250 square feet. The location features a wider range of items, including more multi-serve packs of snacks and groceries than traditional Go stores, as well as fresh and made-to-order foods. The store surprisingly does not offer e-commerce. Click here to request a sample list of Amazon Go future openings.
Meanwhile, Amazon said it is closing six Whole Foods Market locations in four states. The stores are in Montgomery and Mobile, AL; Tarzana, CA; Brookline, MA; and in the Englewood and DePaul neighborhoods of Chicago, IL. Most of the locations will close by May 6, and the Englewood unit will close in the coming months. Whole Foods still has over 50 new stores in the pipeline. Click here to request a sample list of future Whole Foods' openings and closings.
Meijer recently opened two new stores in Northeast Ohio, in Brunswick and Canton’s Jackson Township. The supercenters stand at 155,000 square feet. Since opening its first store in the Columbus area in 1981, Meijer has invested heavily in Ohio, most recently building seven supercenters in the Greater Cleveland, Akron and Youngstown areas.
The new openings come just weeks after Meijer announced a mid-May opening date for new supercenters in Fort Wayne, IN and West Branch, MI. The Company also has plans for a new smaller format store in Cleveland, OH. Click here to request a sample list of future openings.
According to published reports, Alimentation Couche-Tard and EG Group are exploring a possible merger. The companies are said to have traded proposals in recent weeks that would put EG’s valuation at around $16 billion. The news comes more than six months after EG Group began exploring options including a sale. EG entered the U.S. in 2018 when it acquired Kroger’s convenience store network for $2.15 billion, giving it a base of 762 stores in 18 states. Subsequently, it purchased Cumberland Farms in 2019, adding 567 c-stores in seven Northeast states and Florida to its U.S. footprint, as well as a few other small and mid-sized chains. EG Group currently operates more than 1,700 stores across the U.S. under the Cumberland Farms, Certified Oil, Fastrac, Kwik Shop, Loaf N’ Jug, Minit Mart, Quik Stop, Sprint, Tom Thumb, and Turkey Hill banners.
Publix reported results for its 1Q ended March 26. Sales increased 13.4% to $13.34 billion, driven by new supermarket sales and an 11.7% increase in comps. Comp growth was primarily due to increased pricing to offset product costs. Operating profit rose 15.9% to $1.22 billion. During the quarter, the Company opened five supermarkets (including two replacement supermarkets), remodeled 12 supermarkets and closed two. As of the end of 1Q, Publix operated 1,296 supermarkets, up from 1,269 last year. The Company plans to expand into Kentucky in 2023. Click here to request a sample list of future openings.
Publix Super Markets remains one of the 10 largest grocery chains (and the leading employee-owned supermarket chain) in the U.S., with nearly 1,300 retail stores throughout the southeastern states of Florida, Georgia, Tennessee, Virginia, Alabama, North Carolina and South Carolina. More than 800 of the grocery stores are in Florida, Georgia is home to nearly 200, and the other five states each have less than 100. Our report takes a closer look at the Company’s operational and competitive status, including market position, real estate and sales trends, and provides visual competitive analyses as well as key real estate metrics like store count, average sales per square foot, and the new Real Estate Intelligence analytics solution.
BJ’s Wholesale Club opened a new concept in Warwick, RI called BJ’s Market, which stands at 43,000 square feet, about half of a full-sized BJ’s club. BJ’s Market will feature fresh foods, produce, sundries and seasonal products for members of BJ’s Wholesale club. The Company pitched its new concept as a more convenient, efficient shopping experience. The new BJ’s market concept will test product assortments, displays, product demonstrations and convenience initiatives. BJ’s Market will offer customers the same pack sizes and pricing as BJ’s clubs, as well as the same shopping options including curbside pick-up, Express Pay, and same-day delivery. Click here to request a sample list of future openings.
Lidl has begun construction on its largest Long Island, NY, store located in Deer Park. The $15 million store will be 35,360 square feet and is expected to open in the winter of 2023. Lidl currently operates 21 supermarkets on Long Island. Click here to request a sample list of future openings.
