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Family Dollar Projects Better Days Ahead

The good news from Family Dollar in its quarterly earnings call was mostly in the future. The 6,300-store discount chain said it expects March comp-store sales to rise 3% to 5%, above the previous estimate of 2% to 4%. The company projects full-year comps to rise 1% to 3%.

Fiscal 2007 second-quarter earnings at the neighborhood retailer soared by 66.0% to $90.5 million from $54.5 million for the same period one year ago — but the dramatic change was due to a $45.0 million litigation charge the company had taken during the fiscal 2006 quarter.

Still, sales are climbing due to expansion, up 12.2% to $1.95 billion from $1.74 billion a year ago. Comp-store sales were up a scant 0.4%, with the company noting an increase in average transaction offsetting a decline in customer traffic.

Chairman and ceo Howard Levine pointed to Family Dollar's inventory and control initiatives, opportunistic buys, and upgrades to store layout.

He also noted that profitability continues to improve in the chain's growing roster of urban stores, as improvements are being made there in manager retention, shrinkage, and shopability.

In merchandise selection, Family Dollar's current emphasis is on food and apparel, where it has recently announced the introduction of Hanes branded goods.

Home Textiles Today research pegged Family Dollar home textiles sales at $371.5 million for 2005.

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