NEW YORK — Family Dollar Stores Inc., which reduced its stocks of hanging apparel 15 to 20 percent in the fourth quarter, posted a 12.2 percent earnings increase in the period, in line with Wall Street expectations.
Net income for the quarter rose to $30.3 million, or 18 cents a share, against $27.1 million, or 16 cents, in the year-ago period.
Sales for the period ended Aug. 26 rose 14.1 percent to $789.8 million compared to $692.1 million a year ago. Apparel, including basics such as socks, underwear, and shoes accounted for 21 percent of the company’s sales in the quarter. Comparable-store sales for the quarter were up 5 percent.
In a conference call the company said softline comparable-store sales for the quarter were down 7.9 percent, while hardlines rose 10.3 percent. The company said apparel markdowns in the quarter were “aggressive” and that inventories at the end of the quarter were in line with company plans.
Howard Levine, president and chief executive, noted in a statement that the earnings were driven by improved sales, partially from 158 new stores.
“To support the rapidly growing number of stores, we also began shipping merchandise from a new 907,000-square-foot distribution center in Rowan County, Ky.,” he noted. The facility distributes to more than 500 of Family Dollar’s 3,737 stores, which are spread over 39 states.
The company’s space reallocation, which reduced apparel, added more consumables such as toothpaste and detergent. To help offset the lower gross profit margins of the consumables, the company allocated more space to giftware.
“The program is bringing more customer traffic to our stores, and we are pleased with the results to date,” said Levine.
For fiscal 2000 net income jumped 22.8 percent to $172 million, or $1 a share, against $140.1 million, or 81 cents, last year.
For the year, sales for the Matthews, N.C.-based discounter rose 13.9 percent to $3.13 billion compared to $2.75 billion in fiscal 1999. Comparable-store sales rose 5.2 percent for the year, “the fifth consecutive fiscal year that increases in existing store sales have exceeded 5 percent,” Levine noted.
Comparable-store softline sales were down 2.5 percent while hardlines rose 8.7 percent.
For the year, the company opened 406 new stores and closed 41.
During the fourth quarter, Irv Neger joined the company as senior vice president of softlines. Neger was most recently senior vice president of merchandising at Pennsylvania Fashions. John Scanlon continues as senior vice president of merchandising, relinquishing responsibility for softlines to Neger but retaining supervision of hardlines merchandising.
Neger reports to Levine, and Scanlon continues to do so.
In other changes at Family Dollar, Gil LaFare has been promoted to the new post of senior vice president of real estate from vice president of that area; Clay Teter has succeeded LaFare; Chuck Curry has been promoted to vice president of store development and risk management from head of asset protection; Mike Zuege has been promoted to vice president of asset protection; and Ken Smith, formerly head of the business development team responsible for new process development and implementation, has been promoted to vice president of store process improvement.