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  • Jennifer Marks

Family Dollar looks to recapture value position

Matthews, N.C. – Family Dollar will close 370 stores, decelerate the pace of store growth and pare pricing on some 1,000 skus as it looks to shore up its value proposition. While it continues to emphasize consumables to drive traffic, the company acknowledged in some locations it has pared back too much space in apparel and home.

“Believe it or not, we have some very good apparel stores. We have some very good home stores that we’ve taken space from,” president and ceo Howard Levine told analysts during this morning’s quarterly conference call.

The company spent the past 90 days reviewing its store portfolio, he said. In addition to identifying the under-performing stores slated for closure – mostly older, smaller units, said Levine – Family Dollar also tagged stores that need expansion in one of three categories: apparel, home or food. He did not say how many units would be impacted.

After a disappointing performance in seasonal goods during the 2013 holiday season, Levine said Family Dollar failed to stock enough merchandise at the $1 price point. For holiday 2014 it will also reintroduce $5 toys.

The company will pare the number of circulars it drops to one to two per month and shift circular delivery from Sunday newspapers to mail. It will also do more marketing via email, radio and digital.

“We must reaccelerate traffic,” Levine said.

Family Dollar remains on track to open 525 new units during the current fiscal year and renovate roughly 800 stores per year, but during the next fiscal year it will add only 350 to 400 new stores.

For the company’s second quarter, ended March 1, net income tumbled 35.2% to $90.9 million, or 80 cents per share. This year’s quarter had one less week than last year’s. Sales fell 6.9% to $2.7 billion, with comps down 3.8%.

Year to date, net earnings dropped 23.4% to $168.9 million, or $1.47 per share. This year’s first half had one less week than last year’s. Sales slipped 1.9% to $5.2 billion. The company did not report same-store sales for the period.

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