Former Duane Reade Execs Charged With Fraud
New York City The Securities and Exchange Commission charged two former senior executives at drug store chain Duane Reade with fraud for allegedly orchestrating multimillion-dollar accounting schemes that caused the company to inflate its reported earnings and overstate its net income.
The U.S. Attorney for the Southern District alleges that former CEO Anthony Cuti also provided false information during negotiations over the purchase of previously public Duane Reade by private-equity firm Oak Hill Capital Partners in 2004.
It said from Dec. 2000 through June 2005, Cuti and former CFO William Tennant “engaged in a scheme to misrepresent Duane Reade’s financial performance” to investors and fraudulently made millions of dollars.
However, Cuti’s attorney in the civil case, Jeffrey Sklaroff, said that the transactions were disputed and had no effect on stockholders, bondholders, the company or Oak Hill.
The men “achieved significant financial gain” according to federal prosecutors. They said Cuti also received more than $50 million in compensation from Duane Reade and Oak Hill, including a payout of more than $25 million after the takeover.
Tuesday Morning posts 17.3% 1Q comps drop
DALLAS Tuesday Morning reported net sales for the first quarter of fiscal year 2009, ended Sept. 30, of $173.4 million, a decrease of 14% as compared to $201.7 million for the like period last year. Comparable-store sales dropped 17.3%, comprised of a 14% decrease in traffic and a 3.3% decrease in average ticket.
Based on the first-quarter sales results, the company expects diluted EPS for the first quarter to be in the range of a 9 cents to 11 cents drop, compared to 3 cents for the same period last year.
The company stated that business was impacted in September by Hurricanes Ike and Gustav, which hit during a major sales event, causing a loss in comparable-store sales of approximately $4.2 million and a negative effect on earnings per share of approximately 2 cents. Without the impact of the hurricanes, the company believes that earnings per share for the quarter would have been in the range of negative 7 cents to 9 cents.
“Our September direct mail event began on a positive note, but was impacted by the hurricanes as well as the unprecedented financial crisis. The latter served to impact sales for the remainder of September,” stated president and ceo Kathleen Mason. “Our customer is especially cautious with discretionary spending during this time of economic uncertainty. We continue to focus on managing our inventories and keeping expenses in line with revenues.”
Family Dollar promotes evp, strategy and marketing
MATTHEWS, N.C. Family Dollar has promoted Dorlisa K. Flur to the position of evp of strategy and marketing. Flur joined Family Dollar in 2004 as senior vp of strategy and business development.
“Understanding our customer is critical to our mission of providing customers with a compelling place to shop. We have invested significantly to know our customers better, and with Dorlisa’s leadership, we have used this knowledge to develop our strategic agenda,” said Howard Levine. “She has been instrumental in the development of several of our key initiatives, including the launch of our cooler program, Concept Renewal and our broader re-branding effort.
“In addition to her current strategy and business development responsibilities, Dorlisa will assume executive responsibility for marketing,” continued Levine. “Our goal is to improve the financial returns of our marketing strategy by strengthening the linkage between our customer communications and our customer research efforts. Dorlisa will also utilize customer insights to lead our cross-functional efforts to enhance Family Dollar’s private label strategy.”
Prior to joining Family Dollar, Flur served as a principal with the global management consulting firm, McKinsey and Co. She also spent six years on the board of Charlotte-Mecklenburg’s Arts and Sciences Council and currently serves on the boards of the North Carolina Blumenthal Performing Arts Center and the Bechtler Museum of Modern Art.