Family Dollar rejects takeover bid
Matthews, N.C. — Family Dollar Stores on Thursday said its board rejected a takeover bid by an activist investor, saying it "substantially undervalues the company." In February, Nelson Peltz’s Trian Fund offered $55 to $60 per share, or about $6.99 billion, for Family Dollar.
The chain said it also adopted a shareholder rights plan, commonly called a "poison pill," that would significantly dilute shares if a takeover attempt proceeds.
Peltz, Family Dollar’s largest shareholder, started increasing his stake in the company last summer, saying the stock was undervalued. He said he met with senior management to discuss the company’s direction. The Trian Fund bought more Family Dollar shares in January.
Family Dollar’s board said that pursuit of a sale is not in the best interests of shareholders, and that the best way to deliver value to shareholders is to continue implementing the company’s strategic plan announced in September.
Howard Levine, chairman and CEO, said the results from its fiscal year reflect its strategic plan, noting that the company has accelerated new store openings, launched an ambitious, multi-year store renovation program, and invested to improve our operational capabilities.
"Family Dollar is executing effectively on its business plan and has a proven record of delivering superior results for shareholders," said Levine.
Family Dollar has more than 6,800 stores in 44 states.
Family Dollar stays on course
MATTHEWS, N.C.— Family Dollar Stores announced that it will continue to implement its strategic plan. The decision was agreed upon unanimously by the company’s board of directors who decided the strategic plan was the best way to deliver value to all Family Dollar shareholders. The company also reported that it would not entertain the proposal from Trian Group to acquire Family Dollar and that pursuit of a sale of the company is not in the best interest of shareholders.
"In September 2010, we shared with investors our strategic plan to accelerate revenue growth, expand operating margins and optimize our capital structure," said Howard Levine, chairman and CEO. "The results from this fiscal year are a positive reflection of this plan. We have accelerated new store openings, launched an ambitious, multi-year store renovation program, and invested to improve our operational capabilities. In addition, our board increased the quarterly dividend by 16% to $0.18 per share and approved a $750 million share repurchase program. As of March 2, 2011, the company had repurchased $400 million of common stock."
The company also announced that its board has adopted a shareholder rights plan, details of which will be contained in a Form 8-K to be filed with the U.S. Securities and Exchange Commission. The rights plan, which has a term of 12 months and a 10% beneficial ownership threshold, is intended to enable all of the company’s shareholders to realize the long-term value of their investment in the company, and reduce the likelihood that any person or group would gain control of the company by open market accumulation or otherwise without paying a control premium for all shares.
February sales better than expected; Limited and Zumiez top apparel segment
New York City — Many retailers reported better-than-expected sales in February amid milder mid-month temperatures in many parts of the country. But some warned of a weaker March due the timing of the Easter holiday. Analysts also cautioned that rising fuel prices may damper consumer spending going forward.
The Thomson Reuters Same-Store Sales Index rose 4.2% in February, topping estimates for a 3.6% increase, and also rising higher than in the year-ago period.
February is considered the least important month of most retailer’s fiscal first quarter calendar, as it generally is focused on clearing out winter-related merchandise, and preparing for the release of goods for the warmer weather ahead.
In the apparel segment, the winners included Limited Brands, whose same-store sales jumped 12%, topping the 8.5% average estimate of analysts surveyed by Thomson Reuters. Sales at its Victoria’s Secret chain surged 15%, while those at Bath & Body Works climbed 10%.
Zumiez continued its hot streak. The teen retailer said that February same-store sales jumped 12.8%, topping analysts expected 4.2% increase.
Gap, however, fell short of expectations, reporting a 3% decline in same-store sales. Thursday its revenue at stores open at least a year and the associated online sales declined 3% in February, hurt by weak sales in the Midwest.
By division, Banana Republic reported a 4% drop in same-store sales, while sales at Gap stores in North America dropped 1%. Sales at Old Navy North America fell 4%. International sales declined 7%. Analysts surveyed by Thomson Reuters expected a 4.2% increase.
This is the first month that Abercrombie 7 Fitch and American Eagle Outfitters did not report same-store sales on a monthly basis. The two teen retailers joined a growing number of retailers, including Wal-Mart Stores, that no longer report same-store sales each month.
In other apparel same-store sales results for February:
Destination Maternity Corp.’s sales gained 2.6%, helped by improving weather conditions later in the month.
Cato Corp. reported a 5% rise in sales, rose 5% percent in February, helped by a shift in the timing of income tax refunds and more favorable weather than in the year-ago period.
The Buckle’s sales were up 2.1%, short of analyst expectations.
Wet Seal’s sales rose 7%, better than expected. Online sales rose 20% from a year ago. The company said it plans to open 30 new Wet Seal stores in fiscal 2011.
Hot Topic’s sales fell 1.4%. Analysts had predicted a 5% decline.