Proxy advisory firm Institutional Shareholders Services (ISS) recommended that Kohl’s Corp. shareholders vote in favor of two candidates suggested by activist investor Macellum. ISS said that Jeffrey Kantor appears to have “highly relevant expertise” for the board, including experience from Macy’s, and Pamela Edwards appears to have a “breadth of skills and experience directly relevant to Kohl’s current challenges.” The firm cited her executive roles at L Brands, board experience at Neiman Marcus, and CFO roles at divisions of L Brands and Citi Trends. Kohl’s responded with a statement saying that both candidates lack the experience necessary to oversee “either the continued execution of Kohl’s strategy or a robust process to evaluate expressions of interest to acquire the Company.” It added that neither nominee possesses M&A or public board experience.
As we have been reporting, Kohl’s recently said that Goldman Sachs, which it has hired to explore strategic alternatives, has engaged with more than 25 parties and that select bidders have been invited to review internal documents. Click here to request more info.
H.E. Butt recently opened its newest store in New Braunfels, TX. The 122,000 square-foot location is the Company’s first to feature a Home by H-E-B department and a two-story True Texas BBQ restaurant. As evidenced by the map, the Company has about 50 planning openings. Click here to request a sample list of future openings.
On May 14, Macy’s will open a new 22,000 square-foot store under its Backstage off-price banner in Grapevine Mills, TX, within the Dallas-Fort Worth metro area. The store is located in a mall anchored by Saks Off 5th and containing the only Neiman Marcus Last Call store in the metro market. This will mark the third freestanding store under the Backstage concept in North Texas. The store will sell men’s, women’s and children’s apparel, toys, housewares, and fashion accessories, and has customer service desks for Macy’s online pickups and returns.
Last week, Macy’s broke ground on a $584 million, 1.4 million square-foot fulfillment center in China Grove, NC. The facility is expected to be operational in 2H24, in time for the 2024 holiday season. Macy’s said the facility will be the most automated building in its supply-chain network and will account for around 30% of total digital supply-chain capacity.
On May 2, Camping World opened a new 44,000 square-foot location in Churchville, NY, serving the greater Rochester market. This is the Company’s sixth full-service facility in the state, joining two Camping Worlds and three Gander Outdoors locations. It offers a range of new and used RVs from top manufacturers, a full assortment of RV and outdoor products and accessories, as well as the entire portfolio of Good Sam products and services. Camping World now operates 192 locations in 42 states, including 158 Camping World units and 34 Gander Outdoors units. Click here to request a sample list of future openings.
A published report claims Bed Bath & Beyond is exploring bids for buybuy BABY, with prospective suitors identified as Cerberus Capital Management and Tailwind Acquisition Corp., after activist investor RC Ventures urged the sale of the brand. RC Ventures reportedly cited BBY’s poor performance in contrast to buybuy BABY’s continued upswing, stating the subsidiary could be more valuable alone. RC Ventures, the VC fund managed by Chewy Co-founder and GameStop Chairman Ryan Cohen, holds a 9.8% stake in Bed Bath & Beyond. Click here to request a more info.
After its $14.60 per-share takeover bid was rejected by Rite Aid, Spear Point Capital Management attempted to make a case for reengaging with management. Rite Aid said it rejected the offer, which provided no evidence of financing, required multiple months of exclusivity and called for the Company to spend multiple months soliciting competing proposals. In addition, Spear Point’s proposal was conditioned on none of the Company’s debt becoming due and payable upon a change in control, which contradicts the terms of nearly all of Rite Aid’s debt instruments. Spear Point Co-Founder Ron Bienvenu commented, “I’m going to give the company an opportunity to reengage. If they won’t reengage after we make our case, I assume the shareholders, if they like our case, will probably give them an earful. I think the Company is grossly undervalued.” Mr. Bienvenu sees the value in Rite Aid in its data, which he believes may be worth billions. He also said he has an unidentified buyer for Elixir, willing to pay $2 billion. He wants the Company to allow him to assess the data so he can properly value it. Spear Point is teaming up with Silverback United, a data valuation company. “Healthcare and pharma data as a market is one of the most developed information marketplaces,” Mr. Bienvenu said. Spear Point also said it is working on the debt portion and has approached debt holders about a takeover.
In 2022, Weis Markets plans to invest more than $150 million of capex on new stores, remodels, fuel centers, IT upgrades and smaller store improvement projects. This plan would seemingly put it in line with FY21 when the Company invested $152 million in Capex but well above the $131 million spent the year before. The Company’s net store count remained flat during FY21 (ended December 25) at 196 stores. Since then, the Company has opened two new locations, located in Warminster, PA and Martinsburg, WV.
