Categories: world

Why Dollar Tree would be ashamed of itself for colossal Family Dollar failure

DLTR ) on Wednesday? The press release – or the current management team that helped the press release and the weakness figures on it together – deserves zero praise. -reactid = "15"> Are you joking Mr. Market? How in the world can you cheer the well-done, word dump that was outputted by struggling reseller Dollar Tree (DLTR) on Wednesday? The press release ̵ 1; or the current management team that helped the press release and weak numbers on it – deserves zero praise. No. It really is so cut and dry. Hats Tips for Activist Investors Jeff Smith on Starboard – You chose an ideal goal to fight for change.<h2 class = "canvas-atom canvas-text Mb (1.0em) Mb (0) Dollar-tree blows a lot of smoke class =" canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm "type =" text "content =" Dollar Tree shares rallied 5% Wednesday when the company blew a kiss to new nemesis Smith that it works hard to jump, start delayed sales and profits. The center of the plan is a deeper integration of the Bumbling Family Dollar brand & nbsp; (and its 8,200 plus stores) in Dollar Tree. "data-reactid =" 18 "> Dollar Tree shares rose by 5% on Wednesday when the company blew a kiss to new nemesis Smith that it is difficult to jump, started to sell and profit. The center of the plan is a deeper integration of it The remarkable Family Dollar badge (and its 8,200 plus deals) in…

DLTR ) on Wednesday? The press release – or the current management team that helped the press release and the weakness figures on it together – deserves zero praise. -reactid = “15”> Are you joking Mr. Market? How in the world can you cheer the well-done, word dump that was outputted by struggling reseller Dollar Tree (DLTR) on Wednesday? The press release ̵

1; or the current management team that helped the press release and weak numbers on it – deserves zero praise. No.

It really is so cut and dry. Hats Tips for Activist Investors Jeff Smith on Starboard – You chose an ideal goal to fight for change.

<h2 class = “canvas-atom canvas-text Mb (1.0em) Mb (0) Dollar-tree blows a lot of smoke class =” canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm “type =” text “content =” Dollar Tree shares rallied 5% Wednesday when the company blew a kiss to new nemesis Smith that it works hard to jump, start delayed sales and profits. The center of the plan is a deeper integration of the Bumbling Family Dollar brand & nbsp; (and its 8,200 plus stores) in Dollar Tree. “data-reactid =” 18 “> Dollar Tree shares rose by 5% on Wednesday when the company blew a kiss to new nemesis Smith that it is difficult to jump, started to sell and profit. The center of the plan is a deeper integration of it The remarkable Family Dollar badge (and its 8,200 plus deals) in Dollar Tree.

Some actions that Dollar Tree said it takes to improve performance are:

  • A multi-price point test on Dollar Tree that Smith suggested Back in a letter to CEO Gary Philbin in January, Dollar Tree model has long been rooted in selling goods at $ 1.00, but it’s a tough model to keep – and take advantage of – today with the least wage and transport inflation and customs duties on Chinese goods (where Dollar Tree gets the bulk of its general merchandise).

  • A test of Dollar Tree branding departments within Family Dollar stores. Doing this, or assuming, would improve price perception. nd Family Dollar shoppers For many low-income buyers, Family Dollar is still considered too expensive.

  • Change the 200 Family Dollar Store Banners to the Better Dollar Tree Banana this year.

  • Rebuilding 1,000 family-dollar places this year. [19659009] Rolling out adult drinks to 1000 Family Dollar stores and adding freezers to 400 stores. These are important product categories for the low-income purchaser.

In another attempted kiss to Smith, Dollar Tree added to retired TPG consumer / retail veteran Carrie Wheeler to the board. Wheeler is currently sitting on the J.Crew clothing platform (which has its own operational problems right now).

Philbin is obviously optimistic about all those things that work and joke investors as soon as possible.

“In addition to synergies, it is important to recognize the profound impact that the Dollar Tree and Family Dollar brands have had on each other and the meaningful value that this creates for our shareholders now and in the future. “For the Family Dollar brand, Dollar Tree has also benefited. The stores we have from Family Dollar banners work well and have improved Dollar Tree’s overall profitability, a trend that should continue as we banner more stores,” Philbin told Wednesday at a conference call. “We have since received a lot of positive feedback from many investors and we are convinced that we are on the right track to reach an inflection point, as we continue to optimize the Family Dollar business fleet in 2019.”

<h2 class = “canvas- atom-text-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm” type = “text” content = ” What the optimistic investors must having missed What the optimistic investors must have missed

A woman walks through a family dollar store on December 11, 2018 in the Brooklyn New York City neighborhood. (Photo by Spencer Platt / Getty Images)

Lost in Philbin’s uber-haughty profit talks and corporate press release, is the basic assumption of depraved malfunctions on Dollar Tree. These bad mistakes should shift the power of Starboard’s Smith (and other upset shareholders who have been around beyond Smith) in his efforts to shake up Dollar Tree’s board.

Together, they paint a picture of a management group that has long been the latest for new names and a board that needs new faces with new ideas.

