Commercial Real Estate Retail News - Week of March 25th
**Apparel Stores**
 



**Big and tall retailer finds fit with DXL format**
MARCH 18, 2016,  Destination XL Group is seeing strong same-store sales growth from its stores branded as DXL as it continues to shift away from the smaller footprint Casual Male concept.
 
Destination XL Group, which bills itself as the largest omnichannel specialty retailer of big and tall men's apparel, said its total same-store sales increased 3.1%, but its 137 DXL stores open for more than 13 months grew comps 8.9%. Total fourth quarter sales increased 3.8% to $124 million and full year sales increased 6.8% to $442.2 million. The company’s DXL stores drove the increase with comps up 9.7% on the year.  Despite improved sales, the company reported a loss of $1.4 million, or three cents a share, in the fourth quarter compared to a prior year profit of $1.6 million, or three cents a share. The net loss for the year was $8.4 million, of 17 cents a share, compared to a loss of $12.3 million, or 25 cents a share, the prior year.
 
 
**New York &amp; Company in outlet overdrive**
MARCH 18, 2016,  Specialty apparel retailer New York &amp; Company plans to convert even more of its nearly 500 stores to an outlet format following a strong finish to the year.
 
New York &amp; Company ended the year with a total of 490 stores, of which 82 locations are outlet stores. This year, the company plans a further repositioning of its portfolio toward the outlet concept with 50 existing New York &amp; Company stores due for conversion to outlet stores in the first quarter. The company also plans to open one new outlet while closing between eight and 12 New York &amp; Company stores following the closure of 18 store in 2015. At the end of current fiscal year, the company expects to have more than one fourth, or 133 stores out of a total footprint of between 481 to 485 stores, in the outlet format. Those efforts are expected to yield 2016 same store sales growth in the low single digits, following a similar performance in 2015 when comps grew 3.1%. Total 2015 sales were $950.1 million, compared to prior year sales of $923.3 million.
Department Stores
 
**Nordstrom Rack to add two more locations**
MARCH 25, 2016, The off-price division of Nordstrom plans to open a new store in the nation’s capital, and another in Texas.
 
Nordstrom Rack will open at District Center in the heart of Washington, D.C. The approximately 37,000 sq.-ft., two-level store, is scheduled to open in fall 2016, will be the retailer's thirteenth Nordstrom Rack in Washington, D.C./Baltimore area having first opened in the area at Potomac Mills in Woodbridge, Virginia in 1990.
 
  
**Meijer confirms purchase of land in Minneapolis suburb**
March 21, 2016,  BROOKLYN PARK, MINN - Meijer Inc. is confirming the acquisition of 30 acres in an Minneapolis suburb.
 
The Michigan big-box retailer doesn't have any immediate plans for the property or entering the Minnesota market, said Frank Guglielgmi, Meijer's senior director of communications. Meijer just launched its $750 million expansion into neighboring Wisconsin that will put 16 supercenter stores in the state by 2019.
 
 
**Gordmans to open five stores in 2016**
MARCH 18, 2016,  Gordmans Stores plans to open a new store next month in its hometown of Omaha in April, the first of five new units the apparel and home décor retailer has planned for the year.
 
Gordmans launched its e-commerce site last year and opened six new stores to end the year with 102 locations while turning in a weak sales and profit performance. The addition of selling space enabled the company to increase sales 0.9% to $205.7 million while same-store sales decreased 2.2% during the fourth quarter ended Jan. 30. Net income for period fell to $1.1 million, six cents a share, from $2.3 million, or 12 cents a share, the prior year. Gordmans ended 2015 with total sales of $649 million, an increase of 2.3% from the prior year, while same-store sales declined 1.2%. The company reported a loss of $4.3 million, or 22 cents a share, compared to a prior year loss of $3.5 million, or 18 cents a share.
 

