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Saks extends credit agreement to 2016, revises terms

BY CSA STAFF

New York City — Saks said Tuesday that lenders have agreed to amend a $500 million revolving credit agreement that now extends to 2016. The agreement also favorably revises other terms.

As a result, the department store retailer estimates its 2011 interest expenses will total about $50 million, down from its previous estimate of $51 million to $53 million.

The debt previously was scheduled to mature Nov. 23, 2013. Now, it matures March 29, 2016.

The maximum committed borrowing capacity remains $500 million. Saks said it currently has not borrowed directly against the facility.

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NRF welcomes Federal Reserve’s commitment to swipe-fee reform

BY CSA STAFF

WASHINGTON — The National Retail Federation announced that it welcomed Federal Reserve Chairman Ben Bernanke’s commitment to complete final swipe fee reform regulations in time for retailers to begin offering customers discounts and other benefits this summer as scheduled.

“Retailers want to begin passing on swipe fee savings to their customers as soon as possible, and today’s announcement means those plans will be able to move forward as planned despite the anti-consumer efforts of some in Congress,” NRF SVP and general counsel Mallory Duncan said. “The Fed has received thousands of comments on this proposal and it is appropriate for that input to be carefully and thoroughly reviewed. If they take a few extra weeks, we understand.”

According to NRF, Bernanke said that the high volume of comments received by the Fed and the issues they have raised mean the agency will slip beyond an April 21 deadline to complete final regulations. But he acknowledged that swipe fee reform legislation enacted last year will take effect on July 21 even without regulations and said “we are committed to completing the rulemaking for that provision in advance of that date.”

Regulations proposed by the Fed in December would lower debit card swipe fees from their current level of 1% to 2% of each transaction to a flat fee of no more than 12 cents per transaction for large banks that adhere to fees set by the card companies. Banks that set their own rates would be free to charge any fee they believe the market would bear provide that they do so independently. The move would reduce the current $20 billion a year in debit swipe fees by about 70%, or $1.2 billion a month. Financial institutions with less than $10 billion in assets are exempt.

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Family Dollar posts sales and profit improvement

BY CSA STAFF

Profit grew by nearly 10% to $123.2 million and sales advanced 8.3% to nearly $2.3 billion, as Family Dollar remained on a consistent growth trajectory during its second quarter ended Feb. 27. Earnings per share for the period increased 21% to 98 cents compared with 81 cents in the second quarter the prior year.

“Over the last several years, we have accelerated capability-building investments and increased our efforts to improve the in-store shopping experience. These investments have provided a solid foundation for the successful launch of our strategic plan to re-accelerate revenue growth, expand operating margins and optimize our capital structure,” said Howard Levine, chairman and CEO of Family Dollar. “Our performance year-to-date illustrates that we are effectively leveraging these enhanced capabilities and executing well against our business plan and delivering superior value for shareholders.”

The second quarter saw the company again produce solid same-store sales growth of 5.1%, which it said was almost entirely the result of more customers shopping its stores as determined by the number of transactions. A modest increase in the value of the average customer transaction also contributed to the comp gain. Sales during the quarter were strongest in the consumable and seasonal categories, according to the company.

The rate of profitability improved slightly, as Family Dollar’s gross margins for the second quarter were 35.7% compared with 35.4% the prior year due largely to less shrinkage, which more than offset higher transportation costs. The shrinkage reduction occurred even though average inventories per store increased by 10% as Family Dollar stocked up on consumables. The company’s expense rate was essentially flat with the prior year at 26.82% compared with 26.77%.

Looking forward to the back half of its fiscal year Family Dollar is expecting continued growth and improved profits. Third-quarter and full-year comps are projected to be in the range of 5% to 7%, and additional store growth is planned. At the mid point of its fiscal year, Family Dollar has opened 146 new stores, renovated 313 stores and closed 43 others as part of a full-year plan that envisions the addition of 300 new stores and 80 to 100 closings. The company ended the second quarter with approximately 6,800 units.

The additional square footage, expectations of same store sales growth are forecast to result in third quarter earnings per share of 92 cents to 97 cents, compared to 77 cents last year and full year profitability in a range of $3.13 to $3.23 a share compared with $2.62 last year.

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