FDO 2009 Q3 Earnings - by Better Trades

Discount retail chain Family Dollar Stores Inc. (FDO) made it known before the start of the July 8 trading session, in which the company announced that profits during the 3Q surged, leading Family Dollar to increase their fiscal 2009 projections.

During the most recent period, FDO affirmed that profits jumped to $87.7M, or $0.62 per share, up nearly 36% from last year’s tally of $64.7M, or $0.46 per share. Family Dollar benefited greatly from increased consumer traffic, which propelled overall sales.

Quarterly revenues jumped from $1.7B to $1.84B, an increase in sales of more than 8%. Analysts, within the industry, were looking for the discount retailer to post quarterly earnings of $0.59 per share.

"For fifty years, our strategy of providing customers with value and convenience has enabled us to weather past recessionary cycles well. But, we also have experienced strong growth during recovery periods as customers have increased their discretionary spend," stated Howard Levine, Chairman and CEO of Family Dollar.

Digging deeper into the company’s numbers, FDO witnessed their consumables segment generate net sales of $1.2B, up nearly 13% from last year’s results of $1.07B. Meanwhile, home product sales increased marginally, climbing from $229.5M to $237.4M, a jump of more than 3%.

Elsewhere, FDO saw their apparel and accessories unit slip in overall sales, falling from $230.8M to $219.2M, a decline in revenues of nearly 5%. Additionally, Family Dollar’s seasonal and electronic segment witnessed sales advance nearly 6%, bringing in $185.5M in revenues, compared to last year’s totals of $175.2M.

A negative stat for the company came from their gross inventory, which increased nearly 3% year-over-year, from $1.005B to $1.035B. The increase in supplies reflected a difficult consumer buying environment amidst the global recession.

On a year-to-date basis, Family Dollar has posted net income of $231.2M, or $1.64 per share after the first three quarters. That is up nearly 29% from this time last year, in which the company posted net earnings of $179.9M, or $1.28 per share.

Net sales for the first nine months tallied $5.59B, up more than 7% from last year’s total of $5.22B.

Looking ahead to the upcoming 4Q, Family Dollar is anticipating earnings to be in the neighborhood of $0.39 to $0.43 per share, with sales increased between 4% and 6%. Analysts, in the meantime, are looking for FDO to book net earnings of $0.39 per share on total revenues of $1.83B for the quarter.

As for the company’s yearly outlook, FDO expected to post earnings between $2.03 and $2.07 per share. The recent projections were revised upwards from the company’s original expectations that were released in April. The previous earnings ranged from $1.90 to $2.00 per share. Analysts, on aveage, are looking for the retailer to post annual earnings of $2.00 per share.

Following the company’s earnings release on July 8, shares of FDO surged more than 12% by the close of trading, adding $3.43 to conclude at $31.18 per share. During the past year, shares of Family Dollar have ranged from $19.70 per share to $35.00 per share.

By Better Trades