November 10, 2021
On November 8, Price Chopper/Market 32 and Tops Markets completed their previously announced merger. Under the terms of the agreement, the two companies will be managed locally by their respective leaders and continue to be referred to by their established brand identities but will be owned and overseen by a new parent company, Northeast Grocery, Inc. As previously announced, Scott Grimmett, current president and CEO of Price Chopper/Market 32, will lead the new parent company. He will also serve on its board as will Frank Curci, former Tops Markets chairman and CEO. The regulatory review process by the FTC mandates the divestiture of 12 of the combined companies’ stores. C&S Wholesale Grocers (current supplier to Tops) has been approved to purchase all 12 stores; financial terms have not been disclosed. C&S will convert these 12 stores to Grand Union supermarkets.
Back in July 2021 and on the heels of C&S Wholesale’s acquisition of Piggly Wiggly Midwest, C&S appointed Mark McGowan as its SVP of Retail, former President of Ahold Delhaize’s Stop & Shop. Mr. McGowan has more than 30 years of experience in the grocery industry and his leadership is expected to be critical to the Company’s expansion into the retail and franchise space, which is an active part of C&S’ growth strategy. Click here for more info.
Panera Brands, the privately held company that operates Panera Bread, Caribou Coffee, and Einstein Bros. Bagels, has announced that it plans to file for an IPO, though no specific date, price range, or number of shares to be offered was provided. The owner of Panera Brands, JAB Holding Co., will purportedly continue to be a long-term shareholder following the IPO. Panera had previously been a publicly traded company until 2017, when it was bought by JAB. Panera also announced that Danny Meyer, CEO of Union Square Hospitality Group and founder of Shake Shack, plans to personally invest at the time of the IPO with at least $285 million from his special purpose acquisition company (SPAC), USHG Acquisition Corp. Mr. Meyer will be appointed as lead independent director of Panera’s board upon completion of the investment. Click here for a list of Panera Bread future openings.
Our Hot Market Report takes a closer look at the Miami, FL real estate landscape, and provides visual competitive analyses as well as key real estate metrics such as future openings, store count, market share, digital insights, and demographics. Click here to request a copy of the full report.
The Giant Company, a division of Ahold Delhaize, recently opened its new state-of-the-art Giant Direct Ecommerce Fulfillment Center (EFC) in Philadelphia, PA. The 124,000 square-foot facility will enable the Company to serve more customers in Philadelphia and, for the first time, southern New Jersey. The Company will initially provide Giant Direct delivery to eight towns in the area, with plans to introduce the service to additional communities over the next several months. The new EFC aims to streamline order fulfillment by using the latest in robotics, machine learning and vertical integration. Giant’s presence in Philadelphia has been growing over the past few years. The Company, which had one store in Philadelphia in 2018, is expected to have 10 locations in the city by the end of 2023. In addition to three Giant Heirloom Markets and a new flagship store, Giant will open three additional stores in the city by the end of the year. The Company also has more than 150 pickup locations, and customers across 90% of its footprint have access to online grocery ordering and delivery services. Click here for a list of future openings.
Earlier this year, Amazon defeated a union drive at its Bessemer, AL warehouse. With another vote looming, the Company has ramped up its campaign at the warehouse, allegedly forcing thousands of employees to attend meetings, posting signs criticizing labor groups in bathrooms, and flying in staff from the West Coast. The moves to discourage unionization ahead of any second election shows how Amazon is fighting representation at its U.S. worksites.
In other news, Amazon is seeking approval from U.S. communications regulators to deploy more than 4,500 additional satellites as part of the Company’s effort to deliver broadband internet to areas around the world that lack high-speed service. Amazon had previously said it planned to spend at least $10 billion to build 3,236 such satellites through its Project Kuiper program. Last week, it asked the FCC for approval to deploy a total of 7,774 satellites for the project. Yesterday, Amazon requested approval to launch and operate two prototype satellites by the end of 2022.
