Thursday, 8 January 2015

Hit that bid (approach) for Family Dollar

Whilst the Dollar General bid for Family Dollar potentially makes the share an investment for specialist merger arb analysts and fund managers only...

...the company's general insights are worthy as they give some readacross into the broader economy.  The confusingly dubbed 'Dec-15' sales were better on a year-on-year basis helped by better pricing and higher traffic...

...although any bump up in spending in the last month of the year has hardly shifted the dial and - as shown below - actually the gap in spending to 'non FDO Shopper(s)' has actually increased recently.  The impact of an improving economy OR an indication that Family Dollar is not performing (and should be taken over / new blood introduced?)

This point can be debated but clearly the company remains troubled.  Observations about pricing challenges and mix pressure say many things about a business... do falling operating profit margins.

If I was a Family Dollar shareholder I would be grabbing onto that bid interest.  This does not feel like a company to be backing independently or - because of its own challenges - is providing much of an insight into the general economy. 

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