Family Dollar Issues Lower Guidance as Earnings Dip

Family dollar sees top-line revenue increase, but same-store sales fell, and the company announces lower guidance following a difficult start to its 2014 fiscal year.

Jan 9, 2014 at 9:58AM

Family Dollar (NYSE:FDO) reported earnings today for the first quarter of its 2014 fiscal year, and it saw its net sales increase by 3.2% to $2.5 billion, however its comparable-store sales dropped by 2.8%.

The company highlighted that the sales in its consumables category increased by 4.7% as refrigerated and frozen food, health aids, and tobacco largely drove the growth, however its comparable-store sales fell due to fewer transactions and the average value of the transactions declining.

Family Dollar saw its earnings dip from $0.69 per share in the year-ago quarter, to $0.68 per share in the most recent quarter. While the gross profit margin increased from 34.1% of sales to 34.3% of sales, the company saw its selling, general and administrative (SG&A) expenses jump by nearly $37 million, and its operating profit fall by $6.5 million. The company noted that on an average per-square-foot basis its SG&A expenses fell by 1.4%.

In total, net income at Family Dollar fell to $78 million from $80.3 million as reported in the first quarter of its 2013 fiscal year.

"Today, we reported sales and earnings for the first quarter of fiscal 2014 that were in-line with our previously provided guidance," said Family Dollar Chairman and CEO Howard R. Levine in the company press release. "In addition, our core customers continued to face economic uncertainties, and the promotional environment intensified. While the top line was pressured, we expanded gross margin and managed inventory levels well. In addition, we continued to make progress in our longer-term initiatives."

Family Dollar's first fiscal quarter ended Nov. 30.

Family Dollar issued lower guidance for upcoming quarters and noted it expected to continue to see comparable-store sales declining in a low-to-mid single digit range. It also announced that it anticipates that its earnings will fall from $1.21 per share in the second quarter of fiscal 2013 to between $0.85 and $0.95 per share in the second quarter of fiscal 2014. However, of that decline $0.07 will be attributable to the additional week in the comparable quarter last year.

Family Dollar also dramatically lowered its guidance for the full 2014 fiscal year, from the previous estimate of EPS between $3.80 and $4.15 to a range of $3.25 to $3.55.

Levine said that "[r]eflecting our December results, our expectations that the macroeconomic trends will continue, and the impact of investments we plan to make to strengthen our value proposition, we have lowered our earnings expectations for the second quarter of fiscal 2014 and the full year." The company said comparable-stores sales for December decreased about 3%, driven by a decline in customer transactions.

"While we have made meaningful progress to improve our execution, our financial performance has not met our expectations," said Levine. "We have a great business model and ample growth opportunity, and I know we can do better."


Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information