Retail News Breaks Archives
Family Dollar raises earnings forecast on sales increase
March 22nd, 2011
MATTHEWS, N.C. – Family Dollar Stores Inc., which recently rebuffed an unsolicited buyout offer, reported that sales for the second quarter ended February 26 rose 8.3% to $2.09 billion. Comparable-store sales increased 5.1%, despite a negative impact in January from harsh weather.
As a result, the company has raised its second-quarter earnings guidance to a range of 97 cents to 98 cents per diluted share from its January estimate of 92 cents to 97 cents per share.
Earlier this month Family Dollar’s board of directors rejected a buyout offer of $55 to $60 per share from New York-based Trian Group, a hedge fund headed by billionaire investor Nelson Peltz, contending that the bid substantially undervalues the chain. It also adopted a “poison pill” shareholder rights plan designed to discourage unsolicited buyout efforts.
Trian, which owns about 8% of Family Dollar’s outstanding shares, sent the company a follow-up letter on March 14 asking the board to reconsider its offer and emphasizing that it should not be considered a hostile bid. If Family Dollar does not reconsider the bid, the letter stated that the retailer must raise its operational performance to the level of competitor Dollar General Corp., in particular matching Dollar General’s sales per square foot, which totaled $200 as of December 2010.