EmailFamily Dollar (FDO $66.00 -3.09) reported third quarter earnings of $1.06 per share, $0.01 worse than the Capital IQ consensus of $1.07, while revenues rose 9.6% year/year to $2.36 billion versus the the $2.37 billion consensus. The company issued in-line guidance for the fourth quarter with EPS of $0.71-0.81 versus the $0.77 consensus. The company also reaffirmed guidance for fiscal year 2012 with revenues of +9-10% to approximately $9.48-9.57 billion versus the $9.34 billion consensus. Third quarter comps rose 5%; gross margin fell 40 bps YoY to 35.8%. As a percentage of sales, the impact of stronger sales of lower-margin consumables, higher markdowns and increased inventory shrinkage were partially offset by higher markups resulting from the Company's continued investments in private brands, global sourcing and price management capabilities, and lower freight expense.
"Delivering stronger shareholder returns begins with increasing sales per square foot, and this quarter, we began to implement a number of initiatives to broaden our consumable assortment and satisfy more of our customers' shopping trips. As planned, most of these initiatives began late in the quarter and had little impact on our third quarter sales results. We are on schedule, and I am very pleased with the progress our teams have made in such a short period of time. As we complete most of these initiatives in the fourth quarter, we will have a fully competitive assortment and will be well-positioned to accelerate sales productivity further.
