FAMILY DOLLAR NET UP 13.3%

NEW YORK — New stores gave Family Dollar Stores Inc. a shot in the arm in its first quarter, accounting for about two-thirds of a 14.9 percent increase in revenues and contributing to a 13.3 percent rise in net income.
Net income for the quarter ended Nov. 25 was $41.5 million, or 24 cents a share, compared to $36.6 million, or 21 cents a share, during the year-ago period.
Sales for the quarter increased to $820.1 million compared to year-ago sales of $713.5 million. The average transaction price increased 2.5 percent compared to the 1999 period. Comps for the quarter rose 4.6 percent and fell 0.5 percent in December after a reduction in space for hanging apparel and an emphasis on hard goods.
With hardline sales up 9.1 percent in stores in operation at least a year, the increase in comps for the quarter was achieved despite a decrease in softline sales of 6.7 percent. As reported, the company during the fourth quarter reduced space allocated to hanging apparel by 15 to 20 percent and introduced more hardline consumables in departments such as household chemicals, paper products and food.
Howard Levine, president and chief executive, noted in a statement that the improved results were a product of the company’s merchandising initiatives. The company completed its merchandising changes in October, midway through the quarter, and was able to more than compensate for the program’s costs with savings from the discontinuation of an advertising circular.
Family Dollar also reported that same-store sales for the five-week period ended Dec. 30 dropped 0.5 percent as softlines fell 9.5 percent and hardlines moved ahead 2.5 percent. The average transaction price gained 2.5 percent from year-ago levels.
Levine noted that, while overall sales improved, sales in stores open more than a year were below expectations. “Severe winter weather was responsible for a portion of the shortfall in existing store sales,” he said. “With the economy also slowing, sales of seasonal merchandise in departments such as trim-a-tree, toys and hanging apparel were below plan.”
He added that the company faced tough comparisons with last year’s sales, which were driven by the greatly anticipated, but ultimately nonexistent, Y2K bug.
Levine stressed the importance of the firm’s merchandise changes in insulating it against a cool retail season that looks like it will last beyond winter.
“With Family Dollar’s merchandising mix continuing to shift to more low-priced basic merchandise to meet the needs of value-conscious consumers, we believe the company is well positioned even in a slowing economy to continue its profitable growth,” he said.

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