Party City’s 3Q21 sales decreased 4.4% to $510.2 million, driven by the divestiture of a significant portion of international operations in 1Q21, partially offset by an 8.9% increase in retail sales due to a 7.5% comp increase. Third-party wholesale sales were down 33.6% due to the previously mentioned divestiture; excluding international operations, sales were up 7.8%. Gross margin increased 270 bps to 36%, driven by the divestiture and cost management. Adjusted EBITDA was down 12.8% to $42.9 million. Total corporate Party City stores as of September 30 was 754, up from 739 last year. Click here for a sample list of openings and closings.
Big 5 Sporting Goods’ 3Q21 sales and comps fell slightly short of the high hurdles from 3Q20, as these two metrics dropped 5% and 0.7%, respectively. However, revenue increased 9% relative to 3Q19. Downward pressure on 3Q21 sales came from closing two stores during the last 12 months, as well as an unfavorable calendar shift. Operating income fell 15%, and margin contracted 140 bps due to higher operating costs, despite improved gross margin. The net cash position improved to $104 million at October 2, 2021 from $50 million at September 27, 2020; the Company ended 3Q21 with no borrowings under its $165 million secured credit facility and cash of $114 million. Big 5 operated 429 stores at the end of 3Q21 and expects a year-end store count of 431 units. Ongoing concerns include a historically high concentration of apparel and footwear, which are among the most competitive categories in retailing. For 4Q21, management expects comps in the range of negative low-single digits to positive low-single digits.
Floor & Décor’s 3Q21 sales increased 28% to $876.6 million, and comps were up 10.9%. Gross margin eroded 130 bps to 41.7%. Adjusted EBITDA rose 12.7% to $120.2 million. The Company opened six new stores during the quarter, ending with 153 units and two design studios. Looking ahead to 4Q21, Floor & Décor plans to open seven new locations; this will bring the total to 27 new stores opened in FY21, representing 20.3% growth from FY20. Click here for a complimentary list of future openings.
The Cheesecake Factory reported 3Q revenue growth of 45.7% to $754.5 million. Comparable restaurant sales increased 41.1%. Relative to 3Q19, comparable restaurant sales increased 8.3%. During 3Q21, the Company opened four new restaurants in North Italia and Flower Child in the Phoenix area, North Italia in the Nashville area, and Blanco in the Chicago area. Subsequent to quarter-end, the Company opened a Cheesecake Factory in Huntsville, AL, a North Italia in Orlando, and Blanco and Culinary Dropout in Denver. The Company met its development objective to open 14 new restaurants across its concepts during FY21. Internationally, The Cheesecake Factory opened a third location in Shanghai under a licensing agreement.
Save A Lot sold six Company-owned stores in Dallas, TX and Jacksonville, FL to Yellow Banana LLC as part of Save A Lot’s ongoing efforts to convert corporate-owned stores to local ownership. Yellow Banana is owned by 127 Wall Holdings LLC. This news follows Yellow Banana’s September purchase of 32 Save A Lot stores in the Cleveland, Chicago, and Milwaukee metro areas, and brings Yellow Banana’s total Save A Lot count to 38 stores in five states.
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Inserra Supermakets debuted its largest store under the ShopRite banner in New Jersey. The 80,000 square-foot unit opened on October 31 as a replacement for the ShopRite of Wayne. Inserra is a member of the Wakefern cooperative and operates 23 ShopRite stores, with New Jersey locations in Bergen, Hudson and Passaic counties, and five stores located in upstate Rockland County in New York.
Fleet Feet agreed to acquire JackRabbit from affiliates of CriticalPoint Capital. The transaction is expected to close on December 7 and includes all 57 JackRabbit locations across 15 states and its jackrabbit.com e-commerce business. Terms were not disclosed; as part of the transaction, Fleet Feet will be assuming JackRabbit’s vendor payables and vendor receivables. The JackRabbit locations will fold into the Fleet Feet company-owned operations, and all stores will transition to Fleet Feet branding by the end of 2022.
JackRabbit is currently an operating subsidiary of Running Specialty Group (RSG Acquisitions, LLC). After the deal closes, both Shoes.com and Olympia Sports are expected to remain individual subsidiaries of RSG.
