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Retail Deals

Retail sales for the month of December rose nearly 5.2% year over year, to about $749 billion on an unadjusted basis, according to data provided by the U.S. Census Bureau.

Driving the news: On a seasonally adjusted basis, December retail sales grew 6% year over year but fell 1.1% month over month to about $677 billion.

The headline number for December was affected by lower gas and auto sales, as well as a decline in home furnishings.

Why it matters: Retail sales were about $916 billion for November and December, excluding auto, gas and restaurants.

That's below the National Retail Federation's projection that holiday sales would increase between 6% and 8% or between $943 billion and $960 billion.

Between the lines: A number of retail analysts and economists prefer year-over-year comparisons because month-over-month figures are seasonally adjusted utilizing data from the past 10 years that contain a lot of noise.

That time period includes the depths of the pandemic.

And while results are seasonally adjusted, they do not take into account inflation, which appears to be cooling.

Yes, but: Food services and drinking places saw a noticeable jump in sales to about $89 billion in December from nearly $79 billion a year ago, an increase of more than 12%, as consumers shift spending from objects to experiences.

Richard Collings writes the Axios Pro Retail deals newsletter. Start your free trial at AxiosPro.com.

Retail sales soften in December

Insiders prefer to track year-over-year data, but the numbers missed NRF expectations.

Illustration of a retail shopping bag full of market trend arrows. 

Retail

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Party City has filed for bankruptcy protection in an attempt to restructure the company's debt, becoming the latest national retailer to confirm its financial struggles as consumer spending tightens.

Driving the news: The company announced it filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas and entered into a restructuring agreement late Tuesday.

Party City Holdco Inc. said it is asking the court to "maintain business-as-usual operations" to keep its 800-plus stores open, pay wages and benefits, and "honor customer programs and policies."

The company said it has secured $150 million in debtor-in-possession financing from an ad hoc group that needs to be approved by the court.

What they're saying: Debt is not the only factor for Party City, GlobalData retail analyst Neil Saunders said Wednesday. 

“A downswing in demand for party products has also put pressure on the business,” Saunders said. “Much of this is down to two factors: increased competition and a more constrained consumer.”

"There is likely still something of a role for Party City, but the company needs to financially restructure and to rethink its approach,” Saunders said, adding many of its stores are in "sub-optimal locations which are poor at driving passing trade."

Flashback: The New Jersey-based party supplies company has been struggling before the pandemic and announced store closings in 2019.

The retailer has also been dealing with an ongoing global helium shortage.

Inflation has tightened consumer budgets, a trend reflected in the financial health of other big box retailers. Bed Bath & Beyond recently warned that it could file for bankruptcy protection and announced a new round of store closings last week.

Editor's note: This story has been updated with additional information.

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Party City files for Chapter 11 bankruptcy protection

The retailer filed for Chapter 11 relief in the U.S. Bankruptcy Court for the Southern District of Texas.

Party City filed for bankruptcy protection Jan. 17. Photo: Bruce Bennett/Getty Images

Bankruptcy

Activist hedge fund Trian Fund Management won't pursue a takeover bid for Wendy's, the company said in a securities filing Friday.

Why it matters: In May, Trian, which holds a roughly 19% stake in the company, had proposed taking over Wendy's, either alone or with third parties, as a way to bring value to shareholders.

What they're saying: "In light of the company’s current business momentum and strong liquidity position, returning additional capital to shareholders through additional stock repurchases and increased cash dividends was the appropriate path to enhance shareholder value at this time," Trian said in the filing.

What's happening: Wendy's said in a separate filing that it launched a new $500 million buyback plan and doubled its quarterly dividend to 25 cents a share.

The company also said it will reorganize its corporate structure, and announced the departures of U.S. CFO Leigh Burnside and CMO Kurt Kane. Kane’s position will be eliminated.

Context: Trian, which is helmed by billionaire Nelson Peltz, has a long history with the company, with Peltz serving on the board of Wendy's predecessor companies, and then on Wendy's board since 2008 when the company merged with Triarc Cos.

Nelson Peltz's Trian won't make offer for Wendy's

Trian had proposed taking over Wendy's to bring value to shareholders.