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**Discount Stores**
 
Fred's announces new chairman alongside Q4, 2015 results
MARCH 23, 2016,  Fred’s on Wednesday reported its Q4 and FY2015 earnings, as well as the news that board chairman Michael Hayes would be stepping down, to be replaced with longtime director Thomas Tashjian.
 
The company’s quarterly earnings hit $554.5 million a 10% increase over the same period last year. This increase grows to 14% when sales from stores that largely closed in Q4 2014 are discounted. Comparable store sales grew by 1.7%, and net loss for the quarter was $3.9 million, compared to an $8.2 million loss in the same period last year — a difference Fred’s attributed to the cost of store closures and provisions for inventory reserves. Gross profit for the quarter increased 7% to $132.9 million, and its adjusted diluted earnings per share — $0.02 — reflected a 250% increase over Q4 2014. Gross margin dropped from 27% in Q4 2014 to 25% this year, which the company attributes to growth among specialty pharmacy, which is a low-margin category.  From a full-year perspective, Fred’s $2.15 billion total sales reflected a 9% increase over the entirety of FY2014, a number that grows to 13% over last year when excluding $71.7 million in sales from stores that were closed in 2015. Comps increased 1.5% for the full year — compared to a loss of 0.6% in FY2014 — and gross profit grew to $551.6 million, an increase of 3% over last year.
 
 
**Five Below ramping up store growth**
MARCH 23, 2016 ,  Five Below is accelerating new store growth again this year.  The tween and teen retailer shared a long-range profit forecast which indicates it expects accelerating growth to be a recurring theme. It plans to open 85 new stores this year, adding to its base of 437 units.
 
A net increase of 71 new stores last year – on top of 62 units the prior year – enabled Five Below to increase sales 23.7% to $326.4 million in the fourth quarter and 22.3% to $832 million during the fiscal year ended Jan. 30. Also contributing to the top line growth was a fourth quarter same store sales increase of 3.6% and a full year increase of 3.4%.  Profits increased 26.1% to $42 million, or 77 cents a share, compared to $33.3 million, or 61 cents a share, during the fourth quarter the prior year. Full year profits increased 20.1% to $57.7 million, or $1.05 a share, compared to $48 million, or 88 cents a share.
 
 
**Kohl’s Reveals Store Closure List**
March 21, 2016,  After a disappointing fourth quarter that saw profits drop 20 percent, the 1,164 store-Kohl’s Corporation has released the names of 18 underperforming stores that will close this year. Half will be in California, including seven concentrated in southern California. The remainder are in Florida, Georgia, Illinois, New Jersey, North Carolina, and Wisconsin.
 
All will close by June 19, with the exception of one store in Georgia slated to close on November 1.  The Menomonee Falls, Wisconsin-based retail chain announced plans to shutter 18 underperforming stores on February 25, when it released disappointing financials for the quarter ending January 30—a period that included the normally robust holiday shopping season. At the same time, the retailer confirmed its plans to open seven, smaller-format stores in 2016, as well as a dozen Fila outlets, and two Off/Aisle stores.

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**Grocery Stores**
 
**Publix making first push into Greater Washington**
Mar 23, 2016, Publix, a Florida-based grocer with a cult-like following in the south, has hired a local broker and appears to ready to enter the D.C. market. The company had a booth at the International Council of Shopping Centers’ Mid-Atlantic Dealmaking and Conference event last week at National Harbor. It was the first time Publix has had a presence at the event, which connects landlords with potential retailers.
  
Publix spokeswoman Kim Reynolds confirmed the chain is looking to open stores throughout Virginia, including in Northern Virginia, although she said could not speak to the District or other parts of the Washington region specifically. The company's presence at the expo created quite a buzz, with attendees saying its booth was mobbed for much of the day. Publix held several meetings with brokers and other conference goers.
 
 
**Martin's** reportedly selling its 19 stores in the Richmond area as part of merger
March 21, 2016,  The 19 Martin’s Food Markets stores in the Richmond region likely will be sold or closed this year as part of a planned merger, according to an industry trade publication.  The Kroger and/or Publix supermarket chains could be the likely buyer of those stores.
 