Dick’s Sporting Goods announced that Nike’s loyalty program will be linked to its own membership offering to allow customers to shop for Nike shoes and apparel, including member exclusive merchandise, on Dick’s website. In addition, in-person workout events will be hosted at Dick’s House of Sport locations in Rochester, NY and Knoxville, TN in November and December. There is also the future possibility for Nike customers to drop off returns or pick up online orders at Dick’s stores. The initiative is part of Nike’s strategy of expanding its own direct-to-consumer business, but also working more closely with fewer, select retailers. According to Dick’s most recent annual report, Nike was the Company’s largest vendor in 2020, accounting for 19% of merchandise purchases. Click here for a list of future openings and closings.
Camping World reported record 3Q sales of $1.90 billion, pushing its TTM EBITDA to a record of $902 million. With RV trends remaining robust, the Company increased its FY21 EBITDA estimate to $915 million - $930 million. FY22 financial guidance will not be provided until early next year, but management is optimistic it will outperform FY21. Over the next three to five years, management’s goal is for annual revenue to exceed $10 billion (TTM sales are currently $6.70 billion) with EBITDA surpassing $1 billion, assuming no material adverse changes in market conditions. The Company plans to grow Good Sam revenue 10% plus per year; continue its pace of acquisitions and new store openings, targeting 12 to 15 per year, with further growth possible if opportunities arise; and increase used RV sales, with annual revenue doubling to $3 billion. Management noted new vehicles, which dropped 19% in unit sales, were not as strong due to supply constraints, but it is seeing some normalization in inventory levels. New and used vehicle inventories grew 30% and 215%, respectively, while products and parts were essentially flat. Products and service comps fell 4.1% in 3Q21. Click here for a sample list of future openings.
The Tile Shop’s 3Q21 sales increased 13.2% to $92.2 million, and comps were up 12.8% from strong demand for home improvement products. Gross margin was up 30 bps to 68.2% due to better pricing, partially offset by increased costs. Adjusted EBITDA declined 6.4% to $10.4 million. The Company ended the quarter with 143 stores in operation, compared to 142 a year ago.
Cinemark’s business remained pressured in 3Q21, with revenues 47% below pre-pandemic 3Q19, at $435 million. However, sales improved 48% sequentially, as U.S. patron attendance improved to 21.5 million, up from 15.1 million in the second quarter. Average U.S. ticket price was $9.08, up 13% over the prior-year period. As of September 30, the Company had reopened all 324 and 200 of its domestic and international locations, respectively. In YTD21, Cinemark opened one domestic location and three international locations; it closed eight domestic and three international locations. The Company currently has commitments to open two new theaters and 33 screens in 4Q21. Given the steady top-line recovery, Cinemark recorded positive adjusted EBITDA for the first time since the onset of the pandemic, at $44 million (still down 74% over 3Q19). As of September 30, the Company had sufficient liquidity, including $543 million in cash and an undrawn $100 million credit facility. Looking forward, October delivered the highest monthly box office during the pandemic period. Momentum is expected to continue in November and December, given a strong film slate. Additionally, the FY22 box office is expected to improve sharply, as studios return to a theatrical exclusive model, after experimenting with day-and-date releases throughout this year.
Southeastern Grocers recently opened a third Fresco y Más Supermarket in Tampa Bay, FL. Fresco y Más caters to Hispanic and Caribbean communities. The Hispanic and Latino population makes up more than a quarter of Tampa, according to U.S. Census data; it grew nearly 19% since 2010 — triple the national average. The store was converted from a Harveys Supermarket, which is also owned by Southeastern Grocers. Fresco y Más first launched in 2016 in South Florida and now has 27 locations across the state. Click here for a sample list of future openings.
Ahold Delhaize’s Food Lion has invested $127 million to remodel 87 stores across Georgia, Kentucky, North Carolina, South Carolina, Tennessee, and Virginia. By the end of this year, 23 of these remodeled stores will offer Food Lion To Go pickup service. Click here for a list of future openings.
