October 9, 2014
Family Dollar’s fourth quarter results were affected by decreased customer traffic, prompting chairman and CEO Howard R. Levine to point out that the company is still in the early stages of its turnaround plan.
Levine expects that the strategic actions taken in fiscal 2014 will position the company for better sales and earnings performance in fiscal 2015. Although he anticipates that the first quarter will be the most challenging of fiscal 2015, Levine is optimistic that momentum will build through the rest of the year. But he stopped short of giving specific details regarding financial guidance for 2015 in light of the company’s pending merger with Dollar Tree.
Total net sales for the quarter increased 4.5% to $2.61 billion from $2.5 billion in the prior-year quarter. Comparable store sales increased 0.3% as a result of an increase in the average customer transaction value, partially offset by fewer customer transactions. Sales in the fourth quarter of fiscal 2014 were strongest in the consumables and seasonal and electronics categories.
Gross profit for the quarter was $861.3 million or 32.9% of net sales. During the quarter, the company implemented a series of restructuring initiatives, including the closing of 375 underperforming stores. As a result, the company incurred $10.4 million in inventory write-downs in an effort to sell through merchandise at stores scheduled to close.
Net income in the quarter was $34.5 million compared with $102.2 million in the fourth quarter last year. Adjusted to exclued the inventory write-downs, restructuring charges and merger fees in the quarter, and the favorable accounting adjustment in the quarter, net income for the quarter was $83.9 million, compared to adjusted net income of $99 million in the fourth quarter last year.
“Although our fourth quarter results continue to reflect the difficult competitive environment, as well as the financial challenges facing our customers, we are continuing to execute our previously announced restructuring initiatives to improve our performance,” added Levine.
Source: Retailing Today
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