Boosting investors’ confidence Family Dollar Store Inc. (FDO) posted a 14 per cent rise in its fiscal first quarter earning, higher than Wall Street’s expectations. Fewer holiday season markdowns and lower freight costs helped profitability to grow, the company revealed on Wednesday announcing its first quarter results.
Howard Levine, Chief Executive Officer, FDO said that the first quarter sales were strongest in basic consumable items. He further added, customers “Clearly appreciated the great toys and gifts we offered this holiday season.”
FDO’s net income soared to $67.6 million (49 cents a share) from $59.3 million (42 cents a share) in the year ago period. Sales in the quarter ended November 28 cruised 3.9 per cent to $1.82 billion from $1.75 billion backed by a rise of 2.4 per cent in comparable-store sales. The discounter’s gross margin too rose to 36.1 per cent from 35 per cent beating analysts’ forecasts. The company’s strategy to focus on consumer staples helped the company attract higher traffic, it said in its statement.
Shares of the Matthews, North Carolina-based Company, which currently owns more than 6,600 stores in 44 states, moved $2.91 up (11 per cent) to $30.40 per share in pre-market trading.
Meanwhile, the discount retailer expects the results of the current quarter to be even stronger. It has projected earnings between 65 cents a share to 79 cents a share. According to a survey done by Thomson Reuters, analysts expect a 64 cent profit for FDO in the present quarter.
As reports reveal compared to other industries discount retailers have performed well during the downturn and it’s mostly for the financial crunch in people’s personal accounts. Family Dollar too has got its share of benefit from this trend. Moreover, its thrust on consumables also paid off well as sale of consumables increased 5.8 per cent during the quarter.