A towel dispenser includes: a housing for receiving toweling; a motor assembly that causes a leading edge of the toweling to be extended from the housing such that a line of perforations in the toweling along which a user tears the toweling is located downstream of the sensor, and the toweling to be retracted into the housing after the leading edge has been extended; and a sensor that senses a leading edge of the toweling during retraction of the toweling. The sensor causes the motor assembly to cease retracting the toweling into the housing as a function of the sensing of the leading edge of the toweling. The toweling may be a roll of perforated paper towels.