Family Dollar Profit Misses Estimate

(RTTNews) - Discount retailer Family Dollar Stores Inc (FDO), which is being acquired by rival Dollar Tree Inc. (DLTR), said Wednesday after the markets closed that its third quarter profit fell slightly from last year, due mainly to a higher effective tax rate.

The company's quarterly earnings per share, excluding items, also came in below analysts' expectations, but its quarterly sales matched analysts' forecast.

Family Dollar shares remained unchanged in after hours trading after closing the day's regular trading session at $79.18, up 37 cents.

For the third quarter ended May 30, 2015, the Matthews, North Carolina-based company reported net income of $79.9 million or $0.70 per share, compared to $81.1 million or $0.71 per share for the year-ago quarter.

Excluding $4.7 million of expenses related to the pending merger with Dollar Tree, adjusted net income for the third quarter was $84.6 million or 0.74 per share, compared to $96.5 million or $0.85 per share in the prior year quarter.

On average, 18 analysts polled by Thomson Reuters expected the company to earn $0.82 per share for the third quarter. Analysts' estimates typically exclude special items.

Total net sales for the third quarter rose 2.6% to $2.73 billion from $2.66 billion in the same quarter last year. Fifteen analysts had a consensus revenue estimate of $2.73 billion for the third quarter.

Same-store sales for the quarter increased 0.7% as a result of an increase in the number of customer transactions, which was partially offset by a decrease in the average customer transaction value.

Net sales of Consumables increased 3.8% in the third quarter and represented 74.2% of total net sales, while net sales of Discretionary categories, including apparel and accessories, home products, and seasonal and electronics, fell 0.8% to 25.8% of net sales.

Dollar Tree has offered to buy Family Dollar for $76 per share or $8.7 billion in cash and stock, while another discount retailer Dollar General Corp. (DG) made an all-cash bid for $80 per share, or $9.1 billion. But Family Dollar's board preferred the lower, but more hassle-free offer from Dollar Tree, rather than face the risk of antitrust hurdles that a deal with Dollar General would possibly lead to.

In order to get approval of the U.S. Federal Trade Commission, Dollar Tree and Family Dollar last month agreed to divest 330 Family Dollar stores following the merger. Dollar Tree has entered into a definitive agreement to sell those 330 Family Dollar stores to private equity firm Sycamore Partners. Dollar Tree continues to expect to close the Family Dollar acquisition in early July.