This Week in Retail #66
Hey Friends,
I hope everyone had a great weekend. It feels like the whole country is starting tho thaw out as we prepare for spring. I don’t believe chickens are migratory birds, but one plans to head south for good. KFC is relocating its U.S. corporate headquarters to Plano, Texas, where it will join Pizza Hut Global HQ, about 20 miles north of Dallas.
The move will impact 100 corporate employees over the next six months and an additional 90 remote positions within 18 months, with employees encouraged to relocate. Yum! Brands has pledged relocation support.
The decision aligns with Texas' rapid economic growth, as the state continues to lead in job creation. Governor Greg Abbott’s office highlighted Texas’ strong economy and business-friendly environment as key factors in attracting corporate relocations.
By far the biggest headline of the week……Nike and Kim Kardashian's shapewear brand, Skims, have announced a partnership to create a new women's activewear line called NikeSkims. This collaboration aims to merge Nike's expertise in sports innovation with Skims' focus on body-inclusive design, offering training apparel, footwear, and accessories tailored to women's needs. The first NikeSkims collection is scheduled to launch in the United States this spring, with plans for a global rollout in 2026. This initiative is part of Nike's strategy to expand its women's segment and compete with brands like Lululemon and Alo Yoga.
Kim Kardashian, co-founder and chief creative officer of Skims, expressed enthusiasm for the partnership, highlighting the goal of delivering products that are both functional and flattering. Nike's President of Consumer, Product, and Brand, Heidi O’Neill, emphasized that NikeSkims aims to "shake things up for the next generation of athletes" by combining the strengths of both brands.
The collaboration has positively impacted Nike's market performance, with shares rising 4% following the announcement. Analysts view this move as a strategic effort to capture a larger share of the women's activewear market, which has seen significant growth in recent years.
NikeSkims is expected to set a new standard in the global fitness and activewear industry by offering products that blend performance and style, catering to both elite athletes and everyday fitness enthusiasts.
Reporting season has began to shake up the retail world with some astonishing milestones being accomplished……Amazon has officially surpassed Walmart in revenue, reporting $187.8 billion in sales last quarter compared to Walmart’s $180.6 billion. Despite a strong holiday season, Walmart’s stock dropped 8% premarket due to concerns over slowing growth. While both retailers compete in e-commerce and physical retail, Amazon’s diverse revenue streams—such as AWS, advertising, and subscription services—set it apart. Amazon’s high-margin businesses contributed to $59 billion in profit last year (9% margin), while Walmart’s profit stood at $19.4 billion with much thinner 2.9% margins.
Staying with Amazon for a moment…Outside of my love for retail, anyone who knows me will tell you I’m a huge James Bond fan. IF the content were there, I’d write about it weekly but outside of a new James Bond announcement, updates are rather hit and miss. Amazon MGM Studios is taking creative control of the James Bond franchise as long-time producers Michael G. Wilson and Barbara Broccoli step back. Under a new joint venture, Amazon MGM, Wilson, and Broccoli will remain co-owners of the franchise, but Amazon MGM will oversee its creative direction. Wilson, involved with Bond for nearly 60 years, is retiring to focus on art and charitable projects, while Broccoli plans to pursue other endeavors after concluding No Time to Die. Amazon MGM Studios' head, Mike Hopkins, emphasized the company's commitment to continuing the 007 legacy for future audiences.Amazon overpaid for MGM, acquiring the studio for $8.5 billion—far above its estimated $3.5-$4 billion value—largely due to the potential of the James Bond franchise. However, with producers Barbara Broccoli and Michael G. Wilson retaining control, Amazon couldn’t fully develop Bond as intended. To gain full creative control, the company spent an additional $1 billion, securing the ability to fully leverage the Ian Fleming IP.
Consumer Equity Partners is launching the Industry Innovation Fund, aiming to raise $200 million to $500 million to invest in retail technology startups. The fund will draw 25-50% of its capital from 15-25 retailers, including grocers, convenience stores, pharmacy chains, and dollar stores, with investments spread over five years.
The fund seeks to help smaller retailers compete with industry giants like Walmart and Amazon, which dominate retail tech due to their financial strength. It will focus on shopping experiences, store operations, supply chains, retail media, foodservice, and health services.
Retailers investing in the fund will be required to participate in at least one pilot test every two years to ensure active engagement in innovation. Consumer Equity Partners, led by CEO Tom Furphy and partners JJ Van Oosten and Patrick Walsh, expects to begin investing by mid-2025. The firm is already in discussions with potential investors and portfolio companies.
In other grocery news……Jason Buechel, CEO of Whole Foods Market (WFM), will take on expanded responsibilities leading Worldwide Grocery Stores (WWGS) while maintaining his current role. He will join the Stores Leadership Team and report directly to the author. Buechel, who has been with WFM since 2013, previously served as COO and has helped drive record sales growth and expansion to over 535 locations.
Under his leadership, WWGS will continue integrating grocery selections across Amazon’s logistics network, enhancing convenience for customers, particularly Prime members. Recent initiatives, including the Grocery Subscription and redesigned Amazon Fresh stores, have received positive feedback. Claire Peters will continue overseeing Amazon Fresh, Amazon Go, and Grocery Partnerships, while Anand Varadarajan will lead product and technology for WWGS. The leadership team remains focused on making grocery shopping simpler, faster, and more affordable.
