UPDATE: Morgan Stanley Downgrades Family Dollar Stores to Equal-Weight, Removes PT

In a report published Monday, Morgan Stanley downgraded its rating on Family Dollar Stores

from Overweight to Equal-Weight, and removed its $85.00 price target. Morgan Stanley noted, “FDO's 6.6% comp actually beat expectations driven by strength in its consumables efforts. But these sales came at a cost as GMs declined 110 bps due to a litany of woes (mix shift, increased promotions and markdowns, higher shrink). While the consumables rollout has been successful, we think the discretionary weakness is more than just a weaker lower-income consumer and likely self-inflicted. Furthermore, discretionary is likely to get worse given the expiration of the payroll tax holiday.” Family Dollar Stores closed on Friday at $56.65.