Family Dollar Q4 Profit Tops View, Cautious On Outlook

(RTTNews) - Discount retailer Family Dollar Stores, Inc. (FDO) Wednesday said fourth-quarter profit increased from the prior year, helped by higher revenues amid a strong demand in the Consumables category. Adjusted earnings topped Wall Street view. The company issued a cautious outlook for fiscal 2014.

Howard Levine, CEO, said, "While the environment was more challenging than expected, I am pleased with our progress. We have increased our market share, we have stabilized margins and we are increasing profitability. Our strategy is working, and we remain on course with our long-term goal to drive continued profitable growth and increase shareholder returns."

Net income for the quarter increased to $102.21 million from $80.93 million in the prior year. Earnings per share rose to $0.88 from $0.69.

The latest results included a one-time $5 million favorable adjustment related to a change in accounting for some vendor allowances. The prior-year results included a litigation charge of $11.5 million.

Adjusted earnings totaled $0.86 per share, while it amounted to $0.75 in fiscal 2012. On average, 29 analysts polled by Thomson Reuters expected earnings of $0.84 per share. Analysts' estimates typically exclude special items.

Net sales rose to $2.502 billion from $2.364 billion in the previous year. Wall Street expected revenues of $2.56 billion for the quarter.

Comparable store sales, as well as customer traffic and the average customer transaction value were flat during the quarter.

Sales were strongest in the Consumables category, which increased 8.3 percent, driven primarily by strong growth in refrigerated and frozen food, health aids and tobacco.

For the fiscal year, net income improved to $443.58 million from $422.24 million, while net sales advanced to $10.391 billion from $9.331 billion.

During fiscal 2013, the company opened 500 new stores, closed 26 stores, and renovated, relocated or expanded 830 stores.

Looking ahead, for the first quarter of fiscal 2014, the company expects earnings per share of $0.65 to $0.75 per share compared to $0.69 per share in the previous year. Comparable store sales are estimated to decline in the low-single-digit range. Analysts expect first-quarter earnings of $0.76 per share.

For the 52-weeks ending August 30, 2014, the company expects earnings per share to be between $3.80 and $4.15, compared with $3.83 in fiscal 2013 that included an extra week, which is estimated to have contributed $0.07 of earnings per share. The guidance assumes a mid-single-digit increase in total net sales.

Wall Street looks for annual earnings of $4.13 per share on revenues of $11.15 billion.

FDO, which closed at $69.45 on Tuesday, is losing 2.8 percent in pre-market trading.