Some examples of what the market overlooked:

  • Family Dollar will make sure to close up to 390 stores this year. Dollar Tree did not spend $ 9 billion to buy Family Dollar to enter there and close stores … and rebrand others.

  • A comprehensive write-down fee of $ 2.7 billion related to family-owned assets (due to the brand’s ongoing underperformance compared to expectations at the time of settlement of the contract).

  • Family Dollar gross profit margins decreased 400 basis points compared to the previous quarter. Retail traffic was also under pressure.

  • Dollar Tree gross profit margins were down 90 base units compared to the quarter in the quarter.

  • Changing the name of 200 stores from Family Dollar to Dollar Tree is related to saying Dollar Tree misunderstood the value of Family Dollar at the time of acquisition (which it did).

  • Testing Dollar Tree stores inside Family Dollar is weird – it says effectively to low income customers. Family Dollar doesn’t have the best price. Cannibalization anyone?

  • Full year profit guidance of $ 4.85 to $ 5.25 versus $ 5.78 consensus.

It will be ugly

Splash in Dollar Tree management doesn’t really sound sure to test multiple price points in their name stores and one has to wonder if they understand their current problem with a well-known Wall Street name like Smith and others important shareholders.

“Only confirmation of a [price] test seems to have given investors enough to hope that the company can be open to major change; however, it is simply too little to move on to have confidence that the test will show Successfully, says Jefferies analyst Christopher Mandeville, reflecting the feelings of Yahoo Finance talked with.

Another major scramble on Dollar Trees: somehow, Wheeler gets to throw his support for holding and investing in Family Dollar despite the fact that he was only appointed to the board.

“I am happy to have the opportunity to join the Dollar Tree board. I have long admired the company’s strong leadership position and growth opportunities in the value-selling sector, says Wheeler in a statement Wednesday. “The Dollar Tree business has a unique niche and an extremely loyal customer base, while Family Dollar is a huge opportunity for value creation. I look forward to contributing to the board to help develop and grow the business.”

The poor performance of the family dollar has refused on Dollar Tree’s overall performance seen for years as a retail outlet on Wall Street because of its strong return on investment and sales development. The tree’s stocks have disappeared over the past two years – the stock is 32% higher than a more than 65% gain for rival Dollar General. Walmart’s stock is up 41%.

<p class = “canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm” type = “text” content = “Since Dollar Tree closed its Family Dollar acquisition July 6, 2015, the stock has been up 25% against the S & P 500’s 35% win, while Dollar General ( DG ) and Walmart ( WMT ) share up 50% respectively. 35%. “Data Reaction Time =” 72 “> Since Dollar Tree closed its Family Dollar acquisition on July 6, 2015, the stock has increased by 25% over S & P 500’s 35% profit. At the same time, the shares in Dollar General (DG) and Walmart (WMT) are up 50% and 35% respectively.

Jeff Smith, CEO and Chief Investment Officer at Starboard Value LP. Photographer: David Paul Morris / Bloomberg via Getty Images

Throughout the Dollar Tree management has been stuck to its thinking on Family Dollar by being able to fix and run shareholder value. The latest example comes on Wednesday. It’s no surprise given that Philbin has spent time as Family Dollar’s senior executives from July 2015 to December 2017. Dollar Tree’s Chairman of the Board, Bob Sasser, also served as Dollar Tree’s CEO from 2004 to September 2017 and finally signed on the Family Dollar transaction. .

Both of these two retail veterans are architects of the Family Dollar-Dollar Tree combination. Of the 13 members of Dollar Tree’s Board (including Wheeler, Philbin and Sasser), nine were around to approve the Family Dollar acquisition.

Impairment of value simply and simply, which should not be encouraged by the market. Rather, heads should roll. Unless the market becomes sinful, it may know that Dollar Tree does not – and unlikely – under Philbin and its current board. A press release that on Wednesday only embraces Smith’s investment case and pushes to turn the board upside down this year.

<p class = “canvas-atom canvas-text Mb (1.0em) Mb (0) – -sm Mt (0.8em) – sm” type = “text” content = “But in a world where value-sensitive resellers like Target ( TGT ), Walmart and TJX Companies ( TJX ) do so many things to work successfully in digital time, Dollar Tree takes a $ 2.7 billion write-down on a major acquisition is not a good look. “data-reactid =” 96 “> But in a world where value-centric resellers like Target (TGT), Walmart and TJX Companies (TJX) do so many things to work successfully in digital time, Dollar Tree takes a $ 2 , 7 billion write-downs on a larger acquisition is not a good look.

The ball is now in Smith’s court to apply the next round of press – Dollar Tree released its ball a while ago.

<p class = “canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm” type = “text” content = ” Brian Sozzi is an editor of Finance. Follow him on Twitter @BrianSozzi “data-reactid =” 98 “> Brian Sozzi is a general editor at Yahoo Finance. Follow him on Twitter @BrianSozzi

<p class = “canvas-atom canvastxt Mb (1.0em) Mb (0) – sm Mt em) – sm” type = “text” content = ” Read more: ” data-reactid = “99”> Read more:

Share
Published by
Faela