Family Dollar's profits rise
By Staff -- Playthings, 10/3/2008 9:17:00 AM
MATTHEWS, N.C.—Family Dollar Stores reported good news for its fiscal fourth quarter: double-digit gains in profits powered by stronger sales.
The retailer’s net income for the fourth quarter of fiscal 2008 increased nearly 41 percent to $53.2 million, compared with $37.8 million for the fourth quarter of fiscal 2007. Net income per diluted share in quarter grew 46 percent to $0.38.
Net sales for the quarter rose 8 percent to $1.76 billion, helped by a net gain of 26 stores compared to the corresponding period of 2007. Sales at comparable stores increased 5.6 percent, a result of an increase in the average customer transaction value and higher customer traffic, as measured by the number of register transactions.
The retailer’s operating profit, as a percentage of sales, was 4.6 percent compared with 3.8 percent in the fourth quarter of fiscal 2007. Lower selling, general and administrative (SG&A) expenses “more than offset” lower gross profit, as a percentage of sales. Gross profit fell fractionally due to the effect of stronger sales of lower-margin consumable merchandise and higher freight expense, which was partially offset by lower merchandise markdowns and lower store inventory shrinkage, according to the company.
“As expected, fourth quarter sales benefited from the effect of the government stimulus checks distributed this summer. Strong sales of consumables and effective management of inventory risk, combined with disciplined expense control resulted in robust earnings growth,” said Howard R. Levine, Family Dollar’s chairman and CEO. “After a challenging first half, these results reflect how quickly our team has adapted to the changing macro environment. The investments we made to drive revenue growth delivered strong results, and our Associates did a great job managing expenses and inventory risk in this uncertain environment.”
Sales for fiscal 2008 were $6.98 billion, up 2 percent from 2007. Sales in comparable stores increased 1 percent, helped by an increase in the average customer transaction value. Customer traffic, as measured by the number of register transactions, was approximately flat for the year. During fiscal 2008, the company opened 205 new stores and closed 64 stores.
Net income for fiscal 2008 was $233.1 million compared to $242.9 million in fiscal 2007.
Looking ahead, the company expects net sales to increase 3 to 5 percent in its fiscal year ending in August 2009. Comparable store sales are predicted to increase 1 to 3 percent. It expects to open approximately 200 new stores.
