Ex-Aeropostale exec gets eight years prison sentence over kickbacks
New York — Christopher Finazzo, former executive VP and chief merchandising officer for Aeropostale, has been sentenced to eight years in prison after being convicted of defrauding the company and taking more than $25 million in kickbacks from a key vendor.
Finazzo, who was found guilty in April 2013 of 14 counts of mail fraud, wire fraud and conspiracy, was also ordered to forfeit more than $25 million and pay the company $13.7 million in restitution.
Prosecutors said Finazzo entered into an illegal deal with Douglas Dey, a movie producer and the owner of South Bay Apparel, a firm that was once a major clothing supplier for Aeropostale. Under the deal, Finazzo from 1996 to 2006 allegedly caused the company to buy more than $350 million in T-shirt and fleece items from South Bay on behalf of Aeropostale in exchange for about 50% of the vendor’s profits.
Prosecutors said the scheme enabled Finazzo to collect more than $25 million in kickbacks from South Bay.
Dollar Tree profit dips in second quarter
New York — Dollar Tree Inc. reported that net income in the second quarter dipped 2.6% to $121.5 million, from $124.7 million a year earlier, amid higher freight costs and investments in higher-value products.
Revenue rose 9.5% to $2.03 billion, and same-store sales increased 4.5%, beating Wall Street estimates of a 2.5% rise. It was the chain’s26th consecutive quarter of positive comparable store sales growth.
“I am very pleased with our second quarter results,” CEO Bob Sasser said. “Expanded assortments of high-value product contributed to our strongest quarterly comparable store sales performance in two years. Pet supplies, hardware, household products, food, electronics and party goods all performed well in the quarter. Our 4.5% comp sales resulted from increases in both customer traffic and average ticket.”
The company opened 90 stores, expanded or relocated 20 stores and closed four stores during the quarter.
Early this week, Dollar General bid $78.50 for Family Dollar Monday morning in a $9.7 billion deal that exceeds the $74.50 a share Dollar Tree offered for Family Dollar back on July 28. But on Thursday, Family Dollar’s board of directors has unanimously rejected the non-binding proposal made by Dollar General on the basis of antitrust regulatory considerations.
Dollar General digs in as Family Dollar rebuffs takeover bid
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.