FINANCE

Starbucks acquires Teavana for$620 million in all-cash deal

BY Katherine Boccaccio

Seattle — Starbucks Coffee Co. announced Wednesday it will acquire specialty tea chain Teavana Holdings for $620 million in a move to gain traction in the $40 billion global tea industry.

According to Starbucks chairman, president and CEO Howard Schultz, the coffee company plans to grow and expand Teavana’s 300 mall-based stores as well as add a neighborhood store concept to accelerate Teavana’s domestic and global footprint.

Teavana, based in Atlanta, went public in July 2011. Its founder Andrew Mack said the company will continue to operate from its Atlanta home base.

“Being part of Starbucks will give us access to incredible industry knowledge and know how as well as the financial strength to super charge our business and allow us to continue our rapid growth to the benefit of all our supporters, including our dedicated employees worldwide,” Mack said in a statement.

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Target well-positioned for holidays too

BY CSA STAFF

A 2.9% third quarter same store sales increase and the sale of its credit card business pushed Target’s third quarter profit up 17.6% to 96 cents a share.

Total sales increased 3.4% to $16.6 billion in third quarter due to the 2.9% comp increase and the benefit of a net increase of 18 stores compared to the prior year. Target ended the period with 1,781 stores and was up against a challenging prior year comparison when comps advanced 4.3%.

"We’re pleased with Target’s third quarter financial performance, which reflects superb execution across each of our business segments," said Gregg Steinhafel, chairman, president, and CEO of Target. "We are well-positioned to deliver strong fourth quarter performance by offering compelling merchandise and unbeatable value through initiatives like the Target/Neiman Marcus Holiday Collection, 5% REDcard Rewards and our new Holiday Price Match which allow our guests to shop at Target with confidence throughout the holiday season."

Earnings per share increased 17.6% to 96 cents from 82 cents, but that figure includes a 15 cent benefit from the pending sale of the company’s credit card receivables portfolio and expenses related to next year’s entry into Canada. On an adjusted basis, excluding the impact of expenses related to Canada, earnings per share increased 4.3% to 90 cents from 86 cents.

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Walmart counting on a Merry Christmas

BY CSA STAFF

Walmart maintained an optimistic outlook for the holiday season despite 1.5% third quarter comp increase that reflected a modest deceleration in sales momentum seen earlier this year.

Total company sales increased 3.4% to $113.2 billion with the U.S. stores division advancing 3.6% to $66.1 billion thanks to the combination of the 1.5% same stores sales increase and new store growth. Company profits increased at a slightly faster pace, with net income advancing 9.5% to $3.825 billion and earnings per share increasing 11.3% to $1.08, a penny better than analysts’ forecast and toward the upper end of the company’s guidance range of $1.04 to $1.09.

Wal-Mart Stores, Inc., president and CEO Mike Duke said the company was "very pleased" with its financial performance as the company achieved its goal of leveraging expenses to deliver on a commitment to reduce costs, improve productivity and invest in price.

"Our disciplined approach to operating the business and to the productivity loop drove profitability and expense leverage," Duke said. "Our fundamentals are strong, and we are well-positioned for the fourth quarter, including innovative plans to drive traffic, especially in our U.S. stores."

Duke said Walmart’s strong price position and broad assortment would give the company a clear competitive advantage during the holidays in the U.S. and worldwide.

"Across all of our markets, we are seeing the same price consciousness as we do in the United States. More customers are part of a growing global middle class, looking for quality, value and a better life, and our EDLP model matters to these customers," Duke said.

The company’s U.S. customers appeared to take a bit of a breather in advance of the holidays as same store sales growth of 1.5%, while within a guidance range that called for a 1% to 3% increase, was a modest deceleration from an on plan 2.2% increase in the second quarter and an expectation beating 2.6% first quarter increase. The first and second quarter gains came against prior year declines. However, the third quarter figure marked the first time the company was up against a prior year increase as the 1.3% gain in the third quarter of 2011 marked the first time Walmart’s U.S. comps turned positive after a two year string of negative numbers.

"We again delivered strong sales across the business, adding $2.3 billion in revenue," said Walmart U.S. president and CEO Bill Simon. "We’re excited about the fourth quarter. November sales started ahead of plan. Our Black Friday plans are innovative and designed to drive additional traffic in our stores. We expect strong performance through Thanksgiving weekend."

The company forecast fourth quarter comps will increase in the range of 1% to 3%, but it is up against a fourth quarter the prior year when same store sale increased 1.5%.

"Current macroeconomic conditions continue to pressure our customers," said Walmart CFO Charles Holley. "The holiday season is predicted to be very competitive, but we are well prepared to deliver on the value and low prices our customers expect."

For the full year, Walmart tightened, but didn’t increase, its profit forecast to a range of $4.88 to $4.93 compared to prior guidance of $4.83 to $4.93.

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