
A Family Dollar store is seen in Chicago in this file photo taken June 25, 2012. Family Dollar Stores Inc reported a weaker-than-expected quarterly profit on Wednesday, blaming a delay in tax refunds for hurting sales at the end of January and early February.
Credit: Reuters/Jim Young/Files
By Jessica Wohl
Wed Apr 10, 2013 10:23am EDT
(Reuters) - Family Dollar Stores Inc (FDO.N) reported a weaker-than-expected quarterly profit on Wednesday, blaming a delay in tax refunds for hurting sales at the end of January and in early February, and again cut its annual forecast.
Shares of the discount retailer's stock were down 1.6 percent at $58.83 in morning trading.
"We expected weakness and we got it," said Jefferies analyst Daniel Binder, who has a "hold" rating on Family Dollar shares.
Family Dollar expects that sales of discretionary items such as apparel and home goods could be hurting heading into the rest of its year. It cited financial pressure facing customers and unseasonably cold spring weather.
"Our customers' discretionary spend is expected to remain constrained," Chief Executive Howard Levine said in a statement.
Sales trends improved toward the end of the quarter, ended March 2, as shoppers started to get tax refunds, he added.
"I still am very cautious on the stock," said Steven Soranno, senior analyst at Calvert Investment Management, adding that Family Dollar plans to spend more on capital projects and rely on lower-margin food and other items to drive sales growth.
Family Dollar's results, including weaker-than-expected sales at stores open at least a year, were a stark contrast to results from larger rival Dollar General Corp (DG.N).
Dollar General, which operates thousands more stores and generates billions of dollars more in revenue than Family Dollar, posted better-than-expected quarterly profit last month and said 2013 sales could surpass a strong 2012 as it focuses on goods such as food to attract shoppers in an uncertain economy.
Both of the so-called dollar stores are trying to win shoppers from competitors like Wal-Mart Stores Inc (WMT.N), which carries a wider variety of merchandise.
LOWERS FORECAST AGAIN
In the second quarter ended March 2, net income rose to $140.1 million, or $1.21 per share, from $136.4 million, or $1.15 per share, a year earlier. Analysts looked for a profit of $1.22 per share, according to Thomson Reuters I/B/E/S.
Sales jumped 17.7 percent to $2.89 billion, meeting Wall Street expectations.
Sales at stores open at least a year, or same-store sales, rose less than expected - up 2.9 percent versus the company's own forecast of 4 percent to 5 percent.
BB&T analyst Anthony Chukumba said he looked for a 4.6 percent increase in same-store sales, while Jefferies' Binder expected a 3.5 percent rise.
For the fiscal year, the company now sees earnings of $3.73 to $3.93 a share, while analysts, on average, targeted $3.98 a share.
Family Dollar cut its forecast in January, bringing it down to $3.95 to $4.20 per share from an October outlook of $4.10 to $4.40 per share.
Same-stores sales are now expected to rise 3 percent to 4 percent this year, versus a prior goal of 4 percent to 6 percent. The company now forecasts capital expenditures at $650 million to $700 million this year, up from a prior plan for $600 million to $650 million.
For the current third quarter, it expects to earn 98 cents to $1.08 per share, below analysts' average target of $1.18. Same-store sales are expected to be at the low end of a 2 percent to 4 percent increase in the third quarter, it said.
(Reporting by Dhanya Skariachan in New York and Jessica Wohl in Chicago; Additional reporting by Siddharth Cavale in Bangalore; Editing by Roshni Menon and Jeffrey Benkoe)
- Link this
- Share this
- Digg this
- Email
- Reprints
0 comments:
Post a Comment