Illustration of a burger stacked high with money

Food retail

Bed Bath & Beyond confirmed Tuesday that it is closing more stores as it considers filing for bankruptcy protection. 

Driving the news: The retailer, which also operates buybuy Baby stores and Harmon, released a list of 120-plus closing stores, which includes 62 new Bed Bath & Beyond closings and the 56 closing stores announced in September.

Six buybuy Baby and two Harmon stores were also included on the company's list and liquidation sales are underway.

The latest: Bed Bath & Beyond shares jumped about 20% Tuesday morning after the company's earnings call, Axios' Kimberly Chin and Richard Collings report, noting the company said it was on track to cut $500 million in costs.

Third-quarter net sales declined 33% to $1.26 billion over the prior year on $393 million in losses.

Threat level: Bed Bath & Beyond has been distressed for years, having failed to reinvent itself in the digital age despite efforts to declutter its stores and remake its coupon strategy, Axios’ Nathan Bomey explains. 

 The beleaguered retailer said in a public filing last week that it faces "substantial doubt" about its ability to continue operating on its own.

Meanwhile, Placer.ai, a foot traffic analytics firm, found shopping visits were down 26.5% in December compared to December 2021. 

The firm’s data found store visits were down every month over 2021 visits last year with March 2022 having the biggest drop with 32.2% fewer visits. 

Flashback: In August 2022, the retailer, which also operates buybuy Baby stores and Harmon, announced it would close 150 Bed Bath & Beyond stores. 

Between the lines: Axios called select closing stores and many locations said they expected to close in March. Most stores no longer accept coupons or returns of merchandise.

Some stores from the September list are still open but expected to close by late January at the latest.

Be smart: When shopping liquidation sales, compare prices to competitor stores to make sure you are getting a good deal.

How long the liquidation sales are expected to last was not immediately available and can vary by location.

Remember, when sales are final, items can't be returned so check products closely.

By the numbers: As of late November, the company had 949 stores, including 762 Bed Bath & Beyond stores, 137 buybuy Baby stores and 50 stores under the names Harmon, Harmon Face Values or Face Values. 

30 states will each lose at least one Bed Bath & Beyond store in the new round of closings.

California will lose the most with eight stores, Florida will lose six and Michigan will lose five more stores.

The company included 56 stores that were announced in September on the new closing list.

Yes, but: Some of the locations may already be closed. Check the store locator on the company website or call ahead.

Editor's note: This story was updated with additional information.

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Macy's closing more stores in 2023. See the list.

Bed Bath & Beyond closing 62 stores, holding liquidation sales

Don't expect to use a Bed Bath & Beyond 20% coupon at any going-out-of-business sales.

Bed Bath & Beyond storefront with signs reading “store closing sale.”

Bed Bath & Beyond is closing select stores across the country. Photo: Kelly Tyko/Axios

Shopping

Fisher-Price, Kids2 and the U.S. Consumer Product Safety Commission on Monday “reannounced” recalls from 2019, after more babies died in the recalled baby sleepers.

Driving the news: “This is an urgent warning for consumers to check their homes for these products,” Patty Davis, spokesperson for the CPSC, told Axios Monday. “Do not put your baby to sleep in inclined sleepers ever. It is not safe.”

By the numbers: The 2019 Fisher-Price Rock ‘n Play Sleeper recall said “over 30 fatalities were reported to have occurred in the Rock ‘n Play Sleepers after the infants rolled from their back to their stomach or side while unrestrained, or under other circumstances.”

Since the recall, 70 more deaths have been reported, including at least eight "fatalities that were reported to have occurred after the initial recall announcement," Monday’s recall notice said.

15 infant fatalities were reported to have occurred in the Kids2 Rocking Sleepers, the company said in its recall notice Monday. 

Four fatalities were reported to have occurred after the 2019 recall was announced, Kids2 added.

Between the lines: Both Fisher-Price and Kids2 note in their recall notices that they have been "unable to confirm the circumstances of the incidents" and what products were used.

