Investor Carl Icahn Demands Family Dollar Sell

Investor Carl Icahn sent a letter to Family Dollar CEO Howard Levine yesterday saying that “it is imperative that Family Dollar be put up for sale immediately.” The letter was made public in an SEC filing.

Icahn, who recently disclosed his 9.4 percent stake in the discount retailer, is its largest shareholder.

“Family Dollar has consistently underperformed its peers on most, if not all, operating metrics (same store sales, total revenue growth, sales per store, sales per square foot, operating margins, capital structure efficiency, etc.) and faces growing competition,” Icahn continued. “In addition, the company’s shares have underperformed not only the shares of its peers but also the S&P 500 index over the last 1-year and 3-year periods.”

Icahn said he hoped Levine would cooperate and allow three of his own representatives join the board immediately. Icahn threatened to oust Levine and the retailer’s board: “Therefore, if we cannot achieve this collaboratively, we intend to take this matter directly to shareholders by commencing a written consent solicitation within the next few weeks to remove all of the members of Family Dollar’s board of directors and replace them with individuals that will have a shareholder mandate to sell the company.”

Family Dollar’s board responded yesterday evening with a vaguely worded reassurance to Icahn and its other shareholders: “As previously announced the company is undertaking an in-depth business review to identify opportunities to strengthen our value proposition, increase operational efficiencies and improve financial performance. While this business review is ongoing, we continue to take immediate, strategic actions as appropriate to improve our performance. We are confident that these steps will position Family Dollar to deliver stronger returns for our shareholders.”

Family Dollar’s first-quarter net profit dropped to $78 million in January from $80.3 million the previous year. The retailer announced in April that it would close 370 of its approximately 8,100 U.S. stores. Family Dollar is the second largest dollar store chain in the U.S., behind the more successful Dollar General, which opened its 11,000th store last October.