In a report published Friday, Citigroup reiterated its Buy rating on Family Dollar StoresFDO
, but lowered its price target from $79.00 to $69.00. Citigroup noted, “FDO's EPS of $0.69 came as a surprise following very strong SSS of 6.6%. The variance vs. our estimate was driven by greater gross margin pressure than planned, resulting from FDO's sales-driving initiatives, partially offset by higher SSS and slightly more SG&A leverage than expected. While gross margins could continue to be pressured by stronger sales of lower-margin consumables, and increased inventory shrinkage, much of the heavy lifting associated with merchandising initiatives (i.e. markdowns) has been completed and SSS growth in consumables should accelerate in F2013. We reiterate our Buy rating.” Family Dollar Stores closed on Thursday at $55.74.
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