Chuy’s Holdings’ 3Q revenue increased 24.3% to $101.9 million, driven by customer traffic growth as the Company continued to relax indoor dining capacity restrictions throughout its restaurants, as well as $3.1 million of incremental revenue from new restaurants opened during FY21. For 3Q21, off-premise sales were approximately 26% of total revenue compared to roughly 33% and 12% in the same period last year and two years ago, respectively. Comparable restaurant sales increased 20.5%, driven by a 22.2% increase in average weekly customers, partially offset by a 1.7% decrease in average check. Comparable restaurant sales decreased 2.4% compared to the same period in FY19. During 3Q, Chuy’s opened one new restaurant in Brentwood, TN and four new restaurants during FY21, which completes the Company’s development plan for the year and brings its total count to 96. For FY22, Chuy’s expects to open between six to eight new restaurants.
Giant Eagle is looking to open a 28,000 square-foot store in Bloomfield, OH at the site of the former Shursave IGA in a mixed-use complex. Construction is expected to begin in 2023, with completion taking about 18 months.
On November 13, Rite Aid will open its 68thBartell Drugs store, in Kirkland, WA. It is the Company’s first new store since it was purchased by Rite Aid in late 2020.
Planet Fitness reported encouraging progress towards a recovery, as membership, revenue, and earnings growth continued. 3Q21 sales were up 46% over 3Q20, driven by a 7.2% increase in system-wide comps as consumers returned to gyms. The top line was still down about 8% compared to 3Q19, partially due to lower new equipment sales, given record unit growth throughout 2019. Franchise segment revenue was up 26%, corporate-owned club revenue was up 55%, and equipment segment revenue was up 102% over the prior-year period. The Company added more than 200,000 new members in 3Q and ended the quarter with over 15 million members (within 97% of its all-time high of 15.5 million prior to the pandemic). Overall, EBITDA totaled $62.2 million, up 94% and down 5% over 3Q20 and 3Q19, respectively. As of September 30, the Company had ample liquidity of almost $600 million, which was supported by positive YTD free cash flow generation of $118 million. Given encouraging progress toward recovery, management now expects to open 110 to 120 new clubs in FY21 (including the 69 clubs opened so far in YTD21), up from previous guidance of 75 to 100 new club openings. Click here for a list of future openings.
Demand for office supplies continued to fall, as businesses reopened slower than expected due to lingering concerns over the Delta variant. ODP’s 3Q21 sales fell 7% and 22% compared to 3Q20 and 3Q19, respectively. Management did not provide comps but noted that 160 stores were closed in the last 12 months. EBITDA fell 7% to $162 million, and EBITDA margin dropped 10 bps to 7%. Free cash flow for YTD21 was $199 million, down from $440 million for the same period last year. As of September 25, net cash totaled $400 million, and liquidity totaled $1.70 billion, which was adequate to fund capital requirements.
A planned separation into a retail and B2B unit is intended to facilitate the offer from Staples’ retail unit to acquire ODP’s retail unit for $1 billion in cash. The separation is expected to occur in 1H22. USR Parent, Inc. (Staples’ retail unit, which is controlled by Sycamore Partners) reaffirmed its previous proposal to acquire ODP’s retail/consumer business. Click here for a list of store closings.
Francesca’s is launching a website and opening pop-up stores for its tween brand Franki, which was first introduced a year ago, to transition it to a standalone banner. The first two Franki by Francesca’s boutiques, one in Memorial City Mall in Houston, TX opened on November 5, and the other in Tysons Corner Center just outside of Washington, D.C. due to open November 15, will have six-month leases with the option to extend. Francesca’s filed Chapter 11 less than a year ago and was acquired in January 2021 by a group led by investment firm TerraMar Capital LLC for $27 million, including $18 million in cash. Francesca’s currently operates 458 stores nationwide, down from 551 at the beginning of the year. Click here for a list of future openings.
