July 10 Family Dollar Stores Inc posted
a smaller quarterly profit on Wednesday and said it expects
customers to remain under financial pressure and hold back on
purchases that are not absolutely necessary.
Sales rose 9 percent to $2.57 billion, while sales at stores
open at least a year, or same-store sales, rose 2.9 percent in
the quarter ended June 1. The discount chain expects same-store
sales to rise 2 percent this quarter.
Family Dollar earned $120.9 million, or $1.05 per share,
down from $124.5 million, or $1.06 a share. That was two cents
better than expected by Wall Street analysts, according to
Thomson Reuters I/B/E/S.
The discount chain's gross profit margin fell 1.1 percentage
points to 34.7 percent of sales, as shoppers gravitated toward
buying everyday products such as food and cigarettes, which have
lower profit margins than items like short-sleeved shirts and
"Our customers have been forced to make spending choices
between basic needs and wants," Chief Executive Howard Levine
said in a statement.
Family Dollar's gross profit margin was also hurt by
markdowns. But inventory per store was down 1 percent compared
to a year earlier, easing Wall Street fears that the 7,800-store
chain had too much merchandise on hand on which it might have
Shares were up 2 percent to $65.20 in premarket trading.
In April, the discount chain cut its annual profit forecast
for the second time due to expectations its customers would hold
off on discretionary spending.
On Tuesday, Family Dollar said it now expects a profit of
$3.77 to $3.82 per share for the fiscal year ending this
quarter, a range whose midpoint is below that of its earlier
forecast of $3.73 to $3.93 per share.