Walmart and VIZIO announced they have entered into an agreement for Walmart to acquire VIZIO for $11.50 per share in cash, valued at $2.30 billion. The acquisition will enable Walmart to provide in-home entertainment and media experiences, further accelerating Walmart's media business in the U.S., Walmart Connect. The transaction is subject to regulatory clearance and other closing conditions. VIZIO's board unanimously approved the transaction; additionally it was approved by VIZIO's stockholders representing 89% of outstanding shares. 

Walmart reported FY23 sales increased 5.5% to $648.10 billion, while the global advertising business grew 28% to $3.40 billion. 4Q23 sales were up 5.7% to $173.40 billion, with e-commerce sales up 23%. 

In other news, Walmart is currently seeking a permit for a Sam's Club distribution center in Jacksonville, FL which will cost about $31 million. According to a memo from the city, the facility will be created from an existing warehouse that spans over one million square feet on 63 acres of land.

Amazon, which operates office buildings across Seattle, Bellevue, and Redmond, WA as part of its "Puget Sound headquarters," has opened two new buildings in Bellevue. The new facilities, dubbed "Dynamo" and "Sonic" provide more than 700,000 square feet of office space for more than 2,500 employees. Amazon now operates nine office buildings in Bellevue employing more than 11,000 employees, following its initial hiring spree there in 2020. 

Northeast Grocery announced it would move its Albany and Colonie, NY Price Chopper stores into the nearby buildings that were vacated by ShopRite last year; the stores will operate as Market 32. Last fall, the Company took over the leases for all five former ShopRites in the area, and initially said it would transition two locations, in North Greenbush and Niskayuna, both now operating as Market 32. This latest announcement brings the total to four relocated stores, with one former ShopRite not transitioning. In each relocation case, the Company is moving into newer buildings in high-traffic spots.

Kroger said it plans to lower prices and provide more fresh, affordable choices following its proposed merger with Albertsons. The Company indicated that it has lowered prices following its previous mergers. For instance, it said it invested more than $125 million to lower prices at Harris Teeter after its merger in 2014 and more than $100 million to lower prices at Roundy's after its merger in 2016. Additionally, Kroger invested $2.50 billion and $2.40 billion in capital per Harris Teeter and Roundy's store, respectively, to enhance the customer experience in the three years following each merger. Looking to the proposed merger with Albertsons, Kroger said it will invest $500 million to lower prices and invest $1.30 billion to improve Albertsons' stores. 

Colorado Attorney General Phil Weiser announced last week that the state is suing to block the Kroger-Albertsons merger. Kroger operates 148 King Soopers and City Market stores and Albertsons operates 105 Safeway and Albertsons stores in Colorado. Colorado joins several other states and Washington D.C. which are also suing to block the merger. Weiser stated, "Coloradans are concerned about undue consolidation and its harmful impacts on consumers, workers, and suppliers."

Grocery Outlet agreed to acquire closeout grocery retailer United Grocery Outlet (UGO) from former UGO management. The deal is anticipated to close early in 2Q24, subject to customary closing conditions. The acquisition is expected to be modestly accretive to the Company's 2024 earnings. With 40 stores and a distribution center, the acquisition of UGO will expand Grocery Outlet's presence into Tennessee, North Carolina, Georgia, Alabama, Kentucky, and Virginia. According to a regulatory filing, Grocery Outlet will pay $62 million in cash to acquire the Company. In addition to the newly acquired UGO stores, Grocery Outlet will open 15 to 20 stores in existing markets this year, for a total of 55 to 60 net new stores this year.

Macy’s announced that its Board has received notice from Arkhouse Management Co. LP that it has nominated nine individuals to stand for election to the Macy’s Board of Directors at the Company’s 2024 Annual Meeting. The nomination of directors by Arkhouse set off a proxy battle after the Company rejected Arkhouse's $5.80 billion buyout bid last month. 