Weis Markets also reported results for its first quarter ended March 26. 1Q22 sales rose 9.7% to $1.10 billion, with comps rising 9.4% over 1Q21 and up 10.8% on a two-year stacked basis. CEO Jonathan Weis commented, “Despite significant inflationary pressures, we were able to maintain stable gross profit margins and effectively manage expenses.”
In a published letter last week, Hy-Vee announced plans to ask 500 corporate-level employees to transition to retail locations, citing national inflation, the retail worker shortage, labor costs, supply disruptions, and changes in consumer behavior. This followed the Company’s mid-March announcement that it was looking to shift 121 corporate-level employees from marketing, communications and technology departments to store-level positions. In both cases, the Company offered incentives and moving bonuses to help fill open positions in stores. A spokesperson commented, “Like every company, our employee needs ebb and flow to match our business…. In the midst of COVID-19, we had to significantly increase our projects across our business. With those projects launched, we have to make sure we remain focused on our stores and providing the best value and quality to our customers.” At the same time, Hy-Vee said it is also pausing several projects, including a new warehouse in Cumming, IA, but still plans to continue with its previously announced expansion in the Southeast. Click here to request a sample list of future openings.
Reports indicate SpartanNash is drawing acquisition interest from several parties, including United Natural Foods (UNFI) and Oak Street Real Estate Capital; UNFI is considering purchasing the entire company, while Oak Street is primarily interested in the owned real estate (6.6 million square feet of distribution space and 30 stores), reportedly worth up to $1 billion. As we previously reported on March 31, SpartanNash’s newest activist investors are pushing for changes, including a strategic review focused on a sale. As we continually express, we think scale is as important if not more important than ever in the retail / wholesale grocery arena, and we believe SpartanNash or parts of it could fit well into the profile of others, including UNFI, C&S, or even Albertsons, looking to continue to gain scale. Amazon may also show interest in order to help it support its growing grocery offering; in October 2020, and in connection with its service contract extension, SpartanNash issued Amazon warrants for up to 10% of its common stock subject to vesting conditions.
However, in a statement released this week, SpartanNash said it has not received any offers to buy the Company nor has it been approached directly by any strategic or financial buyer looking to purchase. The comments come in direct response to a press release from activist investors Macellum Advisors and Ancora Holdings that urged SpartanNash to set up a special committee to explore a sale following reports of interest.
Chipotle’s 1Q22 revenue increased 16% to $2.02 billion, driven by a 9% increase in comps and new restaurant openings. In-restaurant sales advanced 33.1%, while digital sales represented 41.9% of total food and beverage revenue. Food, beverage and packaging costs were 31% of total revenue, an increase of 100 basis points compared to 1Q21. The increase was due to inflation across the menu, primarily due to beef, avocados, and paper, partially offset by leverage from menu price increases. During the quarter, the Company opened 51 new restaurants, of which 42 locations included a Chipotlane.
Looking ahead, management anticipates 2Q comp growth of 10% – 12%. For FY22, it expects to open 235 – 250 new restaurants, including 5 – 10 relocations to add a Chipotlane. Click here to request a sample list of future openings.
Sportsman’s Warehouse is adding two new stores in Saratoga Springs and Stansbury Park, UT, bringing its store count in Utah to 12. The stores offer a combined 40,000 square feet of retail space, including the standard 30,000 square-foot Saratoga Springs store (opened April 28) and the smaller 10,000 square-foot Stansbury Park unit (opening May 5). With the addition of the two stores, the Company now operates 125 units.
Local reports claim international budget fashion retailer Primark will open a 63,800 square-foot store in Long Island, NY, at the Roosevelt Field Mall in Garden City, in December. The Ireland-based “mega-chain” will also open new stores at City Point in Brooklyn, Crossgates Mall in Albany, and Jamaica Avenue in Queens, with the latter unit set to open next year. These are in addition to a lease signed for space in Tysons Corner, in the Washington, DC metro area. In September 2021, Primark indicated plans to grow its U.S. store portfolio to approximately 60 stores, from its current count of 13. The U.S. business was healthy in 2021, posting comp growth of 6% (excluding its Boston unit) and solid profit margin. Its stores sell clothing, accessories, and shoes for men, women and children, as well as home goods and beauty products, at low price points.
This Special Analysis includes a breakdown of M&A activity across all retail sectors over the past year. Click here to request this report.
