April 6, 2022
Last week, workers at an Amazon warehouse on New York’s Staten Island voted to unionize. The vote was 2,654 for the union and 2,131 against it. This marks the Company’s first unionized worksite in the U.S. Amazon said it may file objections before the election result is certified. The workers at the Staten Island facility, which is known as JFK8 and is Amazon’s largest in New York, voted to organize under the independent Amazon Labor Union (ALU). It consists of current and former Amazon employees and is not affiliated with any national union. The ALU was formed by former manager Christian Smalls, who was fired in 2020.
Amazon had reportedly been engaging in efforts to discourage employees at the Staten Island warehouse from joining the union, including requiring associates to attend mandatory “captive audience” meetings and putting up banners that said “Vote No”. The ALU has demanded the Company start bargaining in early May and cease any changes to employment terms at their warehouse in the interim. It also demanded the retailer respect workers’ rights to union representation during disciplinary meetings. The union victory comes the same week as a union effort in Alabama looks like it could lose a vote for a second time, though because of challenged ballots the outcome was too close to call on Friday. Another warehouse in Staten Island will vote on joining the ALU within the next month.
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.
Grocery Outlet is targeting the Pittsburgh area as part of its expansion in Pennsylvania. The Company is seeking locations in the area of between 15,000 and 20,000 square feet. After its initial public offering in 2019, Grocery Outlet first started expanding in the Philadelphia market in March 2021 and has opened eight stores there since. A representative commented, “Over the last year, Grocery Outlet has made expanding in Pennsylvania, New Jersey and Maryland a priority…. In addition to exploring our options in the Pittsburgh region, we have recently opened stores in the Philadelphia area and New Jersey.”
After successfully separating from Victoria’s Secret in August 2021, Bath & Body Works closed out the year on a solid note. 4Q21 sales were up 11.4%, while FY21 sales were up 22.5% from FY20 and 46% from FY19. Growth was driven by an increase in transactions and average dollar sales. As pandemic restrictions eased and many consumers ventured back out, e-commerce sales receded to $764 million (a 5.7% decline from FY20) and represented 24% of FY21 sales. During the year, the Company continued to invest in its real estate footprint, completing 54 new off-mall stores and 79 store remodels. The Company also closed 35 units, principally in malls. In FY22, the Company will continue to invest in a new, fully automated fulfillment center to support its existing third-party network. The Company expects the fulfillment center to be operational this fall and at full capacity in fall 2023.
Grupo Comercial Chedraui is in integration mode after closing on its acquisition of Smart & Final from Apollo Global Management in July 2021; Smart & Final now operates as a division of Bodega Latina, the Company’s U.S. subsidiary, along with the El Super and Fiesta Mart chains. In late December 2021, Bodega Latina announced a name change to Chedraui USA to more closely align it with Grupo Comercial Chedraui. Altogether, Bodega now has 377 locations across California, Nevada, Arizona, New Mexico and Texas. 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.
Rite Aid recently closed two more stores in Sacramento, CA, bringing the total number of closures in the city to four since the beginning of 2022. The closures are part of the first phase of a program announced by Rite Aid late last year in which the Company identified 63 stores for closure, or approximately 2% of its store base. The closures are expected to provide a $25 million annual benefit to the Company’s EBITDA, signifying that these stores were EBITDA negative. Rite Aid’s TTM EBITDA and EBITDA margin was $441 million and just 1.8%, respectively, as of the end of 3Q 11/27/21.
According to a recently published report by professional services firm Jones Lang LaSalle (JLL), ALDI was the fastest-growing grocery chain in the U.S. in 2021 in terms of both the number of new stores opened and additional square footage. In 2021, ALDI opened 88 U.S. locations accounting for more than 2.2 million square feet. The Company is now the country’s third largest grocer by store count, behind Kroger and Walmart.
According to our Store Trends database, the Company operated 2,160 stores as of March 2022. States with the largest concentration of stores were Illinois at 9.9%, Florida at 8.4% and Ohio with 6.9%, while Florida and California have seen the most growth over the last two years.
BJ’s Wholesale Club will open a new store in Ross Township, PA on April 8, its second in the Pittsburgh market. Its first club in the area opened in South Fayette Township in December 2021. The new store will bring the Company’s total store count to 227, including 19 in Pennsylvania. BJ’s also announced plans for four more openings in 2022, in Warwick, RI; Lady Lake, FL; Canton, MI; and Greenburgh, NY.