What they're saying: "I urge all parents, grandparents, and caregivers to follow the guidance of this announcement and stop using these products immediately," CPSC Chair Alexander Hoehn-Saric said in a statement Monday.

"Unfortunately, today’s announcement highlights the fact that these products are still in too many homes, and babies continue to be put at risk," Hoehn-Saric said.

"Today’s reannouncement serves as a critical reminder to both consumers and resellers that they should not use, sell, or donate the recalled Rock ‘n Play," Mattel, Fisher-Price's parent company, said in a statement to Axios.

What's next: Fisher-Price and Kids2 are still offering refunds for the recalled products through their websites.

CPSC also adopted a new rule in 2022 on infant sleep products that requires products to have a sleep surface angle of 10 degrees or less, Davis said.

Do not use the recalled Fisher-Price Rock ‘n Play Sleeper, officials advise.

An empty Fisher-Price Rock 'n Play sleeper sits by a wall

Fisher-Price recalled 4.7 million Rock ‘n Play sleepers in 2019. Photo: John McDonnell/The Washington Post via Getty Images

Product recalls

Closer

Axios Closer

A Walgreens executive said Thursday the company may have been too concerned about the surge in thefts and rise in shoplifting attempts last year, CNN reports.

Why it matters: Shoplifting has become a major crisis nationwide, leading to stores closing their doors and locking up mundane items, Axios' Jennifer A. Kingson writes.

Organized crime gangs are looting stores and have become more aggressive and violent in their attempts.

Driving the news: “Maybe we cried too much last year," Walgreens finance chief James Kehoe said Thursday in an earnings call about his company's concerns over shoplifting, according to CNN.

Walgreens' shrink rate dropped from 3.5% in 2021 to 2.5% in the most recent quarter, CNN reports.

“We’re stabilized,” he said, according to CNBC, adding that Walgreen is “quite happy with where we are.” 

The big picture: Shrinkage is a term used to describe inventory loss due to theft, fraud, damage and other factors.

Retail loss is a nearly $100 billion problem for the industry, the National Retail Federation found last year. 

The Combating Organized Retail Crime Act, introduced in September, would create a federal organized retail crime task force.

Retailers are banding together to push for more verification of online sellers to curb the resale of stolen goods.

Walgreens hired private security guards and locked up simple items so people can't access them without an associate, CNBC reports.

“Probably we put in too much, and we might step back a little bit from that,” Kehoe said, per CNN.

Yes, but: There are other retailers — such as Walmart and Target — that recently said theft has been a major problem. For example, Target said in November it lost $400 million from shrinkage and Walmart CEO Doug McMillon said he may have to close stores or increase prices if his company can't get shrinkage under control.

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There are other retailers — such as Walmart and Target — that recently said theft has been a major problem.

A man walks out of a looted Walgreens in Times Square

A man walks out of a looted Walgreens in Times Square. Photo: Timothy A. Clary/AFP via Getty Images

Walgreens

Data: FRED, BLS; Note: Data is not seasonally adjusted; Chart: Axios Visuals

High egg prices are starting to retreat from December's record highs, but it might take time before you see a difference at the store, experts tell Axios.

Why it matters: While grocery items have broadly gotten more expensive, no food item has been impacted by inflation as much as eggs and their prices often give a clue about the current economic environment. 

That's because eggs are not only an ingredient in many other foods and meals, they’re also the product of other food sources, Axios' Hope King writes. 

The price of eggs was up over 49% in November compared to a year earlier, according to the Consumer Price Index, a key inflation barometer.

Driving the news: Egg prices were on average $4.63 for a dozen Midwest large eggs Friday down from $5.46 in the days before and after Christmas, according to Urner Barry's Egg Index.

That's more than a gallon of gas in many parts of the country.

Midwest large eggs — the benchmark for eggs sold in their shells — were $5.13 Tuesday and dropped to $4.98 Wednesday, then $4.78 Thursday before dropping again Friday, Urner Barry's data shows.

A dozen large eggs cost approximately $1.50 in early January 2022 and 94 cents in January 2021, the research firm found.

The big picture: The bird flu outbreak, the worst in U.S. history, and consumer demand have also driven up prices. 

