MATTHEWS, N.C. — Family Dollar Stores here said in its fourth-quarter earnings conference call that its primary objective for fiscal 2012 is to drive traffic with an expanded selection of consumables and to drive larger baskets with more impulse purchases.
Consumables increased 12% in fiscal 2011 — to 69.1% of sales in the fourth quarter, compared with 67.3% a year earlier — reflecting expanded assortments of food and health and beauty aids, the company noted.
“We plan to further expand our consumables assortment and refocus our discretionary business, and we intend to increase our penetration of private brands,” said Howard R. Levine, chairman and chief executive officer.
R. James Kelly, president and chief operating officer, said the company's lowest-income customers — households earning $20,000 a year or less — have changed their buying patterns to focus more on opening price points and private brands while limiting purchases of discretionary items.
“On the other hand, inflation is forcing many middle-income households to pursue more aggressively their search for value, so we continue to see an uptick in traffic from those households, and we see an opportunity there. The inflationary environment is giving us an important opportunity to improve penetration in the more profitable private-brand area.”
Private-brand sales rose 22% during the year to represent 25% of total sales, with private-brand consumables up 26%, representing approximately 16% of sales.
For the fourth quarter, which ended Aug. 27, net income rose 8% to $79.9 million, while sales climbed 9.1% to $2.1 billion and comparable-store sales increased 5.6%. For the year, net income was up 8.5% to $388.6 million, while sales rose 8.7% to $8.6 billion and comps were up 5.5%.
Family Dollar said it plans to open 450-500 new stores this year.
The company also said Kelly is retiring as president and chief operating officer, effective immediately.Succeeding him is Michael K. Bloom, who spent 20 years with CVS Caremark, Woonsocket, R.I. Family Dollar said it has also promoted Dorlisa K. Flur to the new position of vice chair, strategy, and chief administrative officer.