As Black Friday approaches, retailers are scrambling to meet business plans, especially with activist investors clamoring for changes. According to CNBC
projected forecasts vary from the National Retail Federation's estimated 2.2% year-over-year sales gain to Global Hunter Securities' 6% to 8% decline. But some retailers are getting slammed harder than others, and activist investors on their boards will most likely have something to say about it.
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Bookseller Borders Group Inc., which is facing an activist push from the outspoken William Ackman of Pershing Square Capital Management LP, reported that third-quarter results were
essentially at $39.0 million compared to $38.4 million in the third
quarter of 2007, but its consolidated third-quarter losses were
$172.2 million compared to a year ago at $40.0 million. Borders was exploring a possible sale as part of a restructuring, but
it could not find a buyer and announced it was taking itself
off the block and
declined to discuss
the alternative financing discussions it is having with Pershing Square.
Another retailer department store chain, Dillard's Inc., is in a similar situation. After a
year of restructuring by closing 21 underperforming stores, cutting
capital spending and laying off staff, Dillard's
net loss for
the third quarter was $56.0 million compared to net loss of $11.3
million. Activist investors Barington Capital Group LP and Clinton
Group LP have been pressing the retailer to restructure over the past
year. In October, three Dillard's board members rejected a call by the
hedge funds to
remove CEO William Dillard II and other Dillard family members from management.
The losses could embolden support for Barington's and Clinton's efforts to unseat Dillard and other changes.
Finally jeweler Tiffany & Co. posted a 57% decline in fiscal third-quarter net
income, with a net income of $43.8 million down from $101.6 million. The
company
plans to lower its full-year earnings outlook and said it plans to cut staff. Tiffany also has activist investors. In May, Peter May, a founding partner of investment firm
Trian Fund Management LP,
was elected to the board. May works alongside financier Nelson Peltz, and
both are known for taking activist positions at other consumer products companies including Wendy's International Inc., Cadbury Schweppes
plc and H.J. Heinz Co.
It will be interesting to see what moves these activist shareholders make if any through the holiday season. - Maria Woehr
