September 2, 2020
According to reports, J.C. Penney Company is proposing to sell itself out of bankruptcy to its lenders, after a stalemate in negotiations with other bidders, including Simon Property Group and Brookfield Property Partners. The Company will reportedly pursue a bankruptcy sale to its top lenders, including H/2 Capital Partners LLC, which will provide the lenders with equity in exchange for their debt claims. The Company now faces a deadline of September 10 by which it must enter into a transaction with its lenders or another purchaser, or liquidate. Click here to request a list of closings.
Lidl US announced plans to invest at least $500.0 million to open 50 new stores by the end of 2021. The stores will be located in Delaware, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina and Virginia, bringing the grocer’s total number of U.S. stores to more than 150. Grand opening dates of the individual stores will be revealed in the coming months. Click here for a list of locations.
A second Hy-Vee store is expected to open in Springfield, MO in 2021, after being postponed from its original opening date of early 2020.
Meanwhile, Hy-Vee’s Drugstore in Marion, IA, which closed due to a storm on August 10 after sustaining significant structural damage, will not reopen. All prescriptions will be transferred to a nearby Hy-Vee. Click here for a list of openings and closings.
Fresh Thyme Farmers Market is changing its name to Fresh Thyme Market. It also unveiled a new logo (above) and marketing campaign. Partially backed by Meijer, Fresh Thyme operates 75 stores.
Last Thursday, Amazon opened on a limited basis its long-awaited new, high-tech grocery store concept in Woodland Hills, CA under the Amazon Fresh banner. The 35,000 square-foot unit is not slated to open widely to the general public for several weeks and is currently limited by invitation only to customers selected by Amazon. The store, which carries traditional grocery items from national and local brands as well as brands from Amazon and its Whole Foods Market subsidiary, has standard checkout equipment (does not feature the Amazon Go checkout-free technology) but also offers Amazon’s automated Dash Cart technology to avoid the checkout line. Customers can also employ Alexa to handle shopping lists and navigate the store, which will offer same-day delivery as well as in-store and curbside pickup free to Prime members. It is the first of several conventional grocery stores Amazon is planning to open. The Company also intends to operate supermarkets in Oak Lawn, Naperville and Schaumberg, IL, and in Irvine and North Hollywood, CA. The question is will the new concept succeed where the 365 format did not?
A group of more than 2,000 online sellers has filed an antitrust case against Amazon in India, alleging the U.S. company favors some retailers whose online discounts drive independent vendors out of business. The group alleges that Amazon India’s wholesale arm buys goods in bulk from manufacturers and sells them at a loss. Such sellers then offer goods on Amazon at big discounts. The case presents a new regulatory challenge for Amazon in India, where it has committed $6.50 billion in investments. In January, the Competition Commission of India (CCI) had ordered an investigation of Amazon and Walmart’s Flipkart over alleged violations of competition law and certain discounting practices, which Amazon is challenging.
In other news, Amazon announced Friday that it has ordered more than 1,800 electric vans from German automaker Daimler’s Mercedes-Benz unit as part of its bid to become carbon-neutral by 2040. The Company said the order consisted of 1,200 of Mercedes’ larger eSprinter models and 600 of its midsized eVito vans. It is not clear how much Amazon paid for the vehicles. The move is part of Amazon’s aim to meet the goals of the Paris climate agreement ahead of schedule. In September 2019, Amazon agreed to purchase 100,000 electric delivery vans from Rivian Automative, a start-up in which it has invested hundreds of millions of dollars.
Lastly, seven years after it began research and development plans for delivering goods by drones, today Amazon announced it has received federal approval to begin operating its fleet. The certification by the Federal Aviation Administration gives Amazon permission to begin its first commercial delivery trials by drones in the U.S., through its Prime Air delivery unit. The plan of Prime Air is for a delivery system designed to safely get packages to customers in 30 minutes or less using drones. Click here to request a list of future openings.
Neiman Marcus Group filed a lawsuit against Marble Ridge Capital following the U.S. Trustee’s allegations that Marble Ridge attempted to manipulate bidding on Mytheresa, an e-commerce business potentially valued at over $1.00 billion. The impropriety occurred at a time when Marble Ridge was one of three co-chairs of the Creditors’ Committee. The lawsuit alleges that the Marble Ridge’s actions cost the Company an opportunity to cash out its Mytheresa holdings, which would have provided unsecured creditors with between $42.0 million and $54.0 million in cash. The lawsuit seeks: (i) damages of $55.0 million; (ii) subordination of Marble Ridge’s claims against the Debtors, to a position below that of general unsecured creditors; and (iii) a temporary restraining order (TRO) and preliminary injunction, which would prevent Marble Ridge from distributing any funds or proceeds from asset sales in connection with its wind-down and liquidation (which it recently initiated). The TRO also requires Marble Ridge to set aside $55.0 million in escrow to pay for potential damages and penalties for its conduct. Click here for a list of store closures.
