Family Dollar drives up 1Q profits

Don Hogsett, January 14, 2002

Capitalizing on consumers' growing appetite for bargains, and sharply stronger sales, Family Dollar Stores boosted first-quarter profits by 21.1 percent, to $50.2 million from $41.5 million the prior year.

As Americans continue to shun high-margin, high-price department stores, the rapidly expanding chain of low-cost, neighborhood stores drove sales up by 19.1 percent, to $977.1 million to $820.1 million the prior year, quickly approaching its first billion-dollar quarter.

Giving sales an extra kick was a change in the retail calendar which shifted some sales, including the historically strong week after Thanksgiving, from the current second quarter to the first fiscal quarter, which ended Dec. 1. Last year, the first quarter closed on Nov. 25, and Thanksgiving sales were credited to the second quarter.

Same-store sales climbed higher by 4.6 percent, including a 7.3 percent gain in hardlines, partially offset by a 3.5 percent drop in softlines. The average transaction increased about 1 percent, to $8.47, and the customer count, measured by the number of register transactions in existing stores, increased about 3.5 percent.

Proving a strong foundation to rising sales, the chain opened 125 new stores while closing 29 others, for a net increase of 96 units during the period. The company said it plans to open about 525 new stores this year, while closing 50 others.

Providing a glimpse into second-quarter results, the company said December sales results were in line with a planned increase in the 3 percent to 4 percent range.

Family Dollar Stores

Qtr. 12/1/01 (x000) 2001 2000 % CHG
Sales $977,133 $820,148 19.1
Oper. income (EBIT) 334,413 284,414 17.6
Net income 50,207 41,461 21.1
Per share (diluted) 0.29 0.24 20.8
Average gross margin 34.2% 34.7%
SG&A expenses 26.1% 26.7%

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