Family Dollar Store Inc.’s apparel and accessories offering was the chain’s only sales loser in an otherwise strong first quarter.
This story first appeared in the January 7, 2010 issue of WWD. Subscribe Today.
Apparel and accessories sales fell 2 percent to $182.3 million as net revenues for the quarter ended Nov. 28 rose 3.9 percent and profits, up 14.1 percent, topped expectations.
Family Dollar’s net income rose to $67.6 million, or 49 cents a share, from $59.3 million, or 42 cents, a year ago. Sales advanced to $1.82 billion from $1.75 billion and comparable-stores sales rose 2.4 percent as the number of transactions increased. Gross margin rose to 36.1 percent of sales from 35 percent a year earlier on fewer seasonal markdowns and cuts to shrinkage and freight expense.
Quarterly profits came in ahead of the 47 cents analysts expected, but sales were just below the anticipated $1.83 billion.
The Matthews, N.C.-based firm also said second-quarter earnings would rise to 65 cents to 70 cents a share, versus the 64 cents Wall Street anticipated, helping push the stock up $3.43, or 12.5 percent, to $30.92.
“We have not given up on apparel,” Howard Levine, chairman and chief executive officer, said on a conference call with analysts. “We still have further opportunities there to drive some business and are really looking forward to our new assortment for this spring and summer.
“There has been a bottoming out,” Levine said. “We have had a huge effort in trying to improve our apparel business, starting with quality, starting with price points….Our mix is more leaning towards discretionary than others. We purposely kept it that way, but have done a very nice job of managing the risk as we’ve gone through a pretty difficult economic cycle here.”
Levine said the 6,665-door retailer, where prices generally range from less than $1 to $10, could also drive business to its discretionary categories, such as apparel, at events for Easter, Memorial Day, Independence Day and Labor Day.