Market reports reveal that Carl Icahn is compelling
Family Dollar Stores Inc.
) to put itself up for sale, given its disappointing performance
amid a tough retail environment. The billionaire investor also
demanded that three of his firm's members be added to the company's
board to initiate the process soon. In response to this, the
company said that it remains committed to improve the operational
as well as financial performance and to seek opportunities in the
best interests of the shareholders.
Earlier, Carl Icahn had acquired a 9.4% stake in Matthews,
NC-based Family Dollar that pushed the discount store retailer to
adopt a one-year shareholder right plan - better known as poison
pill - to prevent activist investors from completely taking it
over. The shareholder right plan will be exercisable only when a
person or group acquires 10% of the company's common stock. The
poison pill got the support of all the directors, except Edward
Garden who did not favor the move.
After taking on bellwethers like
) in the past couple of years, Icahn now targets Family Dollar and
is likely to push the company's management to implement strategic
changes. There is speculation in the market that
Dollar General Corporation
) may be in the race to acquire Family Dollar.
Family Dollar has been in troubled waters for sometime now. The
soft economic recovery and mounting competition from other big
brick and mortar retailers along with online giants have affected
sales and profitability. The company posted a 6.1% decline in sales
and a 34% fall in earnings per share for the second quarter of
Consequently, Family Dollar announced a number of measures to
improve its operational and financial performance. Management
intends to reduce prices of 1,000 basic items, optimize its cost
structure by reducing headcount and close 370 underperforming
outlets. It also plans to be more rational on new store openings to
reap higher return on investment.
Notably, the company's cautious stance on store openings is in
stark contrast to Dollar General, which is on a store expansion
drive. Dollar general intends to open about 700 new stores in
Currently, Family Dollar holds a Zacks Rank #4 (Sell), while
Dollar General carries a Zacks Rank #3 (Hold).
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