Family Dollar Adds Consumables

MATTHEWS, N.C. — Family Dollar Stores [4] here said it plans to continue to increase the assortment of consumables at its stores to drive sales.

“We’re going where our customer wants us to go,” Michael K. Bloom, president and chief operating officer, told analysts during a financial conference call. “She’s voted, and it’s clear as day to the organization that this is the mix she wants in our stores.”

Consumables — which accounted for 64.6% of the company’s sales mix in the second quarter, according to Kenneth T. Smith, senior vice president and chief financial officer — experienced sales growth of about 10% during the 12-week second quarter, Bloom noted.

Family Dollar has expanded its SKU count in food by 20% over the last 18 months and in health and beauty care by about 25%, Bloom said; and during the second half of fiscal 2012, “we expect to add more than 1,000 new consumable SKUs to our assortment,” Howard R. Levine, chairman and chief executive officer, pointed out.

Bloom said Family Dollar plans to double the refrigerated and frozen food capacity from five doors to 10; to begin selling cigarettes and tobacco products; to expand national brands to include Red Bull, Wise snacks and Gerber baby food, as well as to add the Pepsi line of soft drinks while retaining Coca-Cola brands; and to expand its selection of HBC brands like Schick, Allegra and Oil of Olay while adding Maybelline and L’Oreal.

As national brands of consumables expand, so will private brands, Bloom said. Family Dollar expects to increase its assortment of private-brand consumables by more than 50% this year; private-brand sales through the fiscal first half increased about 16%, he added.

Family Dollar will also introduce a new fixture at the checkstand that includes candy bars and snacks in addition to two new categories for the company — magazines and gift cards, Bloom said.

For the second quarter, which ended Feb. 25, net income rose 10.7% to $136.4 million, while sales jumped 8.6% to $2.5 billion and comparable-store sales were up 4.5%, driven primarily by customer traffic and a slight increase in average customer transaction value, the company noted. For the first half, net income jumped 9.8% to $216.8 million, while sales were up 8.1% to $2.6
billion.