Home Depot director nominees include Staples CEO
Ronald Sargent and Frank Brown — the CEO of Staples and the dean of an international business school, respectively — have been nominated for election to The Home Depot’s board of directors at the company’s upcoming annual meeting on June 2.
Separately, David Batchelder has informed the company that he has decided not to stand for re-election at the annual meeting. Batchelder, founder and principal of Relational Investors LLC, has been a director since 2007.
The new nominees offer diverse backgrounds. Sargent has served as CEO of Staples, since 2002, and as its chairman since 2005. He served as president and chief operating officer of Staples between 1998 and 2002. Sargent joined Staples in 1989 as regional VP, leading the company’s market entry in Ohio, and went on to hold additional leadership roles overseeing Staples’ worldwide operations, retail superstores, delivery business, supply chain and marketing initiatives. Prior to Staples, he held a variety of positions at The Kroger Co.
Brown just completed his term as Dean of INSEAD, an international business school with campuses in France, Singapore and Abu Dhabi. Before his appointment as dean in July 2006, he served as a member of its board and as chairman of its U.S. Council. Prior to INSEAD, Brown spent 26 years at PricewaterhouseCoopers, where he held a series of leadership roles including head of its Assurance and Business Advisory Service, Transactions Services and Corporate Development practices. Most recently, he was the leader of its $3.5 billion Advisory Services operating unit. In June 2011, he will join global growth equity firm General Atlantic LLC as a managing director.
"Frank has strong technical expertise in financial and accounting matters, and Ron possesses extensive global retail and leadership experience. Both individuals would be terrific additions to our board," said Bonnie Hill, lead director and chair of the board’s nominating and corporate governance committee.
Walgreens boosts online presence with Drugstore.com acquisition
DEERFIELD, Ill. and BELLEVUE, Wash. — Shortly after posting record second-quarter sales on Tuesday, Walgreens announced that it would "accelerate its online strategy" by acquiring e-retailer Drugstore.com for about $429 million, subject to customary conditions.
“Our acquisition of Drugstore.com significantly accelerates our online strategy to leverage the best community store network in America by becoming the most convenient choice for health and daily living needs, whether customers shop online or in our stores,” said Walgreens president and CEO Greg Wasson. “This acquisition offers a unique opportunity that will provide us immediate access to more than 3 million savvy, online loyal customers, and will allow us to move even closer to our existing customers through relationships with new vendors and partners, adding approximately 60,000 products to our already strong online offering."
Under the agreement, Drugstore.com stockholders will receive $3.80 in cash for each share of stock, representing a total of about $429 million; a price about $27 million less than the online retailer’s 2010 U.S. sales, according to Online Retailer. The price per share, the Walgreens noted, is a premium of about 102% over Drugstore.com’s 30-day average closing stock price, and a premium of approximately 113% over the closing price of Drugstore.com’s common stock on March 23, the last trading day prior to the announcement.
Walgreens noted that the deal is subject to customary conditions and expects the acquisition to close by the end of June.
Earlier this month, the drug store chain announced it would sell off its pharmacy benefit management business to Catalyst Health Solutions, which carried a price tag of about $525 million in cash, to focus on core strategies. Snapping up Drugstore.com and its assets — which includes the namesake site, along with Beauty.com, SkinStore.com and VisionDirect.com — will "complement and extend many of our own multichannel initiatives that have been driving growth in our business," Wasson said. "As a result, we are positioned better than ever to be the most convenient multichannel retailer of health and daily living needs in America — offering customers what they want, when they want it and where they want it.”
Drugstore.com’s board of directors unanimously approved the definitive agreement. Dawn Lepore, Drugstore.com CEO and chairman, said that its growth strategy was perfectly aligned with Walgreens’, and was confident that the drug store chain would achieve Drugstore.com’s vision and growth opportunities.
Fred’s 4Q earnings up by nearly 50%
MEMPHIS, Tenn. — In yet another example of how discount stores are dominating the retail industry these days, Fred’s Inc. reported strong earnings and sales growth for its fiscal fourth quarter. The company reported fourth-quarter net income of $8.6 million, or 22 cents per diluted share, a 49% increase over last year’s reported net income of $5.8 million or 15 cents per diluted share. For the year ended Jan. 29, Fred’s net income increased 25% to $29.6 million or 75 cents per diluted share compared with net income of $23.6 million or 59 cents per diluted share in the year-earlier period.
Fred’s total sales for the fourth quarter of fiscal 2010 increased 3% to $485.6 million from $473.1 million for the same period last year. Comparable-store sales for the quarter increased 2.3% compared with a decline of 0.9% for the fourth quarter last year. Fred’s total sales for 2010 increased 3% to $1.842 billion from $1.788 billion for the same period last year. Comparable-store sales for 2010 increased 2.2% on top of an increase of 0.4% in 2009.
Commenting on the results, Bruce Efird, CEO, said, "We are pleased to report a strong finish to fiscal 2010, with earnings per share up 47% for the fourth quarter. These results, which helped push earnings per share up 27% for the year, reflect the hard work and dedication of our team and their successful execution of our updated strategies – all within the context of a challenging retail climate. Through their efforts, we made significant progress during 2010 in upgrading our stores, improving our merchandise selection, and strengthening our customer service levels, which in turn helped drive increased sales and higher customer traffic."
During 2010, Fred’s opened 15 store and 21 pharmacy locations and closed 7 store and 15 pharmacy locations. The company also refreshed 196 stores with its new Core 5 elements.
In the first quarter of 2011, the company expects total sales to increase 2% to 4%. Comparable-store sales are expected to increase 1% to 3% versus an increase of 2.2% in the first quarter last year. Earnings per diluted share are forecasted to increase 14% to 24% to a range of 24 cents to 26 cents for the first quarter compared with earnings per share of 21 cents in the same period last year. Based on this outlook, the company expects total earnings per diluted share for 2011 to be in the range of 84 cents to 90 cents, representing an increase of 12% to 20% over last year.