In other news, the Company announced the rollout of Same-Day Select, an advanced expedited grocery delivery option of around two hours. The latest upgrade is designed on the successful testing of the program in the last six months.
The return to in-person shopping continued to fuel lululemon’s sales growth. 4Q21 sales rose 23% from a year ago and 52% on a two-year stack basis, with strong performance across all products, channels and regions, despite the ongoing impact of COVID-19 and strained global supply chains. Revenue was up 21% in North America and 35% internationally. In FY21, the Company opened 53 net new locations, bringing the total to 574 stores. 1Q22 revenue is expected to be in the range of $1.53 billion and $1.55 billion, representing 24% to 26% growth from 1Q21. FY22 revenue is estimated at between $7.49 billion and $7.62 billion, reflecting 20% to 22% growth from FY21.
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Aaron’s announced the completion of its acquisition of Interbond Corporation of America, doing business as BrandsMart U.S.A., for $230 million in cash. BrandsMart is an appliance and consumer electronics retailer with 10 stores in Florida and Georgia.
GameStop continues to position itself for the future; however, it needs to start taking steps to extricate itself from a deepening operational hole stemming from its brick-and- mortar business. Spending on new initiatives led to negative EBITDA in 4Q21, despite a 6% increase in sales. The expanded top line reflected greater demand for new gaming consoles from Sony and Microsoft, continued sales of Nintendo gaming products, and additional store traffic, despite closing 243 stores during the year (management again declined to provide comps).
H&M’s 1Q22 revenue rose 22.7% to SEK 49.166 billion (approximately $5.27 billion) excluding VAT, and increased 18% in local currencies; revenue was still 10.5% shy of pre-pandemic levels. H&M’s operations were negatively impacted by the spread of Omicron, as the Company was forced to close stores in some of its largest markets such as Europe and the U.K., and stores that were open continued to be impacted by extensive restrictions. Sales increased in all markets (a notable 36% increase in North and South America), except for Asia, Oceania, and Africa, which saw revenue slip 3% as a result of pandemic-related store closures. As of March 30, there were 227 stores that were temporarily closed, including 185 stores that were closed in Russia, Belarus and Ukraine, and 42 stores that were closed due to the pandemic. Sales for March 1 to March 28 rose 6% in local currencies and were up 11% when excluding the impact of the stores closed due to the war. H&M opened 15 stores and closed 95 in the 1Q22 period, ending the quarter with 4,721 locations.
In FY22, the Company now plans to open 95 stores compared to 120 new stores expected previously, primarily in growth markets, and close 240 units. The Company will also enter six new markets, including Company-owned stores in Ecuador, Kosovo, and North Macedonia, and franchised locations in Costa Rica, Guatemala and Cambodia. The rollout of H&M online will continue in FY22, with operations in Colombia, Peru, Australia and Philippines.
Target opened a 33,000 square-foot store in New York City’s Times Square last week. The store is one of about 30 small to mid-sized units the Company plans to open this year. Target also plans to remodel about 200 stores across the country.
Sportsman’s Warehouse saw steep drops in 4Q21 comps and EBITDA, down 10.8% and 25.2%, respectively, but that was expected as it cycled the impressive 57.7% comp gain in 4Q20. Management noted the prior year saw strong growth driven by the events of January 6, 2021, which led to increased firearms and ammunition sales across the business, as well as the $2 trillion in government stimulus. Both factors contributed to further gains in 1Q21, when comps grew 24.1%, on top of 28.6% in 1Q20. Accordingly, management is guiding 1Q22 comps to be down 14% to down 11%.
The Company opened 10 stores in FY21, including its first in the state of Florida, and is planning to open up to another 10 stores in FY22, including two more in Florida and two smaller format Spike Camp stores. 2021 also saw the Company remodeling some of its “20-plus” year old stores. 19 remodels were completed in FY21, with seven planned for FY22. The Company is also partnering with key vendors and adding more store-within-a-store sections.
