Family Dollar Stores Inc. (FDO – Analyst Report) posted first-quarter fiscal 2015 earnings of 44 cents a share, which missed the Zacks Consensus Estimate of 59 cents, and plunged 35.3% from 68 cents earned in the prior-year quarter. Stiff competition and margin contraction hurt the results.
Family Dollar Stores, Inc – Earnings Surprise | FindTheBest
To bring itself back on the growth trajectory, this self-service retail discount store chain had earlier announced a slew of measures to improve its operational and financial performances. Management reduced prices of approximately 1,000 basic items and disclosed plans to add value-based products, optimize the cost structure by lowering headcount, reduce inventory shrinkage, close underperforming outlets and being more rationale on new store opening to reap higher returns on investment.
The company is undertaking initiatives to enhance store productivity and remains focused on enhancing sales. This is well evident from the company's comparable-store sales performance so far in the second quarter. Comps grew 1.2% in December on account of fewer markdowns and increase in customer traffic.
Including fees associated to the pending merger with Dollar Tree Inc. (DLTR –Analyst Report), the earnings came in at 36 cents a share, substantially down from the year-ago quarter. Family Dollar decided to stick with Dollar Tree and rejected Dollar General Corp's (DG – Analyst Report) buyout offer on grounds of difficulty to win over antitrust regulatory concerns. The giant that will arise will have the ability to generate sales of over $18 billion and reach out to more consumers through its vast network of stores.
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Family Dollar posted a 2.3% increase in net sales to $2,556.4 million from the prior-year quarter, reflecting sales growth across Consumables (up 3.5%) and Seasonal & Electronics (up 2.5%). This was offset by decline witnessed in home Products (down 4.8%) and Apparel and Accessories (down 1%). Total revenue came below the Zacks Consensus Estimate of $2,577 million.