The avian influenza outbreak that began in February 2022, has killed approximately 60 million birds, which includes 41 million commercial egg-laying hens, Karyn Rispoli, editor of the Egg Price Current for Urner Barry, told Axios.

Flashback: The last major bird flu outbreak was in 2015 and consumers also “experienced quite a bit of sticker shock when egg prices went up,” Rispoli said.

Meanwhile, wholesale prices are now starting to retreat from December as we move past the holiday baking season and high holiday demand, said Brian Moscogiuri, a global trade strategist at Eggs Unlimited, an egg supplier based in Irvine, California.

Yes, but: Egg prices at stores might take longer to drop because retail pricing often lags the wholesale market, Moscogiuri told Axios, adding there is traditionally a 20 to 30% drop from seasonal highs to January and February lows.

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Eggs cost more than a gallon of gas in many parts of the country.

Food

Bed Bath & Beyond — whose 20% coupons, towel towers and wedding registry have been a staple of the American shopping landscape — warned Thursday that its dismal performance threatens the company's future.

Driving the news: The beleaguered retailer said in a public filing that it faces "substantial doubt" about its ability to continue operating on its own — and that it could file for bankruptcy protection.

Why it matters: Bed Bath & Beyond still had some 32,000 employees and 955 stores as of last summer.

That included the company's other properties: buybuy Baby and Harmon.

State of play: Bed Bath & Beyond has been distressed for years, having failed to reinvent itself in the digital age despite efforts to declutter its stores and remake its coupon strategy.

The retailer said Thursday that it expects to report a 33% sales decline in the quarter that ended Nov. 26, "driven by lower customer traffic and reduced levels of inventory availability, among other factors."

The company also said it expects to report a net loss of $386 million, up from $276 million a year earlier.

BBBY shares are down more than 86% over the last year, tumbling below $2 on Thursday.

Threat level: Particularly concerning is the fact that the company is facing what CEO Sue Gove on Thursday called "inventory constraints" and "reduced credit limits," leading to "lower levels of in-stock presentation within the assortments that our customers expect."

Distressed retailers often find it hard to get inventory from vendors under conventional terms as they careen toward a liquidity crisis.

Yet no less recently than June, the company was reporting that it had too much inventory.

"In our view, Bed Bath & Beyond is too far gone to be saved in its present form," GlobalData retail analyst Neil Saunders wrote Thursday in an analysis. "A catalogue of missteps has run the company into the ground and has made it increasingly irrelevant."

Worth noting: Not long ago, Bed Bath & Beyond found itself as the object of affection from meme stock traders, inspired by an investment from GameStop chair Ryan Cohen.

But the stock plunged in August after Cohen sold off his shares, leaving the retailer's shares to trade on the not-so-good fundamentals.

What they're saying: "The Company continues to consider all strategic alternatives including restructuring or refinancing its debt, seeking additional debt or equity capital, reducing or delaying the Company’s business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code," the filing stated.

The bottom line: "These measures may not be successful," the company added.

"Only very radical action will allow it to survive," Saunders wrote, suggesting the company could quickly sell off its buybuy Baby division to raise cash. But "even if it does, it will be a shadow of its former self."

Editor's note: This story has been updated with additional details throughout.

Bed Bath & Beyond warns of possible bankruptcy

The beleaguered retailer faces "substantial doubt" about its ability to continue operating.

An aisle of a store with sale signs suspended from the ceiling

Discounted merchandise for sale at a Bed Bath & Beyond location permanently closing in Northville, Michigan, on Sept. 24, 2022. Photo: Matthew Hatcher/Bloomberg via Getty Images

The new year brings a new round of Macy's store closings.

Driving the news: The department store chain confirmed to Axios on Wednesday that it will shutter more stores in 2023 as part of its Polaris transformation strategy, which was first announced in 2020.

Four Macy's locations at shopping malls are slated to close, the company told Axios.

A clearance sale will begin in January and run for approximately eight to 12 weeks, Macy’s said.

Macy's told Axios it was "committed to offering impacted colleagues a role in nearby locations or severance packages."

