Activist investor Nelson Peltz has amassed a 6%-plus stake in Family Dollar Stores Inc. and is pushing the retailer to make changes he feels will increase shareholder value.
The company has responded by pointing out that it achieved sustained high earnings growth and seen its stock price escalate more than 40% during the course of this year.
MATTHEWS, N.C. — Trian Fund Management LP, the investment arm of financier Nelson Peltz, has acquired a 6.6% stake, or more than 8.7 million shares, in Family Dollar Stores Inc.
Trian Fund Management LP, the investment arm of financier Nelson Peltz, has acquired a 6.6% stake, or more than 8.7 million shares, in Family Dollar Stores Inc.
In a regulatory filing with the Securities and Exchange Commission, the activist investor described the retailer’s shares as undervalued and stated that he has met with Family Dollar’s top management to discuss various ways to increase shareholder value, including increased stock buybacks. Peltz also may nominate candidates for the company’s board of directors.
In response to the Schedule 13D filing, Family Dollar issued a statement in which it pointed out that the company has achieved nine consecutive quarters of double-digit earnings per share growth, “significantly expanded” operating margins and improved inventory productivity. It also noted that its stock price has risen more than 41% so far this year, compared with a 0.8% decline in the S&P Retail Composite during the same period. Over the three years ended July 27, Family Dollar’s stock price has increased more than 30% versus a 15.8% decline in the S&P Retail Composite over the same period.
Earlier this month Family Dollar reported a 19% increase in net profit for its fiscal third quarter, but cautious earnings and same-store sales guidance for the fourth quarter apparently alarmed investors, who drove down the company’s share price by 8% on July 7, when the results and guidance were announced.