 
The sale of the Martin’s stores would be needed to satisfy federal regulators so Dutch retail conglomerate Royal Ahold NV — which operates U.S. supermarket chains Martin’s, Giant and Stop &amp; Shop — can combine this year with its Belgian counterpart Delhaize Group, which owns Food Lion and Hannaford stores. Shareholders of both companies approved the deal last week.
 
 
**83 Ahold-Delhaize stores for sale: Report**
Mar 21, 2016,  An industry trade paper on Monday published a list of 83 stores that it reported Ahold and Delhaize are seeking to sell as part of their forthcoming merger, including all 20 Martin's stores in the Richmond area. Ahold and Delhaize officials have not commented on the report, but have acknowledged stores would likely be divested so as to receive antitrust approval for their deal to close. The FTC had not commented as of late Monday.
 
 
"As part of any merger approval process where there may be store divestitures, store visits may be conducted by potential buyers but it's too early to speculate on the outcome of the FTC review process," Christopher Brand, an Ahold spokesman, told SN Monday. Christy Phillips-Brown, a spokeswoman for Delhaize's Food Lion chain, in a statement said "Delhaize does not comment on pending regulatory matters or on market speculation."
 
 
 
**Union: 8 Giant stores to be sold in merger**
Mar 21, 2016,  A trade union representing workers at Giant-Landover stores in the metro Washington area have informed members that eight stores where its members work could be sold in order to meet antitrust approval of the Ahold-Delhaize deal.
 
 The Ahold-owned stores, which compete with nearby Food Lion locations operated by Delhaize, are located in Accokeek and La Plata, Md.; and in Stafford (two locations), Fredericksburg (two locations), Spotsylvania and Falmouth, Va., according to United Food and Commercial Workers Local 400.

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**Home Improvement &amp; Office Products**
 
**Staples and Office Depot take another shot at FTC**
MARCH 18, 2016,  The CEOs of Staples and Office Depot penned a letter to customers which reveals the extent of their deteriorated relations with the Federal Trade Commission ahead of a hearing that begins March 21 that will determine whether the retailers are allowed to merge.  In the letter, Staples chairman and CEO Ron Sargent and Office Depot chairman and CEO Roland Smith stop short of actually calling the FTC stupid, but that is the inference from more diplomatically worded prose.
 
“The FTC’s actions to stop this transaction are based on a flawed analysis of the marketplace and a deep misunderstanding of the competitive landscape,” Sargent and Smith state in the letter. “The FTC has cherry picked a few facts to fit its narrative and support its case. In making its case, the FTC refuses to even acknowledge the rise of new competitors, such as Amazon, and the disruptive effects of the digital economy.”  “The FTC continues to act against the best interests of the hundreds of thousands of business customers, and millions of everyday consumers who will benefit from the acquisition,” according to the letter. “The FTC is simply wrong. The combination of Staples and Office Depot is good for customers.”
 
The acquisition has been approved in Australia, New Zealand, China and the European Union, subject to a divesture. To try to meet the FTC’s requirements, Staples recently entered into an agreement with Essendant to divest more than $550 million of wholesale business subject to the successful completion of the merger.
Restaurant
 
**Hospitality turnover rose to 72.1% in 2015**
Mar 23, 2016,  Official numbers are beginning to emerge that confirm what restaurant operators already knew: Turnover rates have been pushing higher.  The turnover rate in the economy’s hospitality segment in 2015 rose to 72.1 percent, up from 66.7 percent in 2014, according to a recent Bureau of Labor Statistics report. It was the fifth consecutive year of turnover rate increases.
 
