Quantcast

Family Dollar: Headed For A Buyout?

Get the WebProNews Newsletter:
[ Life]

Things have not been looking good for Family Dollar.

The dollar store chain’s stocks continue to slide, recently hitting a 52 week low.

Both the company’s shares and earnings fell short of original projections made by Zacks Consensus Estimate.

Analyists predict a 14% drop in earnings by the end of 2014.

There is a chance that a lift may be coming for Family Dollar in the form of a buyout. Such speculation has been going on for the past few years and has strengthened as company losses increased.

In 2011, billionaire Nelson Peltz made an offer. At the time Chief Executive Officer Howard Levine had been reluctant to sell his father’s company. The decision not to take the offer may be coming back to haunt Levine.

As the situation worsens, it’s possible that investor activism or the emergence of future offers may force Levine’s hand.

Edward Jones analyst Brian Yarbrough said of the situation, “The ice has got to be getting thinner underneath [Levine]. A lot of times you’ll see private equity take an interest in some of these broken businesses, so you can’t rule it out.”

Family Dollar representatives have been somewhat tight-lipped about where the company stands at present.

Spokeswoman Bryn Winburn said in response to questions about potential buyers that Family Dollar does not comment about market speculation.

Family Dollar’s CEO recently explained to disappointed shareholders that the company’s losses could be blamed on the harsh winter weather.

This explanation didn’t seem quite adequate. Instead, there are more likely explanations being floated to explain the downturn in profits.

Some believe a drop in the earnings of dollar store companies means that customers have more money to spend. This logic implies that Americans are spending their money at higher end stores rather than saving money through dollar store purchases.

Others peg the company’s losses as the result of the competitive pricing at stores like Walmart, Target, and direct rival Dollar General.

There has even been speculation that it could be Dollar General that ultimately steps forward to buy out Family Dollar.

Image via Wikimedia Commons

Family Dollar: Headed For A Buyout?
Comments Off
About Toni Matthews-El
Toni Matthews-El hails from the land of chunked pumpkins and people who come to a complete stop before making any and every turn. When she isn't contributing articles to WebProNews, she spends her time freelance writing, cheering Liverpool FC, and enjoying life as a hair flower connoisseur. Disclaimer: Written opinions do not necessarily reflect that of WebProNews or its affiliates WebProNews Writer
Top Rated White Papers and Resources

Comments are closed.

  • Join for Access to Our Exclusive Web Tools
  • Sidebar Top
  • Sidebar Middle
  • Sign Up For The Free Newsletter
  • Sidebar Bottom