HBCx confirmed that the Company has completed a refinancing that extends maturities and increases liquidity. The ABL credit facility maturity was extended from October 2024 to June 30, 2026, and reduced from $1.30 billion to $1.22 billion at close and then to $1.10 billion in October 2024. Management noted that following the separation of the Saks.com and Saks OFF 5th e-commerce operations, its borrowing base was limited to up to $1.10 billion. As a result, the reduction in the ABL facility capacity had no impact on liquidity. The $60 million FILO term loan maturity was also extended to June 30, 2026.

In addition, the senior secured term loan was increased by $50 million to $443 million and now matures September 30, 2026. Pathlight serves as the administrative agent of the loan.

HBCx also entered into a new $150 million term loan secured by real estate, which matures April 1, 2027. The Company drew down $50 million under the new term loan.

The additional $100 million in liquidity was used to repay borrowings under the ABL credit facility. As of October 28, 2023, there were $754 million in direct borrowings and $57 million in letters of credit outstanding under the ABL credit facility, resulting in availability of $245 million after borrowing base restrictions (borrowing base of $1.06 billion).

Nordstrom announced plans to open a new 26,000 square-foot Nordstrom Rack store in Manalapan Township, NJ in spring 2025. The Company operates four Nordstrom stores and nine Nordstrom Rack stores in New Jersey. The Company also plans to open a 25,000 square-foot store in Geneva, IL next spring. There are four full-line stores and 17 Rack stores in that state. 

As we previously reported, Express hired a turnaround firm, M3, to explore cost-cutting and restructuring options. According to our sources, the Company has also retained Kirkland & Ellis as legal counsel to evaluate a possible bankruptcy filing. A filing could occur within weeks according to our sources.

For the YTD23 period, the Company reported $155 million in negative free cash flow on top of a $120 million cash burn last year. As of October 29, 2023, Express had $35 million in cash and only $22 million in revolver availability under its $290 million facility with Wells Fargo Bank.

Shoe Carnival acquired Rogan Shoes for $45 million. Rogan's is a work and family footwear retailer with 28 stores in Wisconsin, Minnesota, and Illinois. Shoe Carnival expects Rogan's will be immediately accretive to earnings and will contribute about $84 million in sales and $10 million in operating income during FY24. The Company expects to realize about $1.5 million in synergies, half by FY25, with the remainder by FY26, primarily from the integration of Rogan's into the Shoe Station banner. Following this integration, the Shoe Station banner is expected to generate over $200 million in annual sales by FY25. Including Rogan's, the Company's system-wide store count is now 429, and management's long-term goal is to reach at least 500 stores by FY28.

Shoe Carnival also provided preliminary sales results for FY23 ended February 3, 2024, and an update on liquidity. Net sales reached $1.18 billion, which was down 7% YOY. Shoe Carnival made further progress in optimizing its inventory levels, ending the year with inventory down over 10% YOY, compared to a 6% decrease as of 3Q23. The Company had over $110 million in cash and no debt on its balance sheet.

The Children's Place entered into a non-binding $130 million term-loan agreement with Gordon Brothers. The term loan is expected to (i) mature on November 15, 2026, (ii) bear interest at the Secured Overnight Financing Rate plus 9% per year and (iii) contain customary transaction fees. The Company expects to enter into definitive agreements for the term-loan "as expeditiously as possible" during the month of March. The filing stated, "the Company previously announced that it has been working with its financial and legal advisors to consider all strategic alternatives in the event that the Company is unable to consummate the financing contemplated by the Term Sheet or other financing of a similar nature in a timely manner. The Company’s work on these alternatives remains in progress."

On February 15, the Company announced that the recent open market acquisition of shares by Mithaq Capital (Mithaq), a Saudi investment firm, and Snowball Compounding Ltd., who now own approximately 54% of the Company’s outstanding shares of common stock, has triggered a Change of Control event which caused a default under the Company’s credit agreement. The Company is in discussions with its lenders to seek a waiver.

