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Family Dollar hurt by calendar shift

Family Dollar Stores, a neighborhood value retailer, was stymied in its second fiscal quarter by a shift in the calendar and one less week of revenues.

Sales and profits both were held in check, each posting a solid, if unspectacular, gain in the mid-single-digits, substantially off the retailer's usual pace of double-digit growth.

Not only was there one less week in its second quarter, it turned out to be the week after Thanksgiving, one of the strongest sales periods in the entire retail calendar. Sales during that brisk sales period were pulled out of the recently concluded second quarter and included in the first quarter.

Given the vagaries of the retail calendar, profits were held to a 5.5 percent gain, rising to $63.8 million from $60.5 million last year.

Sales climbed higher by 6.5 percent, to $1.1 billion from $1.0 billion a year ago, capped by the calendar shift. Illustrating the impact of the loss of that one big week, Family Dollar said that same-store sales — measured on a comparable 13-week basis — climbed a palmy 8.0 percent.

Customer count, the retailer said, measured by the number of register transactions, increased by 6.5 percent during the quarter, and the average transaction increased about 1.5 percent, to $9.20.

Howard Levine, president, said, despite the calendar complications, same-store sales exceeded plan throughout the second quarter, rising by 8.3 percent in December and by 7.7 percent in January and February.

With strong sell-through of seasonal merchandise, average gross margin widened by 40 basis points, to 33.0 percent from 32.6 percent a year ago.

Looking ahead, Levine said the value retailer has set a target of same-store sales growth of 5 to 6 percent during the third and fourth quarters. Earnings per share, he said, are forecast to rise at a rate of almost 13 percent during the second half, to $0.35 from $0.31 a year ago.

Family Dollar Stores Inc.

Qtr. 3/2/02 (x000) 2002 2001 % Change
Sales $1,105,165 $1,037,368 6.5
Oper. income (EBIT) 100,422 95,212 5.5
Net income 63,768 60,455 5.5
Per share (diluted) 0.37 0.35 5.7
Average gross margin 33.0% 32.6%
SG&A expenses 23.9% 23.4%
Six months
Sales 2,082,298 1,857,516 12.1
Oper. income (EBIT) 179,488 160,450 11.9
Net income 113,975 101,916 11.8
Per share (diluted) 0.66 0.59
Average gross margin 33.6% 33.5%
SG&A expenses 25.0% 24.8%


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