June 7, 2023
At a recent investor conference, Yum Brands CEO David Gibbs outlined the Company’s growth potential, saying it has the possibility to add “another 100,000” units, on top of the 55,000 stores the Company currently operates. Gibbs stated, “Five years from now, we’ll have a lot more restaurants because we’re going to build a lot more. We’ll probably also have another acquisition or two along the lines of what we did with The Habit.”
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Amazon’s Whole Foods Market will open a new 47,000 square-foot store in Washington D.C., in part of the Walter Reed development. The location will feature meat and seafood counters as well as a bakery, prepared food section, and a variety of locally sourced products. There are more than 500 Whole Foods Market stores in the U.S., Canada, and the U.K.
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BJ's Wholesale Club’s first Tennessee store will open on June 14 in La Vergne, 20 miles from downtown Nashville. The new location will offer curbside pickup, in-club pickup, and same-day delivery. Additionally, the location includes a BJ’s Gas station, which opened on June 2. The Company will now have a total of 238 U.S. clubs in 19 states.
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Lululemon’s 1Q23 sales rose 24%, with strong performance across all products, channels, and regions, despite inflationary pressures. Revenue was up 17% in North America, and 60% internationally. Comps rose 14%. E-commerce sales increased 16%, representing 41.7% of total sales. The Company opened seven net new locations, bringing the total to 662 stores.
LL Flooring received an unsolicited, non-binding proposal from Cabinets To Go, LLC, a subsidiary of F9 Brands, Inc., to acquire all of the outstanding shares of the Company for $5.76 per share in cash. LL Flooring is currently reviewing the proposal. The Company is facing operational headwinds amid a pullback in discretionary spending. 1Q23 comps were down 15% and net sales fell 14% to $241 million, driven by lower consumer spending and a decline in Pro sales. Adjusted operating loss of $11 million contrasts with $5 million of operating income last year.
Albertsons’ subsidiary United Supermarkets opened a new location in Wichita Falls, TX. The nearly 55,000 squarefoot store occupies the site of a former Cash Saver supermarket, which closed in January 2019 after five years in operation. United operates nearly 100 stores in Texas and New Mexico under five unique banners: United Supermarkets, Market Street, Amigos, Albertsons Market, and United Express, along with ancillary operations R.C. Taylor Distributing, USM Manufacturing, United Food and Beverage Services and Llano Logistics.
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Red Robin completed a $29 million sale-leaseback transaction with Essential Properties Realty Trust, related to nine owned properties. Proceeds will be used to repay debt and fund capital investments, and support repurchasing shares of Company stock. The Company has begun marketing additional owned properties to explore one or more subsequent sale-leaseback transactions.
ValueAct Capital, an activist investor which owns 4.4% of 7-Eleven’s parent Seven & I Holdings, has been pushing for a potential spinoff of the 7-Eleven chain and a general shift in strategy for the last two years. In a May 31 letter to shareholders, ValueAct stated it looks forward to “private and constructive dialogue” with Seven & I Holdings. This came after May 25, when shareholders voted against ValueAct’s slate of nominees in favor of re-electing Seven & I President and CEO Ryuichi Isaka and other Seven & I-backed candidates to the Company’s board.
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After debuting its first outlet banner store in January 2023 in Greenville, TN, Belk opened 10 new outlet locations in May (see the chart below). The Belk Outlet concept features discounted items that come directly from larger Belk stores, including high-end and designer brands. Prior to the recent openings last month, five other Belk Outlets were opened earlier this year in Russellville, AR, Douglasville, GA, Laurens, SC, Clarksville, TN, and Cedar Bluff, VA, bringing the total to 16 outlet locations. Overall, the Charlotte, NC-based Company has nearly 300 Belk stores in 16 Southeastern states.
Ingka Investments, the investment arm of Ikea’s franchisee Ingka Group, has acquired Made4net for an undisclosed sum. Ingka Group will deploy Made4net’s technology across its stores to update its fulfillment and omnichannel operations. With Made4net’s technology, Ikea can speed up its deliveries, accurately fulfill orders, and better manage its supply chain. Made4net will continue to operate as an independent subsidiary from its New Jersey headquarters and six international offices. CEO Duff Davidson will remain on staff with the Company’s leadership team.
In the Party City, DIP case, the hearing to consider approval of the Disclosure Statement and Plan of Reorganization was rescheduled to the week of June 26; originally, it was scheduled for June 1. The Debtors provided notification (as part of a previously approved procedure) that they will reject four additional leases, located in Greenbelt, MD; Irondequoit and Long Island City, NY; and Alexandria, LA.
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In the Bed Bath & Beyond, DIP case, the Debtors are reportedly in talks to sell the buybuy Baby chain to Go Global Retail, the private-equity owner of Janie and Jack, a children's apparel retailer. Go Global reportedly seeks to acquire buybuy Baby, with plans to keep the chain operating.
The Debtors have also reportedly received interest for the intellectual property of the Bed Bath & Beyond banner from Overstock.com, the online discount retailer. Under that potential scenario, Overstock.com would still close all remaining physical stores. Talks are continuing, and the Debtors have not yet accepted either offer.
On the petition date, documents in the case stated that the Debtors intended to find buyers for 120 profitable buybuy Baby stores as well as more than 300 profitable Bed Bath & Beyond locations. buybuy Baby generated double-digit sales growth in 2021, yet margins were still underwhelming in the mid-single digits. Then during FY22, comps fell 5%, 18% and 22%, respectively, during the first three quarters of the year with no further detail on profitability.
