Family Dollar lowers expectations

-- Home Textiles Today, 4/4/2008 2:30:00 PM

Matthews, N.C. – Family Dollar posted lower profits for the second quarter and lowered its guidance for the year, although executives said they expect the second half of the fiscal year to be slightly better.

“Over the last several months, economic conditions have deteriorated, which has resulted in our customers limited their discretionary spending this past holiday season and focusing more on basic consumable needs,” chairman and ceo Howard Levine told analysts during the company’s quarterly call late last week.

Net income for the quarter ended March 1 fell 30% to $63.3 million, or 45 cents per share – below the 42 cents per share analysts had expected. Sales slid 5.9% to $1.83 billion, with comps flat.

For the first half, net income tumbled 20% to $115.2 million. Sales trailed down 0.9%to $3.5 billion, with a 0.5% comp decline.

Family Dollar now expects fiscal year earnings of $1.50 to $1.60. It had previously issued guidance of $1.56 to $1.64 in earnings for the year.

Expanding space for in an additional 2,700 stores is a key merchandising strategy this year for the 6,500-unit chain.