Family Dollar Q3 profit jumps, projects strong Q4

Matthews, N.C. Family Dollar Stores said Wednesday its fiscal third-quarter profit jumped 36%, as tough economic times drove more consumers to the discount retailer's stores. The chain projected fourth-quarter and fiscal-year profits that would beat current Wall Street predictions.

“Customers are shopping us more frequently and relying on us to meet more of their basic needs. As a result, we continue to gain market share,” said Family Dollar chairman and CEO Howard R. Levine.

For the quarter ended May 30, Family Dollar earned $87.7 million, up from $64.7 million a year earlier.

Last month, Family Dollar said sales for the period rose 8.3% to $1.84 billion from $1.7 billion, while same-store sales increased 6.2%. The company said at the time that it would meet or beat the high end of its profit outlook.

Family Dollar cited strong momentum from sales at stores open at least a year, a key metric of a retailer's health, for driving strong results. Food sales posted the largest increase in the quarter, rising 12.6 % to $1.2 billion from last year.

Looking ahead, Family Dollar said its estimates reflect expected lower freight expense, lower inventory shrinkage and investments designed to improve the shopping experience, including realigning space in its stores.

“Reflecting this strategy, we are investing aggressively in a chainwide store technology refresh, which supports the acceptance of credit cards and food stamps. In addition, this quarter we are initiating efforts to realign space in our stores to accommodate strong customer demand and improve the in-store shopping experience,” Levine said.