Flashback: Macy's Inc., which includes Bloomingdale's and Bluemercury, said in February 2020 that it planned to close around 125 stores, a fifth of locations, as part of a three-year plan.

Rounds of store closings were announced in 2020, 2021 and 2022.

Officials said in 2021 they would delay some of the closings.

Context: As part of the Polaris strategy, Macy's said it continues to "optimize and reposition" its store fleet to have a mix of mall and off-mall locations.

Neil Saunders, managing director of GlobalData, told Axios that much of "the heavy lifting in closures has been completed over the past couple of years and much of the dead wood has been cut out."

"What we are seeing now is more an opportunistic and gentle pruning," Saunders said of the new closings list. "That said, I fully expect there to be more closures this year and in the years ahead as Macy’s still has a lot of sub-optimal stores that will probably perform badly as the consumer economy tightens."

Yes, but: Macy's has been opening new off-mall, smaller format stores and opened four Market by Macy's locations in 2022. 

Bloomingdale's announced it would open its third "Bloomie's" store in Seattle this year, a smaller format store, after opening in Chicago and Virginia.

Macy's also added small Toys R Us toy shops inside all of its stores last year. 

By the numbers: As of October 2022, Macy’s Inc. had 722 total stores, including 510 Macy’s, 54 Bloomingdale's and 158 Bluemercury locations.

The following stores are slated to close during Macy’s first quarter of 2023, which typically ends in late April or early May.

Los Angeles: Baldwin Hills Crenshaw Plaza, 4005 Crenshaw Blvd.

Fort Collins: Foothills Mall, 215 E Foothills Parkway.

Kaneohe: Windward Center (Oahu), 46-056 Kamehameha Highway.

Gaithersburg: Lakeforest Mall, 701 Russell Ave.

Starbucks Pistachio Cream Cold Brew debuts with winter menu

The new year brings a new round of Macy’s store closings.

Exterior of a Macy's store with a red star and the word Macy's on building

Macy's

Pro Rata

Axios Pro Rata

Barnes & Noble is committing to open more than 30 new stores in 2023, three years after being taken private for $683 million by Elliott Management. 

Why it matters: This is a very different sort of story for private equity, which is known for buying physical retailers, slashing costs, and then leaving them for dead.

Driving the news: B&N is committing to opening more than 30 new physical locations in 2023, following its first year of net store growth in more than a decade.

The new openings include some locations abandoned last year by Amazon (i.e., the mortal enemy of physical booksellers), when it closed all of its Amazon Books stores.

This follows the company's first year of net store growth in more than a decade.

Behind the scenes: Elliott certainly followed the private equity playbook to some extent, cutting layers of corporate management and related expenses (including office space). But its primary thesis was to let B&N operate more like ... well, more like bookstores.

It was a learning from Elliott's prior takeover of U.K.-based Waterstones, whose CEO James Daunt was also put in charge of B&N (even though the two companies operate independently). 

Daunt moved to let local store managers have greater say in what books to sell, ended publisher promotions that often resulted in bad books being displayed in prime locations, and eliminated a lot of the extraneous products that had turned B&N stores into indoor flea markets.

The pandemic obviously crushed B&N's top line in 2020 and part of 2021, but Daunt used shutdowns as an opportunity to refurbish stores, reorganize layouts and reassess stock. 

Elliott also made some related acquisitions, most notably buying the assets of bankrupt stationary seller Paper Source. Expect that book- complementary Paper Store products will make their way into B&N locations, likely supplanting some DVD and CD shelf space.

By the numbers: B&N doesn't report financials, with a spokesperson only saying that it's "experiencing a period of tremendous growth." 

For the final full year prior to acquisition, B&N reported $108 million in EBITDA on a $125 million net loss and around $3.6 billion in revenue. A source close to the situation says the bottom line is significantly stronger today than it was then.

The bottom line: Private equity is an unlikely hero for brick-and-mortar retail, let alone its leading bookseller. But that's the current chapter. 

Barnes & Noble to expand, marking a new chapter for private equity

The bookseller is moving into some storefronts abandoned last year by Amazon.

Illustration of a book with the pages made of money. 

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