In the Lord & Taylor Holdings bankruptcy case, the Court issued an order setting September 28 as the deadline to file proofs of claim, including requests for payment under Section 503(b)(9). The Court issued a final order authorizing the Debtors to pay prepetition claims of critical vendors, 503(b)(9) claimants, and lien claimants in the ordinary course of business, up to an aggregate amount of $2.2 million. The Debtors estimated that as of the petition date, $2.6 million was owed to critical vendors, and $570,000 was owed to lien claimants. The Debtors do not believe there are any outstanding amounts owed to 503(b)(9) claimants; however, they requested the authority to pay any such claims out of an abundance of caution. The stores listed in the chart below are the remaining 14 of the Company’s 38 stores that started GOB sales on August 27.
On August 31, the Court entered a final order authorizing the Debtors to use cash collateral (the Debtors did not file a motion seeking to access a DIP Facility). The Court also entered an order establishing bidding procedures for all, substantially all, or any portion of the Debtors’ assets. The Debtors seek to sell the assets either as a going concern or as a liquidation. Click here to request a list of closures.
Trader Joe’s plans to open a new 15,000 square-foot store in Fort Wayne, IN. As of mid-August, construction was still ongoing; the Company has not yet indicated an opening date. Click here to request a list of future openings and closings.
A judge in the Lucky’s Farmers Market Holding Company, LLC bankruptcy case signed an order last week approving the sale of assets related to the Debtors’ property in Panama City, FL. M.B.D. Properties, LLC purchased the assets for $3.7 million. Lucky’s Market has sold 23 of its store locations and one distribution center to various entities for a combined amount of approximately $29.1 million. On August 24, Lucky’s Market requested approval to conduct another private sale, this time to sell its Cape Coral and Clearwater, FL store leases to ALDI. While no cash will be paid by ALDI, the sale will relieve the Debtors of “significant” rejection damage claims and potential subrogation claims by Kroger. Lucky’s explained that Kroger, the prepetition secured lender and guarantor of the two store leases, will pay the cure amounts related to those leases.
H.E. Butt recently opened a food hall inside a store in Austin, TX with a varied lineup of restaurants including Roots Chicken Shak, True Texas BBQ, Calle Taqueria, Yumai Japanese Grill, The Meltery, and Bar at Mueller. The food hall, called Main Street, offers takeout, limited capacity dining on the outdoor patio and inside, and free delivery from FAVOR. Since the pandemic, food halls / courts have not been particularly popular with consumers. Click here to request a list of future openings.
Walmart is selling its footwear website Shoes.com to private-equity firm CriticalPoint Capital. This follows the announcement last week that it is selling its lingerie brand Bare Necessities. The divestments follow Walmart’s sale of indie apparel brand ModCloth in October, and its decision earlier this year to shutter the Jet.com e-commerce site. After acquiring various brands and sites in recent years, Walmart now wants to simplify its U.S online shopping experience and better compete with Amazon.
Walmart has confirmed it is in talks to join Microsoft’s bid to acquire TikTok’s U.S. business. The Company said its business could benefit from TikTok’s success in integrating e-commerce and advertising in other markets, helping it reach more online customers and grow its third-party marketplace and advertising businesses. Walmart said its partnership with Microsoft could not only meet the expectations of U.S. TikTok users but also satisfy U.S. government regulators. TikTok’s parent company Bytedance has been given until mid-November to exit the U.S. market, after the government deemed the company a national security risk. TikTok has filed a court appeal against the ban, calling it politically motivated and without due process. Microsoft confirmed in early August negotiations to buy the operations of TikTok in the U.S., Canada, Australia and New Zealand. The Company said other U.S. investors would be invited to participate on a minority basis. Recent reports suggested other U.S. tech companies may be interested in the takeover, including Twitter and Oracle. According to a published report, prices for a potential deal have ranged from $20.00 billion to $50.00 billion.
In the Forever 21 bankruptcy case, the U.S. Trustee filed a motion seeking to convert the Chapter 11 cases to Chapter 7. The Trustee stated, “There is a substantial or continuing loss to or diminution of the estates, and there is no reasonable likelihood of rehabilitation. The Debtors have repeatedly acknowledged that they are severely administratively insolvent, and recently indicated they can pay administrative creditors only 15% to 20% of their allowed claims.”Click here for a complimentary list of closures.
