Trian Fund Management, owned by activist investor Nelson Peltz, has purchased a stake of nearly 6.6% in discounter Family Dollar Stores.
Trian said in a regulatory filing on Tuesday (27 July) that Family Dollar’s shares are “undervalued in the market place and represent an attractive investment opportunity”.
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The group said it had met with Howard Levine, chairman of the board and CEO of Family Dollar to discuss the business and strategies to enhance value for shareholders.
“During these discussions, the Trian Group communicated its view that there is an opportunity to enhance shareholder value by improving the issuer’s operational performance,” Trian said in the filing.
The firm added that it looks forward to working with Family Dollar on operating initiatives such as increasing sales per square foot to peer levels, improving its operating leverage and optimising the number of new store openings.
In response, a statement by Family Dollar’s board of directors and management team yesterday said the firm is “dedicated to building value for all shareholders” and confirmed the meeting with Trian.
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By GlobalData“Over the last several years, Family Dollar has invested to improve processes and capabilities throughout the organisation,” the retailer said. “As a result, the company has achieved nine consecutive quarters of double-digit earnings per share growth, significantly expanded operating margins and improved inventory productivity.”
Family Dollar also said the company has had had nine straight quarters of growth in earnings per share at double-digit percentage rates. Its stock has risen by more than 41% this year, compared with a slight decline for the S&P 500 Index, the company said.
