Family Dollar posts Q2 growth, but challenges remain
MATTHEWS, N.C. — Family Dollar Stores reported a net sales increase of 17.7% to $2.89 billion for its second quarter. Net income per diluted share for the quarter increased 5.2% to $1.21.
“Our continued market share gains reflect the successful execution of our strategy to become more relevant to customers,” said Howard Levine, chairman and CEO. “This quarter we delivered positive results despite financial pressures that continue to challenge our customers. Following a difficult December, we were pleased with our sales results in early January. Unfortunately, the unanticipated delay of the 2012 tax refunds impacted our results at the end of January and the beginning of February. We were happy to see sales trends improve towards the end of the quarter as our customers began to receive their tax refunds.”
“As we move into the second half of fiscal 2013, our discretionary sales continue to be challenged by both the financial pressures facing our customers as well as unseasonably cold spring weather,” continued Levine. “Given this uncertainty, we have adjusted our plans to reflect lower than anticipated home and apparel sales as our customers’ discretionary spend is expected to remain constrained.”
Sales were strongest in the consumables category, which increased 26.6% during the quarter, driven primarily by strong growth in tobacco, food, and health and beauty aids. During the quarter, the company opened 126 new stores, closed 17 stores, and renovated, relocated or expanded 159 stores.
Comparable store sales for quarter increased 2.9% when compared with sales for the similar 14-week period last year, thanks to higher customer traffic and an increase in the average customer transaction value.
Net income for the quarter was $140.1 million compared to net income of $136.4 million for the second quarter of fiscal 2012.
Family Dollar said it believes that sales in more discretionary categories will continue to be pressured in the second half of fiscal 2013 and that comparable-store sales in the second half of the year will increase between 2% and 4%. The company expects that comparable-store sales in the third quarter will be in the lower end of this range and that comparable-store sales in the fourth quarter will be in the upper end of this range.
The company anticipates that many of the sales and margin trends that occurred in the first half of the year will continue in the third quarter and that earnings per diluted share will be between 98 cents and $1.08 per share compared with $1.06 per share in the third quarter of fiscal 2012.
The company now expects that diluted earnings per share in fiscal 2013 will be between $3.73 and $3.93 compared to $3.58 in fiscal 2012.