Walgreens Bows Out of Bid for Longs
New York City Walgreen Co. said Wednesday that it had withdrawn its bid to acquire Longs Drug Stores. The move clears the way for CVS Caremark’s $2.8 billion deal to acquire Longs.
Walgreen chief executive Jeffrey Rein sent a letter to Longs’ board in which he cited the board’s unwillingness “to engage in a constructive dialogue” and the nation’s worsening financial crisis as the reasons for the withdrawal.
Longs had repeatedly rejected the Walgreen bid, saying the overlap of both companies’ drug stores in certain U.S. states could raise regulatory problems and delay a deal. Longs has already accepted a lower bid by CVS prior to the Walgreens offer. The CVS deal had been approved by antitrust regulators.
However, some Longs shareholders have been critical of the CVS deal, saying it could undervalue the chain’s real estate.
Richard Clayton, research director of CtW Investment Group, which advises pension funds owning about 500,000 shares of Longs, called the move by Walgreens “disappointing” for shareholders and reiterated an earlier charge that Longs’ board failed to respond appropriately to Walgreens’ offer, according to Reuters.
Wal-Mart posts strong comps across all divisions
Wal-Mart Stores reported September net sales for the five weeks ended Oct. 3 of $36.23 billion, a 5.8% increase over $34.23 billion in September 2007. Walmart U.S. posted net sales of $22.48 billion, a 4.8% increase over $21.45 billion in September 2007; Sam’s Club had net sales of $4.39 billion, an 8% increase over $4.07 billion in 2007; and International net sales were $9.36 billion, a 7.3% boost over $8.72 billion in September of 2007.
Total U.S. comparable-store sales rose 2.4% without fuel, versus a 1.4% rise in September 2007. Walmart U.S. comps rose 2%, compared to 0.8% in 2007, while Sam’s Club comparable-club sales rose 4.6%, compared to 4.4% in September 2007.
The net impact of Hurricanes Gustav, Hanna and Ike on total U.S. comparable-store and club sales was approximately negative 0.4 percentage points.
"In spite of both the impact from the hurricanes and the recent challenges to consumer confidence as a result of the economic environment, Walmart U.S. had another period of solid comparable-store sales performance," said Eduardo Castro-Wright, Walmart U.S. president and ceo. "We continue to believe that the strong Walmart value proposition is bringing more and more customers to our stores. We are confident that the customers will continue to shop with us as we enter the holiday season."
Comparable-store sales during the September period were strong in both grocery and health and wellness. Sales in grocery were led by food and consumables. Children’s clothing was positive during the September period, while sales of discretionary items were soft.
September sales at Sam’s Club were driven by strengths in fresh food, with produce leading the category. Within general merchandise, apparel sales were strong, while housewares, furniture, video games and electronics saw softer sales. Within electronics, LCD TVs and small electronic devices, such as GPS units and digital audio, performed well.
"Sam’s Club members continue to search for value in this economy," said Doug McMillon, Sam’s Club president and ceo. "Food and consumables, including fresh foods, are driving increases in comparable-club traffic and ticket. While discretionary items are under pressure, members are reacting positively to new items. Price is the primary focus, but newness and quality still matter to them."
The Company expects U.S. comparable-store sales for the October four-week period to be between 1% and 2%, said cfo Tom Schoewe. "The September period included two first-of-the-month paydays, which generally benefit sales," Schoewe said. "However, the October period this year contains no first-of-the-month payday, and that is accounted for in our estimate. We maintain our current estimate for earnings per share from continuing operations for the third quarter ending Oct. 31, to be in the range of 73 cents and 76 cents per share."
PacSun net sales drop 4% in Sept., 3Q
ANAHEIM, Calif. Pacific Sunwear of California reported net sales for the month of September, ended Oct. 4, of $91.2 million, a decrease of 4% from $95.1 million in September 2007. Same-store sales decreased 5%.
Net sales for the third quarter of 2008 were $254.3 million, a decrease of 4% from $265.1 million during the same period last year. Third-quarter same-store sales decreased 6%.
As a result of increased markdown activity, PacSun now expects fiscal 2008 third-quarter earnings to be at the low end of its previously announced earnings guidance range of 0 to 5 cents per diluted share.