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In the David’s Bridal, DIP case, the Debtors identified 52 additional stores which will start GOB sales. To date, the Debtors have identified 101 stores which will be closed. The deadline for bids on the Company’s assets was rescheduled to June 8 from May 30; additionally, the auction was rescheduled to June 9 from June 1. The Court authorized the employment of A&G Realty Partners, LLC as real estate consultant. A&G announced it is accepting offers on 49 David's Bridal leases, for bankruptcy court approval by June 30. The stores range in size from 5,000 to more than 15,000 square feet.
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In the Cineworld Group, DIP case, the Debtors filed a motion seeking approval to reject 25 additional leases, which they estimate will save the estates nearly $16 million annually based on 2022 performance.
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Kroger has opened one of its smaller Ocado ‘spoke’ fulfillment centers in Northern Kentucky. The expanded distribution warehouse in Independence, KY is 2,000 square feet and will support the existing e-commerce hub located in Monroe, OH. Kroger has a regional headquarters office based in Louisville and operates more than 100 stores in Kentucky, including in Independence, as well as four manufacturing and distributing facilities that serve the Company.
In other news, the mayor of Lexington, KY announced that a Mobile Market, stocked with food from Kroger, will be driving to different neighborhoods without a grocery nearby over the summer as a pilot program. The Mobile Market is a 60-foot trailer with a single aisle store offering fresh fruits, vegetables, dairy, chicken, beef, pork, deli meat, and a limited amount of household products, such as toilet tissue, detergents, and other cleaning products. Customers cannot pay with cash, only debit card, credit card, or SNAP/EBT payments will be accepted.
Panera is launching “drive-thru pick-up” at its stores nationwide. Customers can select the option when ordering ahead on the Panera app or e-commerce site and then pick up their online order from the drive-thru. The Company offers several other omnichannel ordering features, including curbside, mobile order-ahead for plated dine-in, rapid pick-up, and delivery. Panera began testing AI-enhanced drive-thru ordering at select stores in August 2022.
EG Group, owner of Cumberland Farms and other U.S. convenience-store chains, has agreed to sell the majority of its U.K. and Ireland fuel, foodservice, grocery and merchandise business to Asda for an enterprise value of $2.82 billion. The Company will continue to operate separately in the U.S, Australia, Germany, France, Italy, the Netherlands, Luxembourg, and Belgium. EG Group will use the proceeds of this transaction, together with the net proceeds of $1.40 billion from the recent saleleaseback transaction involving Cumberland Farms in the U.S., to repay debt in line with its financial policy and deleveraging strategy, it said.
Neiman Marcus previewed its new corporate hub concept in Dallas, TX, a three-story space that can accommodate up to 800 people and is meant to provide a base for visiting brand partners, remote employees, and other partners. Last year, the retailer said it would open a number of “corporate hubs” in different cities, giving its corporate workforce new options as to where they can be based. At the time Neiman Marcus shared plans for the corporate hubs, it said that most of its corporate workforce would remain in Dallas, with the option for some workers to primarily work out of the new hubs. Currently the Company also operates hubs in New York City and Bangalore, India.
Zumiez’s 1Q23 operating results were in-line with its outlook and reflectthe domestic demand environment and heightened promotional activity that has put pressure on its full-price selling model. May sales decreased 12.8%, and comps were down 14.3%. The Company currently intends to open 23 new stores this year, including eight in North America, 10 in Europe, and five in Australia.
Raley’s has reopened a store in Reno, NV, that had been closed for nearly five months for a major renovation. The remodeled location has been upgraded with updated, modern décor, new equipment, and expanded food offerings. The Raley’s banner is part of Raley’s Cos., which was created in December 2021 following the acquisition of The Bashas’ Family of Stores and now has a retail network of more than 235 stores in California, Arizona, Nevada, and New Mexico.
ALDI introduced a virtual convenience store that aims to deliver in as little as 30 minutes, called ALDI Express, powered by Instacart. The service will give shoppers access to nearly 2,000 items from more than 2,100 locations throughout the U.S. ALDI first partnered with Instacart for delivery services in 2017, and the two now offer delivery from 2,200 locations and pickup from 1,500. In May, ALDI announced it is reducing prices on more than 250 products.
This week, Giant Tiger is holding a grand opening for a new 18,600 square-foot location in Huntsville, Ontario, Canada. Earlier this year, the Canadian discount retailer opened an 18,000 square-foot store in Montreal, Quebec. Giant Tiger stores offer home and family fashions, brand-name groceries, and everyday essentials. The privately held Company has over 260 locations across Canada.
Fareway Stores broke ground on a 24,000 square-foot grocery store in Norwalk, IA that will be larger than the existing store it is slated to replace; construction is expected to be completed by early 2024. Fareway also plans to build a new, approximately 10,800 square-foot unit in Story City, IA. Demolition of existing structures at the space will begin this month, with new store construction to begin in early 2024. The family-owned grocer currently operates more than 130 locations in Iowa, Illinois, Kansas, Minnesota, Missouri, Nebraska, and South Dakota.
Victoria’s Secret’s 1Q23 sales declined 5%, in line with management's expectations, which called for a sales decline in the mid-single digits; comps fell 11%, as traffic softened and aggressive promotions continued. The Company opened one store and closed six in the U.S., bringing the total U.S. Company-operated store count.
Saks Fifth Avenue is expanding its personal shopping and styling service, the Fifth Avenue Club, with the launch of private, standalone suites in partnership with hotel and resort operators including Marriott International and its portfolio of luxury brands such as The Ritz-Carlton and St. Regis Hotels & Resorts. The services will be offered to both local customers and hotel guests, and merchandise to sample will be ordered from nearby Saks Fifth Avenue stores. The new hotel-based suites will be opened in Laguna Beach and Napa Valley, CA, as well as Orlando, FL, Maui, HI, Nantucket, MA, Charleston, SC, Nashville, TN, and Deer Valley, UT.
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