Family Dollar Q3 profit falls 33%

Matthews, N.C. -- Family Dollar Stores’ third quarter income plunged 33% amid higher costs and increased competition. Same-store sales fell 1.8%, which marked the third straight quarterly decline.



Family Dollar is under pressure from activist investor Carl Icahn to put itself up for sale. The company has adopted a shareholder rights plan, or "poison pill."



“Our results continue to reflect the economic challenges facing our core customer and an intense competitive environment,” said chairman and CEO Howard Levine. “Although our sales results remain below our expectations, we are encouraged by the improving trends.”



Net income in the quarter ended May 31 fell to $81.1 million, from $120.9 million a year earlier. Net sales rose 3.3% to $2.66 billion, from $2.57 billion a year earlier.



In response to slumping sales, Family Dollar has reduced prices on almost 1,000 basic items. It also is closing underperforming stores.



“We are executing our previously announced restructuring initiatives to improve our performance,” said Levine. “Our recent investment to permanently lower prices is resonating with customers; we are seeing savings from our workforce optimization efforts; and we are on track to close approximately 370 underperforming stores by the end of the fiscal year. We remain confident that these steps will position the company to improve our financial performance and deliver higher long-term shareholder returns.”