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Dollar General digs in as Family Dollar rebuffs takeover bid

BY Katherine Boccaccio

New York — Citing antitrust concerns, Family Dollar Stores on Thursday firmly rejected a takeover offer by larger competitor Dollar General, and said it favors a smaller deal with potential buyer Dollar Tree. Following an $8.5 billion offer last week by Dollar Tree, Dollar General offered a $9 billion, all-cash deal.

"Our board reviewed, with our advisers, all aspects of Dollar General’s proposal and unanimously concluded that it is not reasonably likely to be completed on the terms proposed," said Family Dollar chairman and CEO Howard R. Levine. "Accordingly, our board rejects Dollar General’s proposal and reaffirms its support for the pending merger with Dollar Tree."

Dollar General was quick to respond to the rebuff, and said it was confident it could quickly and effectively address any potential antitrust issue that the takeover could arise in the wake of the acquisition.

“We have done extensive antitrust analysis using experienced advisers, the results of which confirm that the transaction as proposed is capable of being completed,” stated Rick Dreiling, Dollar General’s chairman and CEO. “We remain willing to share this analysis with Family Dollar and its counsel and are confident that we will be able to quickly and efficiently resolve any potential antitrust issues.

There has been much speculation over the myriad of reasons why Family Dollar would prefer to sell itself to Dollar Tree over Dollar General. One major factor is store closures; a takeover by Dollar General could result in far more closures as there are more territory overlaps between the two. Dollar General had said it would divest 700 stores after a potential merger with Family Dollar to satisfy regulatory concerns.

Antitrust issues were also raised by multiple analysts. And, on Thursday, reports surfaced that there were more underlying currents between Family Dollar and Dollar General than had been originally reported. Dollar General CEO Richard Dreiling said that Family Dollar had expressed interested on multiple occasions that they were interested in pursuing a transaction; Dollar General says that is not the case.

Also, Dreiling said his company was unaware that Family Dollar was engaging in conversations with Dollar Tree, suggesting that Levine has harbored concerns that he would lose his CEO position if a deal with Dollar General.

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Sears Q2 loss widens, more store closings on tap

BY Katherine Boccaccio

Hoffman Estates, Ill. — Sears Holdings Corp. on Thursday reported a bigger-than-expected loss in its second quarter – the retailer’s ninth consecutive quarterly loss – amid weak sales. The retailer also announced it may close additional stores on top of the 130 closures already underway this year.

Sears also said Thursday the company plans to explore options with lenders to achieve more long-term capital-structure flexibility in the coming six to 12 months.

Sears lost $573 million during the quarter ended Aug. 2, compared to a loss of $194 million in the year-ago period.

Revenue slid 10% to $8 billion, due in part to its spinoff of the Lands’ End business.

Same-store sales fell 0.8%, comprised of a 1.7% drop at Kmart stores and offset by a .1% increase at Sears stores.

Sears said it will continue to explore a sale of its majority stake in Sears Canada, which reported its ninth loss in 14 quarters.

Sears chairman and CEO Eddie Lampert noted that the company is showing continued to show progress in its turnaround, pointing to its year-over-year increase in online and multi-channel sales, and with members of its Shop Your Way reward program now accounting for 73% of eligible sales.

“However, our second quarter earnings are unacceptable and we are taking steps to address our performance on several levels,” Lampert stated. “This includes reducing costs as we evolve our business model, investing in our Shop Your Way and Integrated Retail customer initiatives, rationalizing our physical footprint and improving pricing and promotions”

Lampert added that as the chain progresses with its transformation by investing in new programs and platforms, it continues to shoulder the costs of two promotional models, which adversely impacts margins.

There is more work to be done to get results where we expect them to be. Like any transformation, we must first overcome the burden of the initial costs before we can enjoy the benefits.

“Like any transformation, we must first overcome the burden of the initial costs before we can enjoy the benefits," Lampert said.

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Bon-Ton Stores narrows loss in second quarter

BY Katherine Boccaccio

York, Pa. — The Bon-Ton Stores, Inc. reported a loss of $36.2 million in the second quarter, narrowed from a loss of $37.3 million in the year-ago period.

Revenue edged up 1.1% to $563.5 million, compared with $557.1 million in the prior year period. Same-store sales increased 1.6%.

“We were pleased that we achieved comparable store sales growth, particularly given the challenging promotional environment and continuation of soft traffic trends,” said Brendan Hoffman, CEO.

The department store chain recently named Kathryn Bufano as its new president and CEO, effective next week.

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