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Family Dollar Reports Strong Earnings Growth

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Family Dollar (NYSE: FDO), the discount retailer, reported earnings Thursday with net income for the third quarter increasing 12.1 percent to $124.5 million.

According to a Family Dollar press release, those numbers compare favorably with net income from the third quarter of 2011 of $111.1 million.

Family Dollar reported that net income per diluted share for the quarter increased 16.5 percent to $1.06 compared with $0.91 for the third quarter of fiscal 2011.

“Today, we reported another quarter of strong double-digit earnings growth. I am especially pleased that we delivered these record results even as we launched multiple initiatives late in the quarter to increase our relevancy to the customer and drive greater store productivity,” said Howard R. Levine, Chairman and CEO.

“Delivering stronger shareholder returns begins with increasing sales per square foot, and this quarter, we began to implement a number of initiatives to broaden our consumable assortment and satisfy more of our customers' shopping trips. As planned, most of these initiatives began late in the quarter and had little impact on our third quarter sales results,” continued Levine. “We are on schedule, and I am very pleased with the progress our teams have made in such a short period of time. As we complete most of these initiatives in the fourth quarter, we will have a fully competitive assortment and will be well-positioned to accelerate sales productivity further.”

For the third quarter, total net sales increased 9.6 percent to $2.36 billion, compared to $2.15 billion this time last year. Gross profit increased 8.4 percent to $845.3 million, compared to $779.8 million last year.

Going deeper, Family Dollar reported that operating profit increased 8.2 percent to $199.4 million for the third quarter compared to $184.4 million last year.

The company has a positive outlook for the fourth quarter, expecting an increase in net sales of between 9 and 10 percent, an increase in comparable store sales of roughly 5 percent and 450-500 new store openings.

Family Dollar expects comparable store sales between 5 and 7 percent, and earnings per diluted share between $0.71 and $0.81. It expects full-year earnings per diluted share of between $3.60 and $3.70.

It has been a good year so far for the company, after it hired new financial head Mary A. Winston in April, and it aggressively went after customers from Wal-Mart (NYSE: WMT) and other grocers.

On Thursday morning, Family Dollar traded at roughly $69, down about 2%.

Follow me @BCallwood.

Posted-In: Howard R. Levine Mary A. WinstonEarnings News Management Trading Ideas Best of Benzinga


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