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Family Dollar Shares Down on Weaker Q1

MATTHEWS, N.C. — Stock in Family Dollar Stores was trading down nearly 7% Friday after the discounter said sales and margins were lighter than expected during its fiscal first quarter.

Family Dollar said net income for the quarter, which ended Nov. 26, increased 8.1% to $80.4 million on $2.1 billion in sales, a 7.6% increase. Comparable-store sales improved by 4.1% as consumable sales increased but discretionary categories suffered. As a result, higher markdowns and increased freight and shrink costs led to a decline in gross margin of 77 basis points to 35.3% of sales.

In a conference call discussing results Friday, Howard Levine, Family Dollar’s chief executive officer, said he expected the sales environment would continue to be challenging for customers but said the chain would meet previously stated earnings goals for the fiscal year. Levine added that the company would focus on opening new stores and renovating older locations, with an eye toward expanding food and consumables to spark shopping trips.

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