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Last Update: 10-Apr-13 07:53 ET
Family Dollar shares fall 6% following miss on earnings
Family Dollar (FDO $36.75 -2.56) reported second quarter earnings of $1.21 per share, $0.01 worse than the Capital IQ Consensus Estimate of $1.22, while revenues rose 17.7% year/year to $2.89 billion versus the $2.89 billion consensus. Sales were strongest in the Consumables category, which increased 26.6% during the quarter, driven primarily by strong growth in tobacco, food, and health and beauty aids. During the quarter, the co opened 126 new stores, closed 17 stores, and renovated, relocated or expanded 159 stores. Comparable store sales for the 14-week period ended March 2, 2013, increased 2.9% when compared with sales for the similar 14-week period last year. Comparable store sales for the quarter increased as a result of higher customer traffic and an increase in the average customer transaction value. Gross profit for the quarter increased 12.8% to $967.1 million, or 33.4% of net sales, compared to $857.4 million, or 34.9% of net sales, in 2Q12. As a percentage of sales, the impact of stronger sales of lower-margin consumables and increased inventory shrinkage was partially offset by lower freight expense and higher purchase markups. "This quarter we delivered positive results despite financial pressures that continue to challenge our customers. Following a difficult December, we were pleased with our sales results in early January. Unfortunately, the unanticipated delay of the 2012 tax refunds impacted our results at the end of January and the beginning of February. We were happy to see sales trends improve towards the end of the quarter as our customers began to receive their tax refunds."
The company issued downside guidance for the third quarter with EPS of $0.98-1.08 versus the $1.18 consensus. The company anticipates that many of the sales and margin trends that occurred in the first half of the year will continue in the third quarter. The company issued in-line guidance for the fourth quarter with EPS of $0.85-0.95 versus the $0.89 consensus. The Company believes that sales in more discretionary categories will continue to be pressured in the second half of fiscal 2013 and that comparable store sales in the second half of the year will increase between 2% and 4%. The company expects that comparable store sales in the third quarter will be in the lower end of this range and that comparable store sales in the fourth quarter will be in the upper end of this range. The company lowered fiscal year 2013 with EPS to $3.73-3.93 from $3.95-4.20, lowered comp guidance to +3-4% from +4-6%; approximately 500 new store openings and 30-50 store closings; Gross margin pressure driven primarily by an expanding mix of lower-margin consumables.
The company issued downside guidance for the third quarter with EPS of $0.98-1.08 versus the $1.18 consensus. The company anticipates that many of the sales and margin trends that occurred in the first half of the year will continue in the third quarter. The company issued in-line guidance for the fourth quarter with EPS of $0.85-0.95 versus the $0.89 consensus. The Company believes that sales in more discretionary categories will continue to be pressured in the second half of fiscal 2013 and that comparable store sales in the second half of the year will increase between 2% and 4%. The company expects that comparable store sales in the third quarter will be in the lower end of this range and that comparable store sales in the fourth quarter will be in the upper end of this range. The company lowered fiscal year 2013 with EPS to $3.73-3.93 from $3.95-4.20, lowered comp guidance to +3-4% from +4-6%; approximately 500 new store openings and 30-50 store closings; Gross margin pressure driven primarily by an expanding mix of lower-margin consumables.
