Family Dollar notches $2.6 billion in 'challenging quarter'
MATTHEWS, N.C. — Family Dollar Stores on Thursday reported a total net sales increase of 2.3% to $2.6 billion for its first quarter ended Nov. 29, 2014. Comparable store sales for the 13-week period decreased 0.4% as a result of slight decreases in both the average customer transaction value and the number of customer transactions.
“As expected, the first quarter of fiscal 2015 was very challenging, as we continued our transition from a very promotional merchandising strategy to a more everyday low price strategy. During the quarter, gross margin continued to be pressured by the impact of our pricing investments, as well as strong growth of lower-margin consumable categories, including food and tobacco," stated Howard Levine, Family Dollar chairman and CEO. "Our team did a good job of controlling expenses; however, ongoing topline challenges and continued margin pressures impacted our net profitability,” he said. “As we look to the rest of fiscal 2015, we are focused on driving more profitable sales growth, and the second quarter is off to a solid start. Comparable store sales in December increased 1.2%, with fewer in-season promotional markdowns than last year and growth in customer traffic.”
Net sales of consumables increased 3.5% in the first quarter of fiscal 2015 and represented 75.8% of total net sales, compared to 74.9% in the first quarter of fiscal 2014. Net sales of discretionary categories (including apparel and accessories, home products, and seasonal and electronics) decreased 1.3% in the first quarter of fiscal 2015 to 24.2% of net sales, compared to 25.1% of net sales in the first quarter of fiscal 2014.
“In fiscal 2014, we implemented a number of initiatives designed to drive sales and reposition our cost structure. We invested $50 million, on an annualized basis, to reduce prices in key areas; we closed 377 underperforming stores; and we took actions to reduce corporate overhead and re-align key organizational functions to reduce our infrastructure costs," Levine said. "While we are still in the early stages of our turnaround plan, we are beginning to see some stabilization in key areas, and we continue to believe that the strategic actions we have taken will position the company for better long-term performance,” continued Levine.