Family Dollar numbers up 12 percent

MATTHEWS, N.C. — With sales climbing at a strong double-digit pace, lifted by continued rapid expansion, second-fiscal quarter profits at Family Dollar Stores Inc. climbed by 12 percent, to $81.4 million from $72.7 million last year.

Sales at the value-pricing, neighborhood small-store retailer climbed 11.7 percent, to $1.4 billion from $1.3 billion last year. Same-store sales improved by 2.2 percent, with a 3.2 percent increase in hardlines partly offset by a 1.2 percent drop in softlines.

Average gross margin improved by 60 basis points, or six-tenths of a percentage point, to 33.8 percent from 33.2 percent the year before. Margins were helped by improved initial margins through better sourcing of goods and lower levels of markdowns. The reduction in markdowns came as a result of purchasing seasonal goods on a conservative basis and better allocation of those goods to the stores, said Howard Levine, chairman and CEO.

Costs kept pace, rising by 50 basis points, or one half of a percentage point, to 24.6 percent of sales from 24.1 percent, hurt by continued increases in workers' compensation costs and lower than expected sales.

Levine said earnings rose during the second fiscal quarter even though same-store sales in December rose only 0.7 percent. "When customers began to focus again on basic consumable merchandise in January and February, as opposed to the focus on seasonal goods in December, sales in existing stores increased 3 percent in the January reporting period and 4.3 percent in the February reporting period."