Bass Pro Shops plans to open a new 140,000 square-foot location in Irvine, CA, which will be its second store in Southern California, joining an existing unit in Rancho Cucamonga. The store is slated to open in late 2022 or early 2023. There are 85 Bass Pro Shops (four in California) and 75 Cabela’s locations nationwide. Click here to request a sample list of future openings.
Victoria’s Secret & Co. has established an Amazon storefront to sell nearly 120 Victoria’s Secret Beauty and PINK Beauty products, as the Company looks to expand its brand presence beyond its own stores and website.
Academy Sports + Outdoors opened its first new store in two years, in Conyers, GA. The 58,000 square-foot location is the Company’s 260th overall, 11th in the Atlanta metro area, and 19th in the state of Georgia. This fall, Academy plans to open another new store in metro Atlanta. Overall, the Company plans to open eight new stores and complete several store remodels in FY22. Click here to request a sample list of future openings.
Wingstop announced an expanded development agreement in Indonesia with its current brand partner, doubling its commitment from 60 to 120 restaurants by 2028. Wingstop’s first restaurant in Indonesia opened in 2014. The Company’s brand partner currently operates 50 restaurants throughout the country, five of which opened this year. Click here to request a sample list of future openings.
Food City, a banner of K-VA-T, has partnered with Ace Hardware to launch its line of Curt’s Ace Hardware stores later this summer. The Company is evaluating several Food City locations for Curt’s Ace Hardware in Tennessee, including Piney Flats, Erwin and Elizabethton, in addition to Mize Farm & Garden Supply Co. in Gray, which Food City recently purchased. Virginia is also a possibility, with Abingdon and Bristol under consideration. Ace Hardware is a retailer-owned hardware cooperative with more than 5,500 locally owned and operated hardware stores in approximately 70 countries.
Meanwhile, Food City recently broke ground on a new 54,000 square-foot supermarket in Alcoa, TN, which will serve as a replacement for an existing location and is expected to open in early fall. The Company also opened a new store on April 6 in Cookeville, TN. K-VA-T operates 138 retail outlets throughout southeast Kentucky, southwest Virginia, eastern Tennessee, northern Georgia and Alabama.
Sheetz plans to expand into western Ohio with the addition of 20 new convenience stores over the next five years. Its first location in that region is expected to open in Dayton in 2024. The Company first entered Ohio with a store in the Columbus market in April 2021. At the time, Sheetz announced plans to open approximately 50 stores in the Columbus metro area over the subsequent five years. Click here to request a sample list of future openings.
In 1Q22, O’Reilly Automotive reported another solid quarter, highlighted by a 4.8% increase in comparable store sales, which was on top of the record 24.8% comp growth posted in the first quarter last year; comps were up 29.6% on a two-year stacked basis. In 1Q22, total sales were up 7% to $3.30 billion, but during the quarter, the Company launched its professional pricing initiative, which put pressure on gross profit, while inflationary cost pressures also cut into profitability. As a result, operating income decreased 3% to $670 million (or 20.3% of sales) from $691 million (or 22.4% of sales) a year ago. As of March 31, the Company operated 5,811 stores in 47 states and 27 stores in Mexico. Click here to request a sample list of future openings.
Noodles & Company reported 1Q22 revenue growth of 2.7% to $112.6 million, including revenue declines of $4 million due to the impact from temporary restaurant closures and $3 million due to the refranchising of 15 Company-owned restaurants. Comparable restaurant sales increased 6.4% system-wide, comprised of a 5.3% increase at Company-owned restaurants and an 11.9% increase at franchised restaurants. Company Average Unit Volumes of $1.25 million represented a 6.8% increase compared to 1Q21 and a 13.3% increase versus 1Q19. Five new company-owned restaurants and two new franchise restaurants opened in 1Q22.
Little Caesars is looking to open at least 11 new stores in Buffalo, NY by 2023 through three multi-unit franchise agreements. Little Caesars has stores in each of the 50 U.S. states as well as 27 countries and territories.
The Cheesecake Factory’s 1Q22 revenues increased 26.5% to $793.7 million. Comps increased 20.7%; so far in 2Q22 (through April 26), comps rose 8.2%, supported by an approximately 25% off-premise sales mix.
The Company now expects to open as many as 15 – 16 new restaurants in FY22, including four Cheesecake Factory restaurants, four to five North Italia restaurants, and as many as seven FRC restaurants, including three to four Flower Child locations.