Circle K Stores, a subsidiary of Alimentation Couche-Tard, is acquiring 10 convenience stores as part of its purchase of Wadsworth Oil Co. The stores are located throughout central Alabama under The Store banner.
7-Eleven continues to expand globally with a planned entry into Laos. It has signed a master franchise agreement with CP ALL LAOS CO., LTD to develop and operate 7-Eleven stores in the country. CP ALL has had a 7-Eleven licensing agreement in its home country of Thailand for more than 30 years and signed a master franchise agreement for Cambodia earlier this year.
In the RTW Retailwinds bankruptcy case, the Debtors notified the Court that Saadia Group LLC (a real estate service provider) was the successful bidder at an auction for the Company’s IP assets. The winning bid was for $40.0 million in cash plus the assumption of certain liabilities. The Debtors entered into a new asset purchase agreement with Saadia Group, which supersedes the prior stalking horse asset purchase agreement with Sunrise Brands, LLC, which was declared the backup bidder at the auction. The new agreement is subject to final approval by the Bankruptcy Court at a hearing on September 3 to consider approval of the sale. The Debtors will pay Sunrise Brands a breakup fee of $540,000.
Meanwhile, the Court entered an interim order authorizing the Debtors to use cash collateral. The Debtors are not seeking access to a DIP Facility. They stated that “consensual use of cash collateral will provide sufficient liquidity to run going-out-of-business sales and market and sell the e-commerce business, with cash-on-hand and revenue from the store closing sales projected to be sufficient to support continued operations and the administrative expenses of the Chapter 11 cases, as well as reduce and ultimately eliminate the balance owed to the prepetition lender through structured pay-downs of prepetition indebtedness.” A hearing on final approval is scheduled for October 6. The Debtors filed a motion seeking to establish November 6 as the last date to file proofs of claim, including requests for payment under Section 503(b)(9). A hearing to approve the motion is scheduled for September 23. Click here for a complimentary list of closures.
Publix Pharmacy has opened a new pharmacy at Jupiter Medical Center in Jupiter, FL. Publix Pharmacy now operates 13 in-hospital pharmacies in the state and continues to look for collaboration opportunities throughout its operating area.
Current and former Ruby Tuesday employees say the chain is closing restaurants without telling staff. The chain has closed about 150 locations in 2020 out of about 450 global restaurants, some of which closed after receiving millions in loans from the Paycheck Protection Program. WARN requires employers with more than 100 full-time workers to notify employees of closures or layoffs at least 60 days in advance, but most Ruby Tuesday employees are part-time, with fewer than 50 full-time workers at any single location. Click here for a complimentary list of closures.
AMC Entertainment announced it has agreed to sell nine theaters in the Baltic region (Latvia, Lithuania, and Estonia) for approximately $77.0 million to UP Invest, the owner of a Baltics cinema group. The cash purchase price represents a 9.3x multiple of anticipated 2020 EBITDA, before the onset of COVID-19. The Company will receive half of the proceeds on signing and the balance upon closing in each country in the coming months. The transaction should help further enhance liquidity and lower net debt.
On August 25, an order was signed in the Fairway Group Holdings Corp. bankruptcy case approving the sale of Fairway’s store in Westbury, NY to Bogopa Enterprises, Inc. for $900,000 in cash. The lease for the Westbury store will be assumed and assigned to Bogopa, which will assume all cure costs up to $300,000 and will be entitled to a $150,000 purchase price credit.
J. Crew Group announced that the Court issued an order confirming its Plan of Reorganization. As a result, the Company expects to emerge from Chapter 11 in early September, after it has satisfied customary conditions to the effectiveness of the Plan. The Plan, supported by the Creditors’ Committee, will equitize over $1.60 billion of secured debt, and provide a $400.0 million exit ABL facility and $400.0 million of new term loans. The Plan hands over control of the Company to a group of debtholders, including Anchorage Capital Group, Davidson Kempner Capital Management, and GSO Capital Partners.
Ace Hardware announced plans to expand into Mexico. Ace International, a subsidiary of Ace Hardware, will open an office in the city of Monterrey to establish a network of local companies and vendors to support retailers. Macedonio Garza was appointed manager of Ace’s expansion plans in Mexico. Ace Hardware entered into a master supply and logistics services agreement with PIMSA Ferreteros, one of the four largest hardware wholesalers operating in Mexico, to provide complete warehousing and distribution solutions for the expansion. PIMSA currently serves more than 4,000 independent hardware retailers in Northern and Central Mexico from six warehouses and distribution facilities, offering more than 15,000 SKUs.
The below retailers recently released their earnings reports. To request more information on these companies, or to discuss the financial performance with a retail industry expert, please click here.
