January 4, 2023
In the RITE AID CORPORATION, DIP case, the following updates were issued over the last two weeks:
1) the Court issued final orders authorizing the postpetition DIP financing and continued use of cash management systems.
2) the Debtors filed a notice that as of the Elixir bid deadline, it did not receive a qualified bid other than the Medimpact $575 million stalking horse bid. The Elixir auction was cancelled and a sale hearing for the Elixir assets will be held on January 9, 2024.
3) the Court approved the Medimpact seller financing documents and the private sale of the debtors interests in the Medimpact seller financing. The financing arrangement whereby the Debtors self-funded the $575 million Medimpact purchase of Elixir was an unusual move, and allows the Debtors to monetize the loan, by syndicating it out to other lenders.
4) a notice was filed stating the auction for the Rite Aid retail assets previously scheduled for December 21 will now on January 24.
5) the Debtors notified the Court of their plans to close 40 additional stores. To date, the Debtors have notified the Court of 331 store closures.
6) the Debtors reached a comprehensive settlement agreement with the FTC regarding its historical use of facial recognition technology to prevent retail theft, and issues relating to the Company's compliance with a 2010 Commission Order.
A statement on the Company's website states that ZULILY entered into an Assignment for the Benefit of Creditors (ABC) on December 22, 2023. As part of the ABC, an assignee – Zulily ABC, LLC, a wholly owned subsidiary of Douglas Wilson Companies – will complete an orderly wind-down of the business “to maximize the recovery for the Companies’ creditors as a third-party fiduciary.” Douglas Wilson Companies specializes in receiverships and liquidating assets of troubled companies.
CAMPING WORLD announced the acquisition of Ashley Outdoors in Salem, AL. Including this location, the Company intends to add 15 dealership locations in 1Q24 through a combination of opening new locations and closing previously announced acquisitions. See the list of locations opening in 1Q24 below:
| Location | State | New / Acquired From | Location | State | New / Acquired From |
| Salem | AL | New | Pinellas Park | FL | New |
| Byro | GA | Jayco Macon | Clermont | FL | New |
| Benton | AR | Jayco Little Rock | Ocala | FL | Forest River RV Ocala |
| Cape Girardeau | MO | New | Greenville | NC | Forest River RV Greenville |
| Little Rock | AR | Forest River RV Little Rock | Statesville | NC | Forest River RV Statesville |
| Springfield | MO | New | Lewisville | TX | New |
| Melbourne | FL | New | Brooksville | FL | New |
| Orange Park | FL | New |
WALMART integrated Affirm's pay-over-time services into its self-checkout kiosks at more than 4,500 U.S. locations. Customers can also use Affirm's payment services online, in the Walmart app, and at its vision and auto centers. When using the service, customers will see the total cost of their purchase before agreeing to the terms and will not have to pay late or unexpected fees. Both Target and Amazon also offer Affirm's payment services on select purchases.
GIANT EAGLE is moving its Pittsburgh headquarters to a four-story 100,000 square-foot building in Cranberry Woods Business Park in Cranberry, PA this spring. As a result of the move, the Company is leaving the RIDC Park in O'Hara Township to move 30 miles north. Starting in the Spring, employees will adopt a hybrid work schedule, working part time in the office and part time remotely.
BROOKSHIRE GROCERY has received approval to start building a new Fresh by Brookshire's store in Longview, TX. The store will be the third location for the Fresh banner. The original concept store opened in Tyler, TX in 2011, and the second opened in 2022 in Fate, TX.
VILLAGE SUPER MARKET'S Fairway banner is rolling out its new "Fairway Now" service, powered by Instacart, which offers home grocery delivery in as little as 30 minutes. The service is now available from Fairway's Chelsea and Upper East Side locations in Manhattan, and will be available from all four Fairway Market locations in the New York City borough in the coming weeks.
Reports indicate that EQUINOX is working with Goldman Sachs and Centerview Partners to raise more than $1 billion of new cash, including $400 million of preferred equity and $600 million of new debt, in order to refinance its existing debt which matures in 2024.
As we have previously reported, the existing capital structure which includes a revolver ($66 million outstanding), a first lien term loan ($1.18 billion outstanding) and second lien term loan ($200 million outstanding) is extremely levered and untenable given continued softness in the business.
This news follows the Company extending its revolver for a second time in November 2023, until January 2024, as it explores refinancing options. We have separately learned the Company has been attempting to renegotiate lease terms with landlords as it looks to alleviate some of its cash flow challenges.
TOPGOLF announced it will build a new location in Greensboro, NC which will have 72 outdoor climate-controlled hitting bays spanning two levels. It is scheduled to open in late 2024. The future location will bring TopGolf's store base close to 100 locations worldwide, including two in the Charlotte, NC area.