Management intends to accept Mithaq’s request to enter discussions regarding its offer to assist with the Company’s liquidity needs. Any such financing would be subject to, among other things, lender approval and compliance with applicable law. Mithaq intends to nominate 11 persons to stand for election to The Children’s Place’s Board of Directors at the Company’s 2024 Annual Meeting of Shareholders.

True Religion's owner, hedge fund Farmstead Capital Management, is reportedly considering selling the chain. Reports indicate that Farmstead has hired Baird to run the sale process. True Religion has filed for bankruptcy twice in recent years, in 2017 and 2020. But it has been in growth mode over the past few years under the leadership of CEO Richard Buckley. In September 2023, the chain opened its first new stores in four year, in Atlanta, GA, bringing its store count to 46 in the U.S. True Religion is also expanding outside the U.S. The chain partnered with Aurorae Group, owner of Evisu Group in China, to open 65 stores by 2026, growing to a total of 108 by 2028. The Chinese market is expected to represent 10% of True Religion's global brand volume by 2026. The brand is also expanding in new markets including India, Indonesia, South Korea, the Philippines, South Africa, Lebanon, and Qatar, bringing its total number of markets outside the U.S. to 26.

Fitness International (La Fitness) successfully refinanced its credit facilities. The new facilities consist of:

• 1L $300 million Revolving Credit facility due 2028 with $61 million drawn at closing
• $300 million term loan A due 2028
• $675 million term loan B due 2029

Overall, this refinancing transaction represents a key milestone especially considering how slow the Company has been to rebuild since the pandemic. It was reported that membership and revenue as of September 2023 have almost fully recovered to pre-pandemic levels; however, peers like Planet Fitness hit those milestones in early 2022. LA Fitness' TTM revenue was reported at $2.09 billion as of September 30, 2023.

Barnes & Noble plans to open five new stores in the Chicago, IL area, in Oswego (spring), Clark & Diversey (in a former Urban Outfitters this summer), Wicker Park (in a former Walgreens this summer), Northbrook (summer), and Schererville (fall). 

Pet Supplies Plus announced plans to open more than 60 locations combined under its namesake and Wag N' Wash chains this year. The Company ended 2023 with 83 franchise agreements for Pet Supplies and 12 for Wag N' Wash. In addition to the franchise agreements, Pet Supplies opened 62 new stores last year, while Wag N' Wash opened 13. The Company operates 720 locations in 42 states under the Pet Supplies banner, and 24 Wag N' Wash locations. 

In the RITE AID CORPORATION, DIP case, the hearing on the Disclosure Statement has been further adjourned to February 26, 2024. The Debtors also notified the Court they rejected three leases in Springfield, MO, Westminster, CA, and St. Louis, MO. 

The Body Shop's new owners, U.K.-based private equity group Aurelius, have entered into administration in the U.K., a move that affects its British business only. The move comes several months after the banner's previous owner Natura & Co sold the chain to Aurelius in a transaction valued at £207 million (US$254 million). Business advisory firm FRP, which will handle the administrative process, said The Body Shop will continue to trade while searching for a buyer for all or part of the business. Earlier this month, The Body Shop signed an agreement with an international family office to sell most of its business in mainland Europe and in parts of Asia. The Body Shop has about 2,500 stores globally, including about 22 in the U.K.

General Interest

Distributors' Role in Drug Shortages... The FTC has announced it is inquiring into the drug distributors’ and GPOs’ contracting practices, market concentration and compensation as part of the agency’s examination of drug shortages and their causes. Additionally, the FTC is evaluating GPOs and drug wholesalers’ compliance with legal obligations under the Clayton and Robinson-Patman Acts, as they apply to price discrimination and unfair business practices. The deadline for submitting comments is mid-April. RetailStat analysts recently issued a White Paper discussing this topic.