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Target falls short, but Macy’s, J.C. Penney and Kohl’s top estimates in February

BY CSA STAFF

New York City — Sales at Macy’s, J.C. Penney and Kohl’s surpassed analysts’ estimates in February amid gradually moderating temperatures and rising consumer confidence. However, analysts warned that a late Easter and rising gasoline prices could impact sales going forward.

Confidence among U.S. consumers rose in February to the highest level in three years, according to a Thomson Reuters/University of Michigan index, as a drop in unemployment helped overcome concern over rising food and fuel costs.

Target fell short of expectations. The chain said Thursday its same-store sales rose 1.8% for February, missing analyst expectations for a 2.2% increase.

Target said more than half of its February same store sales gain was driven by an increase in transactions combined with a small increase in the average transaction size. Sales rose more than average in California, South Florida and the Mid-Atlantic, but less than average in the Midwest, the Carolinas and the Northeast. Grocery and clothing sales rose while home products and electronics sales fell. The chain’s total revenue for the four weeks that ended Feb. 26 rose 2.4% to $4.75 billion.

“Target’s February comparable-store sales were in line with our expectations, as our REDcard Rewards and PFresh remodel programs continue to drive meaningful incremental sales and traffic in our stores,” said Target chairman, president and CEO Gregg Steinhafel.

The rewards program was launched last fall at stores nationwide and offers those who used Target branded credit and debit product 5% off all purchases.

Target expects March same-store sales to fall because Easter-related sales will be pushed to April, with Easter falling three weeks later. Other retailers also warned that the late Easter holiday would cut into March sales.

J. C. Penney Co. said that its same-store sales in February increased 6.4%, with women’s apparel and accessories, children’s apparel, and fine jewelry reporting the strongest results for the month.

Geographically, J.C. Penney said all regions experienced comparable-store sales gains, with the northeast and southwest regions delivering the best performances.

Macy’s reported a 5.8% increase in its Feburary same-store revenue, topping analysts’ estimates of a 3.7% increase. Macy’s results were boosted by strong growth in its online segment, which rose 30.9% in the month.

“Our fiscal 2011 started off with a stronger-than-expected February performance at both Macy’s and Bloomingdale’s. Consumer reaction to new spring merchandise has been encouraging,” said Terry J. Lundgren, chairman, president and CEO of Macy’s.

Kohl’s said its sales increased 5.0%, topping the 4.1% increase analysts expected. Mens, womens and childrens were the top performers, registering high-single digit increases.

In other same-stores sales results for February:

  • Saks’ sales jumped 15.3%, buoyed by strong sales of items such as shoes, handbags and men’s and women’s clothing. Its performance easily topped the 4.9% increase the Street expected.

  • TJX Cos. reported a 3% rise in sales on top of double-digit increases last year.

  • Nordstrom’s sales were up 7.3%, easily beating Wall Street’s expectation of a 4.2% increase. The figure climbed 9.6% for Nordstrom, which includes its stores and direct sales. The lower-price Nordstrom Rack division reported a 1.6% increase.

  • The Bon Ton reported a 0.5% decrease in sales as its key market areas were impacted by snowstorms.

  • Fred’s said its sales rose 0.9%, below analysts’ expectations for the discount store operator. The retailer said traffic earlier in the month was affected by harsh weather.

  • Duckwell-Alco reported a 3.1% rise in sales.

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Family Dollar rejects takeover bid

BY CSA STAFF

Matthews, N.C. — Family Dollar Stores on Thursday said its board rejected a takeover bid by an activist investor, saying it "substantially undervalues the company." In February, Nelson Peltz’s Trian Fund offered $55 to $60 per share, or about $6.99 billion, for Family Dollar.

The chain said it also adopted a shareholder rights plan, commonly called a "poison pill," that would significantly dilute shares if a takeover attempt proceeds.

Peltz, Family Dollar’s largest shareholder, started increasing his stake in the company last summer, saying the stock was undervalued. He said he met with senior management to discuss the company’s direction. The Trian Fund bought more Family Dollar shares in January.

Family Dollar’s board said that pursuit of a sale is not in the best interests of shareholders, and that the best way to deliver value to shareholders is to continue implementing the company’s strategic plan announced in September.

Howard Levine, chairman and CEO, said the results from its fiscal year reflect its strategic plan, noting that the company has accelerated new store openings, launched an ambitious, multi-year store renovation program, and invested to improve our operational capabilities.

"Family Dollar is executing effectively on its business plan and has a proven record of delivering superior results for shareholders," said Levine.

Family Dollar has more than 6,800 stores in 44 states.

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Family Dollar stays on course

BY CSA STAFF

MATTHEWS, N.C.— Family Dollar Stores announced that it will continue to implement its strategic plan. The decision was agreed upon unanimously by the company’s board of directors who decided the strategic plan was the best way to deliver value to all Family Dollar shareholders. The company also reported that it would not entertain the proposal from Trian Group to acquire Family Dollar and that pursuit of a sale of the company is not in the best interest of shareholders.

"In September 2010, we shared with investors our strategic plan to accelerate revenue growth, expand operating margins and optimize our capital structure," said Howard Levine, chairman and CEO. "The results from this fiscal year are a positive reflection of this plan. We have accelerated new store openings, launched an ambitious, multi-year store renovation program, and invested to improve our operational capabilities. In addition, our board increased the quarterly dividend by 16% to $0.18 per share and approved a $750 million share repurchase program. As of March 2, 2011, the company had repurchased $400 million of common stock."

The company also announced that its board has adopted a shareholder rights plan, details of which will be contained in a Form 8-K to be filed with the U.S. Securities and Exchange Commission. The rights plan, which has a term of 12 months and a 10% beneficial ownership threshold, is intended to enable all of the company’s shareholders to realize the long-term value of their investment in the company, and reduce the likelihood that any person or group would gain control of the company by open market accumulation or otherwise without paying a control premium for all shares.

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