Family Dollar sales miss goals; shares fall
SEATTLE (Reuters) - Family Dollar Stores Inc (FDO.N) saw quarterly sales grow less than expected due to tough comparisons with last year and store reorganizations that interrupted some shopping, and its shares fell 9 percent.
The retailer, which prices most of its merchandise at $10 or less, rearranged about half its stores during the most recent quarter in order to stock more consumable items, Chief Executive Howard Levine said in a statement.
Family Dollar, which had 6,655 stores as of August 29, has been making more room for products like food and paper towels and cutting space devoted to clothing, to cater to consumers' tight needs in the recession.
The company has said it has been attracting more middle-income consumers and winning more business from its core lower-income shoppers as more families want to save money.
But the process of reorganizing its stores, which took place across the United States, disrupted consumer traffic and contributed to lower sales growth, Family Dollar spokesman Josh Braverman said.
The company will continue with that process into the next quarter, Braverman added.
This August, Family Dollar also faced a tough comparison against the same period a year ago, when shoppers spent U.S. government stimulus checks at its stores.
Net sales for the quarter that ended August 29 climbed 2.6 percent to about $1.81 billion. The company had forecast an increase of 4 to 6 percent and analysts on average expected revenue of nearly $1.86 billion, according to Reuters Estimates.
Sales at stores open at least a year rose 1 percent, while Family Dollar in July had forecast a rise of 2 to 4 percent.
Family Dollar said it still expects to report a profit of 39 to 43 cents per share for the fourth quarter when it issues full quarterly results on October 7. Analysts' average forecast is 42 cents per share.
Its shares were down $2.68 at $28.31 on the New York Stock Exchange late on Thursday morning, off an earlier low at $27.39.
(Reporting by Aarthi Sivaraman in Seattle and Jessica Wohl in Chicago, editing by Maureen Bavdek and Matthew Lewis)