To the surprise of no one, Kohl’s is closing 27 underperforming stores by April 2025 as part of its transformation strategy. While the company remains confident in its overall store base, it identified these locations as underperforming. Affected employees will be offered severance or the option to transfer to one of Kohl’s 1,150 remaining stores. Additionally, Kohl’s will shut down its e-commerce fulfillment center in San Bernardino, California, when its lease expires in May 2025, citing its ability to fulfill orders from store locations instead.
I’ve been giving Starbucks the respect they deserve as they rebrand but as many know, rebranding often leads to restructuring……Starbucks has announced plans to lay off 1,100 corporate employees and eliminate several hundred unfilled positions as part of a restructuring initiative under CEO Brian Niccol. This move aims to streamline operations, reduce duplication, and create more efficient teams. The layoffs, representing about 7% of the company's 16,000 corporate support roles, will not affect in-store staff. Impacted employees will be notified by midday Tuesday. Additionally, Starbucks now requires vice presidents and higher-level executives in North America to work from the Seattle or Toronto offices at least three days per week. Despite these changes, the company plans to continue hiring for priority positions aligned with its new support structure.
Joann Inc. is closing all U.S. stores after filing for Chapter 11 bankruptcy last month. The 82-year-old retailer, known for selling art supplies and fabrics, is selling its assets to a buyer group that plans to liquidate the business instead of continuing operations.
As of January 2025, Joann operated over 800 stores and employed 19,000 people nationwide, except in Hawaii. The company had $538.3 million in inventory but was burdened by $615.7 million in debt, including $133 million owed to suppliers. High operating costs, including $26 million in monthly rent, contributed to its financial struggles. Going-out-of-business sales will begin soon at all locations.
In some other restructuring news…..Catalyst Brands, the parent company of J.C. Penney, Aéropostale, Brooks Brothers, and others, has laid off 5% of its corporate workforce, cutting about 250 jobs as part of an ongoing integration effort. The company, formed last month as a joint venture between Sparc Group and J.C. Penney, is backed by Authentic Brands Group, Shein, Simon Property Group, and Brookfield Corporation.
In its early restructuring moves, Catalyst has also sold Reebok’s U.S. operations to Galaxy Universal and is exploring options for Forever 21, which has struggled under its current ownership. Authentic CEO Jamie Salter previously expressed regret over the Forever 21 acquisition, calling it his "biggest mistake."
Despite cost-cutting efforts, Catalyst expects positive EBITDA this fiscal year, though restructuring costs remain a factor. J.C. Penney, under CEO Marc Rosen, continues to see sales declines but is unlikely to close many stores, as its landlords—Simon and Brookfield—prefer to keep the retailer as an anchor tenant.
Tapestry is selling Stuart Weitzman to Caleres for $105 million in cash, with the deal expected to close this summer. The sale allows Tapestry to focus on its core brands, Coach and Kate Spade, which CEO Joanne Crevoiserat sees as having stronger long-term growth potential. Caleres CEO Jay Schmidt stated that Stuart Weitzman will become a key brand in its portfolio, expanding its global and direct-to-consumer reach. Caleres also owns Famous Footwear, Sam Edelman, and Allen Edmonds.
Apple has announced a significant investment plan, committing over $500 billion to its U.S. operations over the next four years. This initiative includes the creation of approximately 20,000 new jobs, primarily in research and development, silicon engineering, software development, artificial intelligence (AI), and machine learning. A key component of this expansion is the construction of a new manufacturing facility in Houston, Texas, dedicated to producing servers that support Apple's AI system, Apple Intelligence.
This move aims to enhance Apple's domestic manufacturing capabilities and reduce reliance on overseas production. Additionally, Apple plans to establish a manufacturing academy in Michigan and double its Advanced Manufacturing Fund to $10 billion, further bolstering its U.S. supply chain and innovation efforts. This announcement follows discussions between Apple CEO Tim Cook and President Donald Trump, aligning with the administration's focus on domestic job creation and manufacturing.
In a recent social media post, Costco listed its new gas station hours as 6AM to 10PM Monday through Friday, 6AM to 8:30PM on Saturdays, and 6AM to 7:30PM on Sundays. Hours may vary in California and Hawaii.
SpaceX has announced a $15 million investment in developing dining and retail facilities near its headquarters. This initiative aims to create a comprehensive environment for employees and visitors, enhancing the community experience around the company's central hub.
Late night delivery is becoming part of the normal service offering……Schnuck Markets is testing late-night grocery delivery from a fulfillment center in Ellisville, Missouri, allowing customers to order after 10 p.m., when local stores close. Orders can be placed from 6 a.m. to midnight via Schnucks or Instacart. The facility, a former Straub’s Market, stocks home goods, drinks, fresh produce, pre-packaged food, and alcohol.
The pilot aims to expand delivery hours, improve order accuracy, and meet customer demand for late-night essentials. Instacart, which already offers late-night delivery with other retailers in Missouri, declined to comment.
This move continues Schnucks’ Instacart partnership, which has included Caper Carts, electronic shelf labels, and 30-minute convenience delivery since 2022. Instacart first launched 24/7 delivery in 2021.
To close with some international retail news…….Google is reportedly close to finalizing locations for its new offices and data centers in India. This expansion is part of the company's strategy to increase its presence in the rapidly growing Indian market, enhancing services and infrastructure to better serve local users.
Ireland has seen the opening of its first vending machine-only retail store. This innovative concept offers a variety of products ranging from snacks to electronics, providing customers with 24/7 access to essential items without the need for staff.
That’s all folks……Have a great week.