Family Dollar misses on Q1 profit, sales

Matthews, N.C. – Higher sales of discounted, low-margin items did not necessarily add up to a happy holiday season for Family Dollar Stores Inc. The company missed Wall Street expectations for both net income and net sales during the first quarter of fiscal 2015, even as Dollar Tree and Family Dollar both continue making preparations for a multi-billion-dollar takeover this year.



Fees related to a proposed merger with Dollar Tree Inc., on which shareholders are expected to vote Jan. 22, negatively impacted net income. Dollar General is also still trying to purchase Dollar Tree and is currently in discussions with the FTC about potential competitive issues. Higher selling, general and administrative (“SG&A”) expenses, heavier discount pricing, and a higher tax rate also affected profits.



Net sales rose 2% to $2.56 billion, from $2.50 billion. Same-store sales decreased 0.4% as a result of slight decreases in both the average customer transaction value and the number of customer transactions.



“As expected, the first quarter of fiscal 2015 was very challenging, as we continued our transition from a very promotional merchandising strategy to a more everyday low price strategy,” said Howard R. Levine, chairman and CEO. “During the quarter, gross margin continued to be pressured by the impact of our pricing investments, as well as strong growth of lower-margin consumable categories, including food and tobacco.”