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MATTHEWS, N.C. — Family Dollar stores reported a 12.7% increase in net sales and a 6.6% increase in comps in first quarter 2013, the company said.
The dollar-store chain reported net sales of $2.42 billion, compared with $2.15 billion in first quarter 2012, with an 18.5% increase in sales in tobacco, food and health and beauty aids products. Profit for the quarter was $80.3 million, compared with $80.4 million in first quarter 2012, with earnings per share of 69 cents. During the quarter, the company opened 125 new stores, closed one and renovated, relocated or expanded 169. The company has more than 7,500 stores in 45 states.
"The investments we have made to increase our relevance to the customer are delivering results," Family Dollar chairman and CEO Howard Levine said. "While the near-term economic environment remains difficult to predict, I continue to be excited about the long-term opportunity for our business. We are seeing tangible benefits from our margin-enhancing investments in global sourcing and private brands, and as we work to drive further benefit from the investments we are making to expand profitability, I remain confident that our efforts will deliver stronger results as we progress through fiscal 2013 and beyond."
Analysts were enthusiastic about the chain's prospects, as Guggenheim Partners analyst John Heinbockel recommended buying the stock, and as Citi analyst Deborah Weinswig called the company's earnings per share of 69 cents a "surprise following very strong [same-store sales] of 6.6%."
Analysts had mixed opinions of the results. Weinswig had forecasted earnings per share of 77 cents and was surprised by the results as same-store sales had beat her estimates. Meanwhile, Heinbockel said he would continue giving Family Dollar's stock a "Buy" rating and said guidance still looked optimistic.
"In our view, FDO's principal mistakes were undertaking too many margin-depressing initiatives at the same time and not accurately anticipating the magnitude of the discretionary weakness," Heinbockel wrote in a report.