Sobeys opened a store in Ontario; according to Zurich-based design and shopfitting company Interstore | Schweitzer, the location “is a completely new brand experience that will break new ground and set it apart from the competition.” The location’s debut marks the first time that Interstore | Schweitzer’s Flexstore concept has been implemented in North America. In a Flexstore, all the fixtures are flexible and ready to plug in, including water and electricity, and are fed from the ceiling into the counters. Fresh food counters and refrigerated units can be flexibly outsourced and docked onto other areas as required. The concept enables a retailer to change counters and entire departments quickly and easily, including from service to self-service, without incurring major construction costs.
Freshii Inc. entered into a new multi-unit franchise agreement with Level Hospitality for the planned development of 20 new restaurant locations over the next six years in Texas. The expansion is focused in Houston and Austin.
QuikTrip Corp. (QT) added two new remote travel centers in the Little Rock, AR area. The chain’s remote travel centers have a larger footprint than typical QT c-stores. Their lots also have room to service 20 cars for gas and six diesel bays for trucks. QT operates more than 900 convenience stores across 14 states. Click here for a list of future openings.
Brinker International’s 1Q22 sales increased 18% to $859.6 million. Comps rose 17% at its Brinker banner, 13.4% at Chili’s, and 62.6% at Maggiano’s. Compared to 1Q20, comps rose 5.7% at Brinker, 6.5% at Chili’s, and declined 0.2% at Maggiano’s. Adjusted EBITDA increased to $69.4 million from $65.6 million last year. During the quarter, the Company completed the acquisition of 23 Chili’s restaurants in the Mid-Atlantic region and 36 Chili’s restaurants in the Great Lakes and Mid-Atlantic regions that were previously owned by franchisees.
The Company reaffirmed its FY22 revenue guidance of $3.75 billion – $3.85 billion and EPS of $3.50 – $3.80.
Xponential Fitness announced an exclusive development agreement with Fitness International, LLC, which operates LA Fitness and City Sports Clubs. Under the agreement, franchisees of Xponential Fitness’ brands will have the opportunity to open a studio within an LA Fitness or City Sports Clubs location within their market. The deal includes a minimum development of 350 franchised locations over the next five years. Development costs should be less than opening a standalone studio, though average unit volume should also be lower. The development process is expected to begin in 1Q22 and will not have an impact on FY21 operations.
Last week Bed, Bath & Beyond announced a strategic collaboration with Kroger to directly offer Kroger customers an extensive selection of BBBY’s home and baby products through Kroger.com as well as a small-scale physical store pilot at select Kroger stores beginning in 2022. The Company also announced an acceleration of its three-year, $1 billion share repurchase plan. The Company repurchased $375 million of stock during FY20, another $225 million in 1H21, and now expects to repurchase the remaining $400 million of the program by the end of FY21, one year early. The stock jumped from $15 the day before the announcements to over $25 the day after, and settled closer to $20 by the week’s end. While the partnership and stock buyback news were positive for shareholders (stock buybacks are not good news for creditors), the Company also made subtle comments updating performance. Management commented that October sales were following a similar path to September. September comps (the first month of 3Q) were previously characterized as following a similar trend to August. August comps fell by mid to high single-digits and had sunk the Company’s 2Q comps to -1% overall (-4% at the Bed, Bath banner). Click here for a list of recent and future openings and closings.
RH signed a lease to open an 80,000 square-foot design gallery in Newport Beach, CA. Construction is anticipated to begin next year, with opening slated for spring 2024. Most recently, RH opened a 60,000 square-foot store in Oak Brook, IL in September. The Company also plans to open new design galleries in Jacksonville, FL and San Francisco, CA this fall, followed by four new locations due next year. RH currently operates 67 RH Galleries, 38 Outlets, and 14 Waterworks showrooms. Click here for a list of future openings.
Tuesday Morning reported 1Q22 sales growth of 9.5%, with comps up 26.2% from 1Q20. Due to COVID-related store closures last year, followed by the formal restructuring and the closure of 197 stores during the bankruptcy process that ended in December 2020, the Company’s performance trends are difficult to measure. However, while SG&A margin improved due to sales leverage and negotiated rents, along with unprofitable store closures, gross margin fell 280 bps, as the Company eschewed raising prices to offset surging supply chain costs. EBITDA was negative yet again ($5.7 million), slightly improved from the ($6 million) during 1Q21; these trends are projected to continue for the rest of the year and presumably continue to eat into liquidity. Liquidity is adequate at $44 million for the short term but has been under pressure since the Company emerged at the beginning of the year when liquidity was $72 million.
