Boy, it seems just about everyone is eager for that $500 handout the government is about to distribute to jump-start the economy! Not only has discount chain Family Dollar
In fact, according to PNC Financial Services, about 35% of business owners expect to see some benefit from the stimulus package. At least J.C. Penney is realistic in believing that any benefit will be short-lived. Just how far do executives think we can stretch a dollar these days?
If Family Dollar's earnings are any indication, not that far at all. The discount retailer reported a top-line decline of 5.9% for the second quarter, and net income 30% below last year's results, albeit with an extra selling week last time. But after a dismal first quarter in which margins contracted, the chain is calling for a 1.2% to 7.4% drop in fiscal 2008 earnings.
In tough economic times, you try to get the most bang for your buck. While rock-bottom prices drive consumers to Family Dollar and rivals Wal-Mart
While it's considered a "dollar store," many of Family Dollar's price points well exceed that threshold, unlike a 99 Cents Only
With food and gas costs increasing rapidly, many consumers may contemplate spending their rebate for everyday expenses. But for investors' sake (and the company's), let's hope taxpayers end up cashing in their stimulus check for discretionary items at Family Dollar's stores.
For related articles:
Wal-Mart is a Motley Fool Inside Value recommendation. You'll love the discount offered on a 30-day trial: It's free!
Fool contributor Rich Duprey owns shares of Wal-Mart but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.