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Family Dollar a hot commodity

BY Gail Hoffer

MATTHEWS, N.C. — Family Dollar reported Monday a comparable-store sales increase of 5.1% for the second quarter ended Feb. 26. Net sales for the quarter increased 8.3% to $2.26 billion, from $2.09 billion last year. According to the retailer, warmer weather earlier in the year, as well as strong performance in its consumables and seasonal categories, helped drive sales.

“Family Dollar continues to execute well against our strategic plan to accelerate revenue growth, expand operating margins and optimize our capital structure,” said Howard Levine, chairman and CEO. “Our investments to improve the shopping experience for our customers while enhancing our operational capabilities continue to deliver strong returns.”

The company said it now expects that earnings per diluted share for the second quarter of fiscal 2011 will be in the range of 97 cents to 98 cents per diluted share, compared with 81 cents per diluted share for the second quarter of fiscal 2010.

Family Dollar’s second-quarter performance will make it even more enticing to investors, who have shown a growing interest in discount stores. Last month, Family Dollar Stores received a buyout offer from a New York hedge fund at $55 to $60 per share, a 36% premium over yesterday’s closing price. The offer, which values the company at up to $7.6 billion, was made by Trian Group, which is headed by activist investor Nelson Peltz.

Investors also have shown interest in other dollar stores. 99 Cents Only Stores, according to the Associated Press, has received a proposal to take the company private from the company’s founding family and investment firm Leonard Green & Partners for $19.09 per share.

The offer would value the company at about $1.3 billion. According to 99 Cents, the purchasers would include the Schiffer-Gold family, which owns about 33% of its outstanding stock. David Gold is company founder and chairman, and his son-in-law, Eric Schiffer, is CEO.

Whether any of the aforementioned deals go through remains to be seen, but it is clear that it is a good time to invest in dollar stores while they still have a strong appeal to consumers looking to continute to save in difficult economic times.

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GiantMicrobes expands line of toys

BY Allison Cerra

NEW YORK — GiantMicrobes has developed a new line of educational plush toys that are modeled after tiny organisms.

New to the lineup are toys that resemble magnified microbes of hay fever, a tick and a brain cell.

Original-sized GiantMicrobes (5-in. to 7-in. sizes) retail for $8.95, while GiantMicrobes petri dishes (three mini-microbes packaged in a dish) retail for $12.95, and Gigantics (15-in. to 20-in. sizes) retail for $29.95. The brain cell plush toy is available as a key chain, GiantMicrobes said, and retails for $5.95.

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Magnacca’s know-how will bring WAG to the next level

BY Michael Johnsen

WHAT IT MEANS AND WHY IT’S IMPORTANT — Joe Magnacca brings to bear a menagerie of merchandising savvy that will help Walgreens on its way to well. That savvy includes some "old world" retailing perspective by way of Canada’s Shoppers Drug Mart, where a focus on beauty and convenience is paramount. And his recent meteoric rise through the ranks of Duane Reade is testament to just how well he connected with the denizens of the most-populated city in the United States through enhanced merchandising and marketing.

(THE NEWS: Magnacca’s role at WAG expands. For the full story, click here)

As Walgreens looks to apply the best of Duane Reade to its other 7,000-plus stores, clearly the chief architect of that DR makeover will play a key role. Magnacca just sees things differently, and no doubt his unique vision will identify entirely new ways for Walgreens to look at and market to its customers.

"As a Canadian, we look at the drug store industry a little bit differently because we have more of a European slant on the overall business," Magnacca told Drug Store News during a Duane Reade store tour in late 2009. "If you look at the European model, they are certainly more advanced from a beauty point of view and from a convenience point of view. The European business model has really demonstrated how you can take drug to the next level."

When Magnacca joined Duane Reade in 2008, he brought that fresh perspective and merchandising expertise that resulted in such enhancements as expanded grocery and fresh foods; the DR Delish private brand; upscale beauty departments; the Duane Reader “magalogue” packed with exclusive products, bargains and tips; and the FlexRewards loyalty program that replaced the retailer’s Dollar Rewards.

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