March 20, 2024
On March 18, JOANN Inc., DIP filed a voluntary prepackaged Chapter 11 petition in the U.S. Bankruptcy Court for the District of Delaware. The proceedings have been designated as case number 24-10418.
The Debtors entered into a Transaction Support Agreement (TSA) with a majority of its financial stakeholders and “additional industry financing parties” to strengthen the Company’s financial position. In connection with the TSA, the Company has received commitments for $132 million in new financing and related financial accommodations and it expects to reduce funded debt on its balance sheet by approximately $505 million. The parties have also agreed to a six-month extension of the Company’s existing ABL and FILO credit facilities, effective upon the Company’s emergence from the court-supervised process. Management said, “Under the TSA and related transaction documents, all obligations to employees, vendors, landlords, and other trade creditors will be paid or otherwise satisfied in full and honored in the ordinary course of business.”
Dollar Tree announced the closure of 600 Family Dollar stores in 1H24 as well as 300 FD stores and 30 Dollar Tree stores as their leases end over the next several years. In connection with the store portfolio review, the Company incurred $594.4 million in charges. Additionally, it incurred a goodwill impairment charge of $1.07 billion and a trade name intangible asset impairment charge of $950 million.
Dollar Tree reported double-digit sales growth for 4Q23, driven in part by an extra week. In 4Q, enterprise-wide comps were up 3%; DT reported comps up 6.3% while FD saw comps decline 1.2%. Both banners reported transaction volume increases: DT (7.1%) and FD (0.7%), while average tickets were negative: DT (-0.7%) and FD (-1.2%). The Company opened 641 new stores and closed 205 underperforming stores during FY23.
Tempur Sealy International provided an update on its planned acquisition of Mattress Firm Group. It continues to work with the FTC to advance the transaction, and now expects that the FTC will complete its review by the end of 2Q24. Consistent with previous expectations, Tempur Sealy continues to expect the transaction to close in mid to late 2024.
Tempur Sealy and Mattress Firm continue to make joint progress in planning for post-closing, including solidifying Mattress Firm’s key supplier relationships ahead of the expected closing. Since announcing the acquisition, Tempur Sealy has executed post-closing supply agreements with six other mattress manufacturers, including Purple Innovation, Inc.These contracts are consistent with Tempur Sealy’s plan for Mattress Firm to continue as a multi-branded retailer.
In the RITE AID CORPORATION, DIP case, the Debtors filed a notice that the hearing date for the amended Disclosure Statement was adjourned to March 25, 2024. Also, a hearing to consider approval of the Health Dialog sale agreement will be held March 26, 2024. Additionally, the Debtors requested the Court adjourn the hearing to consider extending the time within which the Debtors may assume or reject leases from March 15 to April 17, 2024.
The Debtors identified two stores for closure, in New Brunswick, NJ and Southgate, CA, bringing the total of announced closures to 430. The Debtors also filed notices for plans to assume four leases.
Fareway Stores plans to open a 21,000 square-foot store in Valley, NE, northwest of Omaha. The Company expects to close on the deal within a few weeks and begin construction after that. A few weeks ago Fareway announced an upcoming location in Basehor, KS.
Zumiez stated that it concluded a "difficult year with stronger than anticipated fourth quarter results as our consolidated monthly sales trend accelerated in January." Looking ahead to 1Q24, quarter-to-date sales decreased 3.1%, and comps were down 6.2%. The Company intends to open 10 new stores this year, including up to three in North America, three in Europe, and four in Australia.
Tilly's 4Q23 sales decreased 4.1%, and comps were down 8.8%. Net sales from physical stores declined 7%, and comps were down 11.8%; e-commerce sales were up 4.7%. Looking ahead, the Company expects to spend up to $15 million during FY24, primarily for the construction of five new stores and continued upgrades to certain distribution and IT systems.
Dick's Sporting Goods reported 4Q23 sales increased 7.8%, while consolidated comps increased 2.8%. During FY23, the Company opened one and closed five legacy stores and opened 10, acquired 12, and closed 16 specialty stores. At year end, the Company operated 724 legacy stores (including 12 House of Sports) and 131 specialty stores (104 Golf Galaxy, seven Public Lands, 17 Going Going Gone and 10 other specialty stores). The Company also operated 36 temporary Warehouse Sale stores.
The Home Depot is opening four new distribution centers to serve pro customers in Detroit, Los Angeles, San Antonio, and Toronto, during the first half of 2024. The new facilities will stock large, bulky merchandise such as lumber, insulation, and roofing shingles. Professionals will be able to order entire job lot quantities to be delivered to their job sites. The Company has already opened similar pro-focused hubs across the U.S., and expects to have facilities in 17 of its top pro markets by year end.
Last week BNED issued a going concern warning and said it is engaged in advanced and ongoing discussions with third parties to evaluate a range of options to strengthen its liquidity and financial position. On March 12 it amended its credit agreement to revise certain reporting requirements and set certain milestones for liquidity and refinancing contingency plans. BNED must execute a binding commitment no later than April 3, 2024.
ULTA's 4Q23 sales increased 10.2%, primarily due to a 2.5% increase in comparable sales, the addition of 30 stores, and an extra week of sales in FY23. Comparable sales improved due to a 4.5% increase in transactions,partially offset by a 1.9% decrease in average ticket. In 4Q23 the Company opened 13 new stores, located in Anaheim, CA; Brea, CA; Brenham, TX; Dartmouth, MA; Glassboro, NJ; Goldsboro, NC; Hialeah, FL; Jacksonville, FL; Land O'Lakes, FL; Missouri City, TX; Orange, CT; Orlando, FL; and Venice, FL. In addition, the Company relocated two stores, remodeled two stores, and closed two stores.
Ulta announced it would expand into Mexico in 2025, through a joint venture with global brand operator Axo. CEO Dave Kimbell said on the earnings call that "The Mexican beauty market is sizable, growing, and has significant beauty opportunity."
Bojangles signed a multi-unit development agreement with LVP Restaurant Group, LLC, to bring 20 new locations to Phoenix, AZ. This deal follows a similar one from last year under which LVP would open 20 first-to-market Bojangles restaurants in Las Vegas, and 10 non-traditional units in TravelCenters locations across the Western U.S. Bojangles opened 40 new restaurants in 2023, with 10 located in new markets. It also added 270 units to its "growth pipeline" through franchising agreements. Bojangles operates more than 800 restaurants in 17 states.
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