Bruce Grindy, chief economist for the National Restaurant Association, posted this week that turnover rates remained below the pre-recession high of 80.7 percent in 2007, but the 2015 rate was more than 15 percentage points higher than the 56.4 percent logged in 2010. The bureau does not report data solely for restaurants but uses a broader “accommodations and foodservices” sector. The average turnover rate for all private-sector workers stood at 45.9 percent in 2015. Grindy noted that remained lower than the average turnover rate of 50 percent during the 2002–2006 period.
 
 
**Krispy Kreme looks to expand franchising**
Mar 23, 2016,  Krispy Kreme Doughnuts Inc. believes it would be better off if someone else built and operated its shops.
 
The Winston Salem, N.C.-based doughnut chain plans to focus more exclusively on franchising in the coming years, executives said during the company’s earnings call Tuesday. Their reason is simple: Franchisees have been doing a better job than the company at operating the chain’s locations.
 
 
Krispy Kreme profit rises 26% on sales growth
Mar 22, 2016,  Krispy Kreme Doughnuts Inc. said Tuesday that its net income rose 26 percent in the fourth quarter ended Jan. 31, as the chain’s same-store sales continued to grow.
 
Systemwide same-store sales rose 1.6 percent in the quarter and 3.9 percent for the year. Company same-store sales rose 2.4 percent for the year, the seventh straight year of growth. The chain's same-store sales didn't meet Wall Street expectations, and the stock was down 6 percent after hours. Net income was $8.2 million in the fourth quarter, or 13 cents per share, rising from $6.5 million, or 10 cents per share, in the same period a year ago. Adjusted earnings rose 14 percent, to 22 cents per share, from 17 cents per share. For the year, revenues increased 5.8 percent, to $518.7 million, from $490.3 million. The company expects to open 30 new domestic units, along with 120 to 140 international locations. It also expects flat commodity costs offset by higher labor costs.
 
**Restaurant analysts cautiously optimistic on Texas**
Mar 22, 2016,  Declining oil prices are muffling restaurant sales gains in some Texas markets, but equity analysts are cautiously optimistic on economic trends in the Lone Star State. Analyst reports from Baird Equity Research and Maxim Group noted strengths in the state’s economy despite downward pressures in the oil sector, which led some public restaurant companies to start expressing concerns last fall.
 
The National Restaurant Association 2016 Forecast, released in February, projected a 3.8-percent increase in sales in Texas, reaching $52.4 billion this year, rising from $50.4 billion in 2015. Texas ranked second in total restaurant sales behind California, which is expected to reach $79.1 billion in 2016. The NRA forecast the total national rate of increase in restaurant industry sales would be 5 percent in 2016.
 
 
**Red Robin** acquires 13 franchised units
Mar 21, 2016,  Red Robin Gourmet Burgers Inc. has acquired 13 of its franchised restaurants in Texas with plans to expand further into that market, the company said Monday.
 
Terms of the deal were not disclosed, but the company has completed the purchase of seven Red Robin units in Houston; two in Dallas; and one restaurant respectively in Lubbock, Austin, Abilene and Amarillo. The sellers included Cowboy Red LC; Cowgirl Red LLC; Texas Red Real Estate Ltd and affiliates; Robert Reynolds and Carolyn Frost Keenan.
 
 
**Blaze Pizza** triples sales in 2015
Mar 18, 2016,  Blaze Fast-Fire’d Pizza reported same-store sales growth of 7 percent for fiscal 2015, the company said Friday. The Pasadena, Calif.-based chain also tripled its sales for the Dec. 27-ended year to $101 million, compared with $33 million in fiscal 2014, with both numbers including sales by franchised units as reported to the company.
 
Blaze ended fiscal 2015 with 105 units, more than double the 50 units open at the end of 2014. Currently the chain has 116 locations open and Blaze expects to open another 96 units over the next 12 months, including expansion into 10 new states and markets in Boston, Denver, Salt Lake City, Phoenix and Atlanta.
 
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**Dollar Stores, Warehouse Club &amp; Other Retailers**
 
 
**GameStop** emerges victorious from transitional 2015
MARCH 25, 2016,  GameStop's efforts to generate growth by diversifying its business model worked well in 2015, as the video game retailer posted its third straight year of positive comps.
 
