* Profit of $0.75 a share before charge meets Wall St view
* Sales up 10.8 percent; same-store sales up 5.4 percent
* Sees 2013 earnings per share $4.10-$4.40, Wall St view is
* Shares up 2.6 percent
By Jessica Wohl
Oct 3 Family Dollar Stores Inc's
reported a higher quarterly profit on Wednesday that met
analysts' estimates, as increased sales of food and other basic
goods brought shoppers into the stores and did not pressure
margins as much as expected.
Shares of the discount retailer rose nearly 3 percent even
as its forecast range for the current quarter suggests it could
miss Wall Street expectations.
Family Dollar forecast earnings of 69 cents to 78 cents per
share for its first quarter, which began on Aug. 26. The
analysts' average estimate is 77 cents, according to Thomson
The company, which sells a variety of general merchandise,
is boosting its growth by opening more stores and by adding more
products to its shelves. To compete with Dollar General Corp
and other retailers, it now sells more food, health and
beauty items, and it added tobacco products, magazines and gift
cards to its stores during its just-ended fiscal year.
The growth plans, which include building more distribution
centers, are raising costs. Family Dollar forecast fiscal 2013
capital expenditures of $600 million to $650 million, compared
with $603.3 million in 2012 and $345.3 million in 2011.
"As an investor, you may not even want to think about Family
Dollar until the middle of the year, until you start to see some
of the better trends," said Brian Sozzi, chief equities analyst
at NBG Productions.
GROSS MARGIN UPSIDE
Family Dollar said it had earned $80.9 million, or 69 cents
per share, in the fourth quarter ended on Aug. 25, up from $79.8
million, or 66 cents per share, a year earlier.
Excluding a charge for a litigation settlement with some
workers, earnings of 75 cents per share met Wall Street
expectations, according to Thomson Reuters I/B/E/S.
Sales rose 10.8 percent to $2.36 billion, in line with
analysts' estimates. Sales at stores open at least a year rose
Sales of "consumables" like food and beauty products, by far
the chain's largest category, rose 16.1 percent. Sales of home
products, clothing and accessories, which typically carry higher
margins, declined in the quarter.
Gross profit dipped to 33.8 percent of net sales from 34
percent a year earlier.
"Gross margin eroded only 17 basis points, far better than
our expectations of a 45-basis-point hit, perhaps a reflection
of tight control over discretionary inventories and markdowns,"
said Guggenheim analyst John Heinbockel.
Family Dollar said it expected to earn $4.10 to $4.40 in the
current fiscal year, which will include an extra week in the
second quarter. Analysts call for a profit of $4.22 per share.
The company expects same-store sales to rise 4 percent to 6
percent in both the first quarter and the fiscal year.
Family Dollar's shares were up 2.6 percent at $67.74 in