CONN'S completed a transaction that has resulted in W.S. Badcock LLC, a home furnishings company in the southeastern U.S., becoming a wholly-owned subsidiary of the Company. Badcock had been a unit of Franchise Group, Inc. since late 2021. Badcock operates nearly 380 stores in eight southeastern states comprised of over 65 corporate locations and over 310 independent dealer-owned stores. The stores are branded “Badcock Home Furniture & More” and sell furniture, appliances, bedding, electronics, home office equipment, accessories, and seasonal items.
On December 18, 2023, we reported that AREX Capital Management, LP sent a letter to the board of ODP CORPORATION urging it to separate its brick-and-mortar retail unit and sell its procurement unit (Varis). AREX believes that these changes to the corporate structure would increase the Company’s share price by at least 50%. In response, ODP issued the following response: “We thank AREX for its input, as we welcome all shareholders’ views on the Company and the most effective way for it to realize value for our investors. The Board regularly and actively evaluates the Company’s strategic plan - including its approach to capital allocation and any potential alternatives for its businesses - and will continue to do so, informed by, among other things, the views expressed by AREX or other shareholders.”
Anagram Holdings, PARTY CITY'S bankrupt balloon-manufacturing affiliate, is close to an agreement with Party City which would resolve disputes between them and allow Anagram to continue operating without interruption, according to reports. Additionally, Anagram won court approval to sell itself to its lenders, who agreed to take over the balloon business in exchange for forgiveness of $168 million in debt.
Party City exited bankruptcy in October 2023.
O'REILLY AUTOMOTIVE entered into a definitive stock purchase agreement with the shareholders of Groupe Del Vasto, headquartered in Montreal, Quebec, Canada, under which O'Reilly will acquire all of the outstanding shares of Groupe Del Vasto and its affiliated entities. The stock purchase is expected to be completed in January 2024, subject to customary closing conditions and regulatory approvals. Groupe Del Vasto operates as Vast-Auto Distribution. Vast-Auto operates two DCs and six satellite warehouses that support a network of 23 Company-owned stores and hundreds of strategic independent partners.
REGIS CORPORATION announced that it will transfer its stock exchange listing from the NYSE to Nasdaq, effective January 8 after the market close. The Company's shares are expected to begin trading as a Nasdaq-listed security on January 9, 2024. The Company will retain its current ticker symbol "RGS." Once the listing transfer to Nasdaq is complete, the Company expects that it will be in full compliance with Nasdaq continued listing requirements and the continued listing requirements of the NYSE will no longer apply. As previously disclosed, Regis had been deemed below compliance with the NYSE's continued listing standard that requires listed companies to maintain either (i) at least $50 million in stockholders' equity or (ii) at least $50 million in total market capitalization on a 30-trading day average basis.
General Interest
3Q Retail Update... Retail trends experienced in 1H23 continued in 3Q. Despite escalating prices, U.S. consumers continued to display resilience, sustaining spending momentum due to a robust labor market and the gradual depletion of residual savings from the pandemic. The Fed seems to be finally winning its battle with inflation, as CPI growth fell to 3.1% in November. Some retailers are even discussing a pending deflationary period; Walmart’s CEO stated “We may be managing through a period of deflation in the months to come.” Nevertheless, consumer budgets are already strained by the two prior years of steep price hikes when CPI grew an average 4.7% in 2021 and 8% in 2022. Those retailers with a heavy mix of grocery, health and other essential categories, and those with a strong value offering largely saw growth. As such, it’s not surprising that the grocery, mass and discount apparel sectors benefited with continued positive sales momentum. This is highlighted by Walmart’s 5.2% comp growth in 3Q, supported by its industry leading grocery business. On the other end, sales of discretionary goods have continued to fall and have also been pressured as consumers shift more of their spending back to services, like travel and eating out. With its lower mix of essentials, Target saw 3Q comps fall 4.2%. Department stores overall have been a retail laggard, while even the higher-end luxury market is starting to struggle with elevated inventories.
Preliminary Holiday Sales Insights… According to preliminary insights from Mastercard SpendingPulse, U.S. retail sales, excluding automotive, increased 3.1% YOY this holiday season (November 1 through December 24). SpendingPulse measures in-store and online retail sales across all forms of payment and is not adjusted for inflation. Online retail sales increased 6.3% YOY, while in-store sales were up a more modest 2.2% YOY. Apparel was one of the top categories for shoppers this season, with sales up 2.4%, while electronics and jewelry sales were up 0.4% and 2%, respectively. In terms of food sales, restaurant sector sales were up 7.8% and grocery was up 2.1%.
