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Family Dollar Invests In Sales But Profits Suffer

For the first quarter of fiscal 2013 ended November 24, 2012, Family Dollar Stores, Inc. posted a net sales increase of 12.7% to $2.42 billion but a net income decline to $80.3 million from $80.4 million for the period in fiscal 2012. With less stock outstanding, earnings per diluted share increased to 69 cents from 68 cents in last year’s first quarter.

Comparable store sales increased 6.6% versus the period last year as a result of increased customer traffic and an increase in the average customer transaction value, the company stated.

The consumables category, up 18.5%, experienced the greatest sales gains among categories, primarily driven by strong growth in tobacco, food and health and beauty aids. In the first quarter, Family Dollar opened 125 new stores, closed one store, and renovated, relocated or expanded 169 stores.

“The investments we have made to increase our relevance to the customer are delivering results,” said Howard Levine, Family Dollar chairman and CEO. “We are driving more traffic, and we are increasing our market share. We are seeing tangible benefits from our margin-enhancing investments in global sourcing and private brands, and as we work to drive further benefit from the investments we are making to expand profitability, I remain confident that our efforts will deliver stronger results as we progress through fiscal 2013 and beyond. Early results from our sales-driving initiatives exceeded our expectations in the first quarter, resulting in more gross margin pressure than anticipated. This mix pressure, combined with expected headwinds from insurance expense, resulted in earnings that were at the low end of our guidance.”