Earnings, profits up in Family Dollar 2Q

MATTHEWS, NC— Moving virtually in lock-step with sales, second-quarter profits at Family Dollar Stores Inc. advanced by 14.0 percent, to $72.7 million from $63.8 million last year.

Fueled largely by rapid expansion, sales at the neighborhood retailer climbed by 13.7 percent, to $1.3 billion from $1.1 billion for the second fiscal quarter ended March 1. Same-store sales rose by 2.9 percent. Hardlines were up 3.5 percent measured on a same-store basis, while softlines grew at a slower pace of 0.8 percent.

Average gross margin held relatively steady, edging up by 20 basis points, to 33.2 percent from 33.0 percent a year ago. Gross margin dollars, driven more by rising sales than beefed-up margins, increased to $417.5 million from $364.7 million.

But offsetting modestly stronger margins, operating costs climbed higher as well, inching up by 20 basis points, to 24.1 percent of sales from 23.9 percent the preceding year.

Operating profits grew by 14.0 percent, to $114.5 million from $100.4 million, generating an impressive operating margin of 9.1 percent, unchanged from a year ago.

Customer count, the retailer said, measured by the number of register transactions in existing stores, was roughly flat, and the average transaction increased by about 2.6 percent, to $9.42.

During the second quarter, Family Dollar opened 88 stores and closed 13.

For all of last year, sales moved up by 13.6 percent, to $2.4 billion from $2.1 billion, while same-store sales increased by 3.0 percent. Hardlines same-store sales rose by 3.4 percent, and softlines grew by 1.8 percent. Earnings for the six-month period increased by 14.2 percent, to $130.2 million from $114.0 million.