Former CEO buys Market Basket for $1.5 billion
Tewksbury, Mass. – In what should mark the end of a six-week standoff that began July 18, Arthur T. Demoulas, who was fired by his cousin Arthur S. Demoulas as CEO of the Market Basket supermarket chain in June, has agreed to buy the company for $1.5 billion. Since Friday, July 18, many Market Basket employees and customers have staged a boycott, dramatically slowing down business at the company’s 71 stores in Massachusetts, New Hampshire and Maine.
The purchase price includes about $500 million of private equity financing, which will represent a change for the formerly debt-free company. Arthur T. still held 49.5% of the company as a shareholder after being fired as CEO, and he is buying the remaining 50.5% from Arthur S. and allied family members, thus valuing the full company at about $3 billion.
Felicia Thornton and James Gooch, who were named co-CEOs in June, will remain in place through the closing period to help with the transition to the new leadership team. However, Arthur T. has assumed day-to-day control of the company.
In a statement, Arthur T. Demoulas said, “All associates are welcome back to work with the former management team to restore the company back to normal operations.” However, Demoulas did not specify if this just means store associates who had been boycotting their jobs and in some cases temporarily laid off as business slacked, or also includes at least eight management-level employees who were fired in July.
Abercrombie sales slide 5.8%; dropping logo from clothes
New Dublin, Ohio — Fast-fashion competitors like H&M and Forever 21 and teens more interested in technology than clothing make these challenging times for Abercrombie & Fitch, whose second quarter revenue fell 5.8% to $890.6 million, missing Wall Street projections. In a nod to changing fashion tastes, the company is phasing out the signature logo-centric clothing that helped build it into a teen retail powerhouse.
“In North America we will be out of the logo business by next spring,” said CEO Mike Jeffries during the company’s second-quarter earnings call with analysts. “It will remain a factor in the rest of the world.”
While sales were off, Abercrombie’s income beat estimates, rising 13% to $12.9 million from $11.4 million a year earlier. The company cited an ongoing profit improvement initiative as driving its net income growth.
Abercrombie’s same-store sales in the U.S. fell 8%, while store-sales in the international division plunged 16%. By brand and including direct-to-consumer sales, comparable sales slipped 1% for Abercrombie & Fitch, fell 6% for Abercrombie Kids and dropped 10% for Hollister.
The company said it is making progress in third quarter back-to-school sales.
“In a continued challenging environment, our sales for the second quarter were somewhat below plan, but we have seen modest improvement since the back-to-school floorset,” Jeffries stated. “We are confident that the evolution of our assortment will drive further improvements going forward, in particular as we move past the headwind of adverse likes in our logo business as we work to strategically reduce that element in our assortment.”
Abercrombie anticipates opening a total of 14 full-price international stores throughout the year, including eight Hollister stores and five Abercrombie & Fitch stores.
The company also plans to open approximately eight-to-10 international and U.S. outlet stores during the fiscal year. In addition, the company now expects to close approximately 60 stores in the U.S. during the fiscal year through natural lease expirations.
Destination XL Q2 loss widens; plans 40 new DXL stores
Canton, Mass. – Charges related to the decision by Destination XL Group Inc. to exit the Sears Canada Direct business resulted in the retailer’s net loss growing to $4 million in the second quarter of fiscal 2014, from $1.6 million a year earlier.
Total sales fared better, driven by increased traffic and higher conversion rates, increasing 6% to $103.7 million, compared with $98 million in the second quarter of fiscal 2013.Same-store sales rose 7%.
For the full fiscal year, the retailer anticipates opening 40 additional 5,000-sq.-ft. to 6,000-sq.-ft. DXL stores in select smaller markets and in markets where geographical considerations warrant an additional presence, for a total of 270-300 new DXL stores. Destination XL will also close approximately 40 Casual Male XL and Rochester Clothing stores. The company also expects a continuing net loss, total sales of $413 million to $418 million, and growth in same-store sales.