FDO 2009 Q2 Earnings - by Better Trades

Before the opening bell on Wednesday April 8, one of the fastest growing discount store chains in the United States, Family Dollar Stores Inc. (FDO), whose concept provides consumers with good values in low cost, basic merchandise for family and home needs, announced that the company’s net income for the 2nd quarter advanced over last year’s figures as consumers continue to bargain shop amidst the economic crunch.

For the recent period, Family Dollar recorded net earnings of $84.1M, or $0.60 per share, versus the previous year’s profits of $63.3M, or $0.45, an increase in earnings of nearly 33%. Results were bolstered by a 6.4% increase in the company’s same store sales.

As a result of a decrease in discretionary spending by consumers, patrons looked to get more bang for their buck, which pushed Family Dollar’s quarterly sales totals higher by the end of the period, from $1.83B to $1.99B, an increase of 8.7%. The company attributed the increase in sales to higher consumer traffic and an increase in the overall transaction value per visit.

Analysts, on average, were looking for the discount retailer to post quarterly earnings of $0.60 per share on total revenues of $1.98B.

Taking a look deeper into the company’s quarterly performance, Family Dollar witnessed consumables net sales increase from $1.05B to $1.21B, an advance of more than 15%, while home product sales increased marginally, up 1.4% to $300.6M.

In addition, seasonal and electronic sales jumped 8% over last year’s sales totals to $267.32M. However, apparel and accessories sales slipped year-over-year, falling more than 10% to $214.88M.

Family Dollar’s gross margin increased over last year’s percentage, coming in at $134.09M, or 6.7% of net sales, compared to $96.46M, or 5.3% of net sales a year ago. Furthermore, gross profits for the quarter advanced as well, increasing by more than 12% year-over-year, from $599.08M to $671.3M.

For the first half of the company’s fiscal year, Family Dollar has posted net income of $143.43M, or $1.02 per share, in contrast to last year’s six-month performance in earnings of $115.25M, or $0.82 per share, an increase of more than 24%. Net sales thus far have come in at $3.75B, up 6.5% from $3.52B.

Looking ahead to Family Dollar’s upcoming 3rd quarter, the company is predicting earnings between $0.54 and $0.58 per share, well above last year’s 3rd quarter earnings of $0.46 per share. Upcoming quarterly sales are also expected to increase, with a projected advance between 7% and 9% based on last year’s quarterly revenues of $1.7B. An increase in sales would imply revenues coming in between $1.82B and $1.86B.

For the 3rd quarter, analysts believe that Family Dollar will post results of $0.50 per share on overall sales totals of $1.81B.

As for the company’s full-year projections, FDO is looking to record annual earnings between $1.90 and $2.00 per share, much higher than last year’s annual income of $1.66 per share. Meanwhile, sales are expected to increase between 5% and 7% over last year’s tally, implying yearly sales totals in the range of $7.33B and $7.47B.

Family Dollar is also anticipating same store sales for the year to increase between 3% and 5% over last year’s results, due largely to an influx in bargain shopping.

Analysts are predicting that yearly results for FDO will come in at $1.90 per share on overall sales totals of $7.36B.

At the sound of the closing bell on Wednesday, shares of Family Dollar jumped 6% in trading, adding $1.97, to end the session at $34.63 per share. Over the past year, shares of FDO have traded as low as $18.43 per share. During the day’s trading, FDO established a new 52-week high of $35 per share. The previous high of $34.06 was set on March 31 of this year.

By Better Trades