• Cecile Corral

Family Dollar Gets Headstart in Home

Family Dollar Stores experienced a significant uptick in its home business – which grew at its best rate since 2007 – during the second quarter, encouraging the chain to give added focus to home and other discretionary categories going forward.

“To drive greater market share, we intend to grow our consumable business while also refocusing on increasing the productivity of our more discretionary categories,” said Howard Levine, chairman and ceo. “While basic needs are still the primary driver of recurring shopping trips, we recognize that families want to celebrate holidays and other events in ways that are both fun and affordable.”

This was especially evident recently, he continued.

“For example, during this past holiday season [Easter] we saw that a strong focus on value combined with appealing in-store presentations and marketing can drive sales of discretionary categories,” Levine explained. “In February, we applied this strategy to our home category. Our merchandising teams assembled a great assortment of quality merchandise for the home at compelling price points. Our store teams created more engaging presentations and our marketing team produced customer communication.”

As a result, sales in the home area increased 6% during the quarter – “the strongest performance that we have seen since 2007,” he noted. “These trends have continued through March. We had strong sell-throughs of Easter-related merchandise.”

For the quarter ended February 27, earnings per share for the quarter shot up 35.0% to 81 cents while net income jumped 33.4% to $112.2 million.

Sales rose 4.9% to $2.09 billion. Comps increased 3.6%, with customer traffic and average transaction both experiencing a boost.

For the first half of the year, net income increased 4.6% to $179.8 million. Sales were $3.913 million, up 4.5%.

“I am pleased to report that the sales momentum we saw in the second quarter has continued through March,” said Levine. “Reflecting favorable weather trends and the impact of the Easter shift, comparable store sales for the March reporting period increased approximately 11%.”

For the third quarter, the company – which operates more than 6,600 unit in 44 states – expects comparable sales to increase 6% to 8%. Earnings per share are forecasted to be between 71 cents and 76 cents compared with 62 cents in last year’s third quarter.

For the full year, Family Dollar’s outlook for earnings per share is between $2.48 and $2.58 compared with $2.07 in fiscal 2009.

Cecile CorralCecile Corral | Senior Product Editor, Home & Textiles Today
ccorral@homeandtextilestoday.com

Cecile B. Corral has been a product editor with Home Textiles Today since late 2000. She covers the area and accent rug, kitchen textiles, table linens, beach towels, decorative bath and decorative pillow categories, as well as some retail subjects.

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