The Texas-based company said that for the full fiscal year of 2015 ended on Jan. 30, total sales were $9.36 billion, a 0.7% increase over 2014. Same-store sales increased 4.3% (a 4.8% increase in the U.S. and a 3% increase internationally) compared to fiscal 2014, primarily driven by sales of video game accessories, pre-owned products and collectibles. GameStop's fiscal 2015 net earnings were $402.8 million. For the fourth quarter, profit at GameStop was $247.8 million, or $2.36 a share, compared with a year-earlier profit of $244.1 million, or $2.23 a share. Revenue rose 1.4% to $3.52 billion. Same-store sales grew 3.1%.
 
 
**Dollar General** to open 1,000 stores in 2017
MARCH 24, 2016,  Dollar General will break its own record for store expansion in 2017. And that’s saying a lot. The discounter is already in high gear, with plans to open a record 900 stores and remodel or relocate about 875 existing locations in 2016. But it’s upping the total for 2017, forecasting some 1,000 new stores and 900 remodels or relocations, which is in line with its model of 6% to 8% square footage growth.
 
 
In 2015, Dollar General opened 730 new stores and remodeled or relocated 881 stores which combined with a 2.8% same-store sales increase allowed it to grow total sales 7.7% to $20.4 billion. The company ended its fiscal year on Jan. 29, with 12,483 stores. Dollar General revealed its plans for 2017 late Wednesday, on the eve of the company’s March 24 investor conference. In addition to the heightened level of new store growth and remodeling activity, ahead of the meeting the company shared an update on other key initiatives and performance assumptions.
 
 
**Sportsman’s Warehouse** hunts for growth with more new stores
MARCH 24, 2016, Sportsman’s Warehouse Holdings announced plans for its most ambitious expansion program ever with 11 new stores planned for 2016 following a strong fourth quarter performance.
 
The Midvale, Utah-based operator of 64 stores focused on the categories of hunting, fishing and camping, opened nine stores last year which combined with its strong fourth quarter showing enabled the company to produce record results. The addition of 11 stores this year will give the company, which went public in April 2014, 75 locations in 20 predominantly Western states and Alaska. Fourth quarter net income, adjusted to exclude non-recurring litigation and loan refinancing costs, increased 25.3% to $11.4 million, or 27 cents a share, from $9.1 million, or 22 cents a share, in the fourth quarter the prior year. Full year adjusted net income, which also excludes expenses related to a secondary stock offering in the third quarter of 2015, increased 22.3% to $25.8 million, or 61 cents a share, from $21.1 million, or 50 cents a share.
 
 
 
Signet shines in Q4, ramps up store expansion
MARCH 24, 2016, Signet Jewelers is already the world’s largest retailer of diamond jewelry and it plans to get even bigger in 2016 by accelerating new store and omnichannel growth. The news came as the chain reported a same-store sales increase of 4.9% in the fourth quarter.
Operating stores under banners such as Kay, Jared and Zale, Signet expects to increase square footage by 3% to 3.5% in 2016, compared to an earlier forecast of 2% to 3% growth. That translates to new store opening in the range of 145 to 178 units for a net increase minus closures of between 61 and 87 units on store based of 3,625 unit at the end of its fiscal year on Jan. 30.
 
 
Sporting goods retailer in two big city openings
MARCH 21, 2016,  **Modell’s Sporting Goods** continues to grow its brick-and-mortar footprint. The New York-based company has added two more stores to its portfolio, one in Boston and the other in Philadelphia. Both stores are in prime locations formerly occupied by City Sports. (City Sports filed for bankruptcy in October 2016, and subsequently announced it would close all locations.)
 
In Boston, Modell’s opened an 11,000-sq.-ft. store on Boylston Street, in the city’s Back Bay area. It’s the retailer’s first outpost in downtown Boston.
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