After completing its transition to franchise-only, Regis started off FY22 with 1Q system-wide comps up 23.2% compared to the prior year but down 17% from two years ago. Despite comp increases, total sales fell 30%, as Regis continued to exit unprofitable Company-owned salons. Increases in royalties and advertising contributions drove franchise-only sales up 9%. Gains were partially offset by a decline in franchise product sales. As part of its transition to a third-party distribution model, the Company exited one distribution center in 1Q21 and plans to exit its other distribution center in FY22. While Regis remained unprofitable during the quarter, its EBITDA loss narrowed to $5.6 million from $18.6 million in the prior-year period and improved 950 bps on a margin basis. The Company’s cash levels fell almost 50% from 1Q21 but improved sequentially from $19.2 million in 4Q21 to $45.5 million in 1Q22, as the Company received gross proceeds of $32.2 million from the issuance of common stock. The Company’s debt levels continued to rise, increasing 10% from the prior year to roughly $196 million as the Company borrowed another $8.9 million against its revolver. Liquidity at quarter end was $148.2 million.
Advance Auto Parts is launching a new store concept called Carquest by Advance, targeting DIY independent owners who will receive operational and merchandising support from Advance. Carquest is an automotive parts distribution network currently owned and operated by Advance via independent retailers. Carquest by Advance stores feature a core selection of DIY automotive parts and products made available by Advance, and independent owners can access Advance’s network of supplier partners or work with local suppliers to meet their needs.
The first Carquest by Advance location opened in Beaufort, NC; by the end of 2021, Advance expects to have 19 retail outlets in the Northwest operated by Portland, OR-based Baxter Auto Parts. The Company plans to target additional locations in markets across the U.S. in 2022 where it does not carry a significant retail presence. As of July 2021, Advance operated 4,748 stores and 215 Worldpac branches, and served 1,306 independently owned Carquest-branded stores.
AMC Entertainment Holdings announced it will be entering the popcorn industry. Beginning in 2022, the Company plans to sell popcorn and other food & beverage offerings via mall kiosks around the country. The Company will initially launch up to five “AMC Theatres Perfectly Popcorn” stores, and plans to expand to 15 locations by the end of 2022. The Company also plans to sell prepackaged popcorn, both direct-to-consumer and in supermarkets and convenience stores later in 2022.
AMC reported 3Q21 results. Given the ongoing impacts of the pandemic, 3Q21 revenue remained pressured, down 42% over pre-pandemic 3Q19. However, sales improved 72% sequentially, as U.S. attendance increased to 26.7 million, up 50% from 17.8 million in 2Q. Average U.S. ticket price was $11, up 17% over the prior-year period. As of September 30, the Company had reopened all of its domestic locations and 99% of its international locations. Overall, EBITDA remained in the red at negative $5.4 million, a narrower loss than the negative $335 million in the prior-year period.
U.K.-based EG Group, the parent company of Cumberland Farms, recently agreed to acquire all 34 fuel and convenience stores in Georgia and South Carolina operated by Sprint Food Stores. EG Group also expects to acquire the proprietary ‘Sprint Kitchen’ foodservice brand. The transaction is expected to be completed by the end of calendar 2021 and will expand EG’s presence in the U.S. to these two additional states. EG Group operates over 1,700 sites across 33 states. Click here for a list of future openings.
Church’s Texas Chicken plans to grow its presence in Canada, with 20 new restaurants expected by the end of 2021 and plans to open another 40 units next year. Click here for a list of future openings.
Nathan’s Famous announced an expansion plan for Saudi Arabia. The brand now serves its hot dogs and fries in seven kiosks across Saudi Arabia, with plans to open three more in the coming weeks.
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