Family Dollar 2Q net income falls

MATTHEWS, N.C. Family Dollar Stores has reported net income of $63.3 million for the second quarter of fiscal 2008 ended March 1, a 13-week period, compared with $90.5 million for the second quarter of fiscal 2007 ended March 3, 2007, a 14-week period. Net income per diluted share in the second quarter of fiscal 2008 was 45 cents compared with 60 cents per diluted share in the second quarter of fiscal 2007.

“Our customers continue to react to the current economic environment by limiting their discretionary spending. This was particularly apparent in our stores during this past holiday season. In addition, our second quarter performance was pressured by both the loss of one week of holiday sales and one less week of sales as compared with the second quarter of fiscal 2007. Despite these challenges, I am pleased with our expense control and inventory management this quarter, especially within such a volatile economic environment,” said Howard Levine, chairman and ceo.

The company reported net sales for the second quarter of fiscal 2008 were $1.83 billion, or 5.9% below sales of $1.95 billion for the second quarter of fiscal 2007. As a reminder, the second quarter of fiscal 2008 included one less week of holiday sales and one less week of sales compared with the second quarter of fiscal 2007. Comparing results for the same 13-week period year over year, net sales increased 3.2%, and sales in comparable stores were approximately flat. An increase in the average customer transaction offset lower customer traffic, as measured by the number of register transactions.

Family Dollar said it expects that comparable-store sales will be flat to up slightly in the third quarter. Reflecting trends month-to-date, the company expects that comparable-store sales for the March period will decrease 4% to 5%. The company expects earnings per diluted share for the third quarter of fiscal 2008 will be between 39 cents and 44 cents, compared with 40 cents per diluted share in the third quarter of fiscal 2007.

The company expects that earnings per diluted share in the fourth quarter will be between 29 cents and 34 cents, compared with 26 cents per diluted share in the fourth quarter of fiscal 2007.

Reflecting current assumptions for the third and fourth quarters, the company now expects that earnings per diluted share for fiscal 2008 will be between $1.50 and $1.60, compared with $1.62 per diluted share in fiscal 2007.