Family Dollar Stores Inc. (FDO), which was the best performer in the S&P 500 index in 2008, would publish dollars-and-cents details of its second-quarter before market opens on April 8.
Retailers have been grappling with the pins and needles of the surly economic climate, through one of the worst holiday shopping seasons in recent history, on eroding consumer confidence. However, Charlotte, North Carolina-based Family Dollar is benefiting from penny-pinching consumers who are swapping to discount stores for necessities rather than desires.
Comparable store sales, or sales at stores open at least for one year, which is a key measure of growth for retailers, increased 6.4% for the second quarter, helped by double-digit sales growth of consumable merchandise.
Based on the sales growth stratum, the discount store operator hiked earnings forecast to a range of $0.59 - $0.61 per share for the second quarter, from the prior guidance range of $0.48 - $0.52 per share. Wall Street analysts have a consensus earnings estimate of $0.60 per share.
Most recently, the company reported second quarter net sales of $1.99 billion, up 8.7% from the previous year, and ahead of the consensus estimate of $1.98 billion. In the year-ago period, the company reported earnings of $0.45 per share on revenues of $1.83 billion.
Family Dollar's chain of self-service retail discount stores caters to low to lower-middle income consumers. The company had 6,643 stores as of February 28, 2009, including 57 new stores opened during the second quarter.
For the first quarter, Family Dollar posted higher profit, topping market projections, flavored by strong consumables sales reflecting higher customer traffic and transaction value. First-quarter net income rose to $59.29 million from $51.95 million in the previous year. Per share earnings grew 13.5% to $0.42 from $0.37 in the prior year. Quarterly net sales were up 4.2% to $1.75 billion from the prior year's sales of $1.68 billion.
Among other players in the field, Dollar Tree Inc. (DLTR) posted an increase in fourth-quarter profit, as sales rose more than 6% stemmed from strong growth in consumer traffic. Comparable-store sales increased 6.2%. Fourth quarter net income jumped to $105.2 million or $1.15 per share from $94.7 million or $1.04 per share a year ago. Sales were up 6.8% at $1.39 billion, compared to $1.30 billion in the year-earlier quarter.
For the first quarter, Dollar Tree projects earnings in the range of $0.49 - $0.54 per share, with sales ranging between $1.13 billion and $1.16 billion. Sales forecast is based on a low-to mid-single digit comparable store sale.
Retail giant Wal-Mart Stores Inc. (WMT) posted a lower fourth-quarter profit, hurt by lawsuit settlement charges and unfavorable currency exchange rates. Though underlying earnings declined year-over-year, Wal-Mart surprised Wall Street and went beyond expectations. The retail giant's fourth-quarter net income was $3.79 billion or $0.96 per share, compared to $4.096 billion or $1.02 per share in the previous year. Revenues rose year-over-year, reflecting higher U.S. comparable store sales and net sales, offset in part by a drop in International sales. Sales at established locations rose 5.1% in February.
For the first quarter, Wal-Mart expects reported earnings per share to be in the range of $0.72 - $0.77. Wal-Mart also sees reported earnings per share between $3.45 and $3.60 for the full year.
Family Dollar shares, which have been trading between $18.43 and $34.06 in the past 52 weeks, closed Tuesday's trading session at $32.66, down 65 cents or 1.95%.
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