WASHINGTON (dpa-AFX) - Family Dollar Stores Inc. (FDO) Thursday announced an 8 percent increase in first-quarter profit as the retail discounter opened more stores and saw improved demand for its Consumables and Electronics. Results also were supported by same-store sales that grew 4 percent. Earnings for the quarter were in line with Street estimates, while sales missed expectations as consumers bought less of its Home Products and Apparel items. FDO shares dropped more than 2.5 percent in extended trade, following the results.
Looking ahead, Family Dollar said despite tough economic conditions, it expects its performance to be similar to the first quarter. The company also detailed its second-quarter outlook, and reaffirmed its guidance for full year 2012.
The Matthews, North Carolina-based company reported first-quarter net income of $80.4 million, up from $74.3 million last year. On a per share basis, the company earned $0.68, compared to $0.58 a year ago.
On average, 25 analysts polled by Thomson Reuters expected earnings of $0.68 per share for the quarter. Analysts' estimates typically exclude special items.
The company's revenues for the quarter increased 7.6 percent to $2.148 billion from $1.997 billion last year. Twenty-two Wall Street analysts expected revenues of $2.17 billion for the quarter.
On a same store basis, sales in the quarter increased 4.1 percent, aided by a rise in average customer transaction value and increased customer traffic.
Sales of Consumables grew 11.4 percent from last year, and Seasonal and Electronics improved 5.6 percent. Home Products were down by 2.8 percent, and Apparel and Accessories fell 3.4 percent, year-over-year.
The company said its gross margin for the quarter dropped to 35.3 percent from 36 last year, hurt by the impact of stronger sales of lower-margin consumables, higher markdowns and freight costs. But these were somewhat offset by higher purchase mark-ups due to its investments in private brands, global sourcing and price management capabilities.
Operating margin for the quarter, meanwhile improved to 6.3 percent from 6.1 percent a year ago.
Concerning inventories, as at November 26, 2011, it stood at $1.302 billion, or 14.3 percent more than the prior year, reflecting the company's investments to expand key consumable categories to spur sales.
At the end of the quarter, Family Dollar operated a total of 7,120 stores, compared to 6,852 stores last year.
During the quarter, the company repurchased about 0.5 million shares of its common stock for $27.4 million. As of November 26, 2011, it had $309.9 million remaining under its share buyback program.
Looking ahead to the second quarter, Family Dollar expects earnings of $1.10 to $1.18 per share. Street analysts currently expect earnings of $1.14 per share for the quarter.
Family Dollar further expects same-store sales for the period to increase about 5 percent, noting that for December alone, they improved 4 percent.
For the full year 2012, Family Dollar continues to expect earnings of $3.50 to $3.75 per share, while analysts expect $3.65 per share.
During the year, Family Dollar expects an 8 to 10 percent rise in net sales, and a 4 to 6 percent growth in same-store sales. It also plans to open 450 to 500 new stores during the period, and close 80 to 100 stores.
FDO closed Thursday's trade at $57.96, up $0.81 or 1.42% , on a volume of over 1.4 million shares on the NYSE. In after hours, the stock lost $1.46 or 2.52%.
Copyright RTT News/dpa-AFX
© 2012 AFX News
