MATTHEWS, N.C. — Momentum remains on the side of Family Dollar, as the company late Thursday reported another quarter of record sales and profits and the opening of 101 units, which included its first stores in California.
Family Dollar said earnings per share increased 17.2% to 68 cents, a penny better than analysts’ forecast, compared with 58 cents the first quarter the prior year, and same-store sales increased 4.1% on top of a prior year gain of 6.9%. First-quarter sales increased 7.6% to a little more than $2.1 billion, and net income grew 8.1% to $80.4 million. The gross margin rate declined to 35.3% from 36% thanks largely to ongoing strong sales in consumables categories. However, overall profitability didn’t suffer as Family Dollar’s lower gross margins were more than offset by a an even larger decline in expenses with selling, general and administrative costs dropping to 29% of sales compared with 29.9% the prior year.
Family Dollar ended the quarter with roughly 7,100 stores and the potential to open many more, as its first units in California opened during the period. During the remainder of this year the company plans to open between 450 and 500 new stores while closing 80 to 100 stores and spending $550 million to $600 million to do so. In addition, the company renovated, relocated or expanded 262 stores in the quarter and built its 10th distribution center.
“We have tremendous opportunity to expand our market share further and improve our store productivity, and I am confident that our investments to better meet the needs of our customers will continue to position us to deliver strong financial returns for our shareholders,” said Howard Levine, Family Dollar’s chairman and CEO.
More immediately, the company’s outlook for the second quarter calls for a same-store sales increase around 5% and earnings per share in the range of $1.10 to $1.18 compared with 98 cents last year. For the full year, profits are expected in a range from $3.50 to $3.75 compared with $3.12 last year.