Costs hinder earnings at Family Dollar

Family Dollar had a dip in profit in the third quarter as the company reported higher costs ahead of its planned merger with Dollar Tree.

Family Dollar Stores Inc. reported a profit of $79.9 million, or 70 cents a share, for the third quarter ended May 30, down from $81.1 million, or 71 cents a share, a year earlier. Excluding restructuring- and merger-related charges, the company’s profit was 74 cents a share, compared with 85 cents a year earlier. Net sales rose 2.60% to $2.73 billion.

Revenue for the latest quarter grew 2.6% to $2.73 billion from $2.66 billion a year ago. Same store sales increased 0.7%. Family Dollar says the number of customer transactions increased, but the average value of those transactions fell.

Sales in the consumables category were up 3.8 percent and represented 74.2 percent of total net sales. Last year, consumables accounted for 73.3 percent of the company's net sales.

The Family Dollar-Dollar Tree merged company, which is pending FTC approval, would include more than 13,000 stores and generate almost $19 billion in annual sales.

So far in 2015, Family Dollas has opened 245 new stores and closed 26 stores as compared to 355 new store openings and 25 closings in the first three quarters of fiscal 2014. The company also renovated, relocated or expanded 433 stores in the first three quarters of fiscal 2015, as compared to 585 stores in the first three quarters of fiscal 2014.