Walgreens Boots Alliance posted stronger-than-expected 2Q22 results. U.S. comps advanced 9.5%, boosted by COVID-19 vaccinations and testing, and included a 14.7% increase in front-end comps, the highest in over 20 years. While store openings have come to a standstill, the Company is making significant capital investments in its Walgreens Health business. Segment sales were just $527 million, and it recorded an operating loss of $77 million in the quarter. Still, the Company said it is making rapid progress towards building out Walgreens Health, with a target run rate of more than $4 billion of sales exiting FY22, and $9 billion to $10 billion in sales by FY25. The business includes VillageMD clinics, Walgreens Health Corners, Shields specialty pharmacy, and the pending acquisition of post-acute and home care business CareCentrix. Nearly half of its store footprint will have either a Health Corner or VillageMD clinic. VillageMD has now opened 102 co-located clinics, and the Company expects to have 200 and another 100 Health Corners by year-end. WBA also opened three automated micro-fulfillment centers and is on pace to have 22 by FYE24. These MFCs are expected to cover 40% to 50% of prescriptions for pharmacies, while also reducing working capital investments. Management noted the strategic review of the Boots business is in progress, with no further details. Boots U.K. business rebounded in 2Q22, but foot traffic was still below pre-pandemic levels (about 15% below) due to headwinds from Omicron. Management noted it does not expect the business to recover to pre-pandemic levels until FY23.
Papa John’s has transferred its controlling stake in a joint venture with Blue and Silver Ventures to Sun Holdings, one of the Company’s largest domestic franchise partners. The transfer gives Sun Holdings a controlling interest in 90 units in Texas. The two companies signed a franchise expansion deal last year to open 100 new units in Texas by 2029, marking Papa John’s largest U.S. franchise deal to date.
Alimentation Couche-Tard is converting 12 Sioux Falls, SD area Holiday Station stores to its global Circle K brand. Work has already begun on one convenience store, and Couche-Tard expects to complete the rebranding initiative in approximately six weeks. One store will be reconstructed as a new Circle K location and is slated to reopen this summer. The banner rebrand has been in the works since 2017, when Couche-Tard acquired the gas station brand from the Erickson family.
Smoothie King assigned development agreements during 1Q22 to open 51 new stores in the Carolinas, Florida, New York, Ohio, Texas and Wisconsin, among other markets. This year, the Company said it is pursuing aggressive domestic growth plans throughout the Southwest, Mountain, Upper Midwest, and New England regions.
7-Eleven launched the Laredo Taco Co. and Raise the Roost Chicken & Biscuits quick-service restaurant (QSR) concepts inside two Speedway convenience stores in Cleveland and Columbus, OH. The locations are the first Speedway stores to feature either of 7-Eleven’s restaurant concepts. 7-Eleven expects to add more Laredo Taco and Raise the Roost Chicken & Biscuits locations across Ohio in 2022.
Southeastern Grocers will close a Winn-Dixie store in Delray Beach, FL.
Signet Jewelers’ FY22 results exceeded expectations, as the Company ended the year with sales and earnings growth. Consolidated sales rose 28.6% to $2.81 billion during 4Q, driven by strong e-commerce penetration and positive comps; sales were up 27.5% from FY20. Same-store sales were up 23.8% in 4Q, as in-store traffic improved. Revenue growth continued to be broad-based across all banners and categories. By region, North America comps grew 22.2% (38.1% vs. 4Q20), with average transaction values up 16.8% and a 3.6% increase in the number of transactions. Overall, Signet grew its U.S. market share to 9.3%, a 270 bps gain over FY21, with market share growth in every channel including bridal, where the Company is the market leader with a 30% share. International comps increased 50.2% (7.5% vs. 4Q20). On the real estate front, store optimization remained a priority, with 86 stores permanently closed and 107 new locations added during FY22. The Company plans capital investments of $250 million in FY23, its largest in five years, to further enhance its stores, digital platform and data analytics.
FAT Brands will expand into Israel, with 10 new franchised Johnny Rockets locations. The franchisee leading the deal, F and J Master License Ltd., will open the new restaurants over the coming decade.
IKEA’s buy back and resell pilot program, first tested in 33 stores between November 1 and December 5, 2021, will now be offered on a permanent basis. In addition to the pilot locations, the program will be offered at IKEA locations in College Park, MD; Carson, CA; Centennial, OH; and Brooklyn, NY. The program offers customers the opportunity to sell their “gently used” IKEA furniture back to the Company in exchange for store credit. Items bought back will be sold in the Company’s “As-Is” department. IKEA operates 375 stores in 30 countries, including 52 in the U.S.; it already operates buy back programs at its stores in many other countries.
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