Family Dollar Moves Ahead Despite Rough Year

Matthews, N.C. — Despite having just closed a “tough” fiscal year, Family Dollar Stores Inc. experienced success with its cooler rollout and urban initiative and will move ahead with these programs into the new year.

Howard Levin, chairman and CEO, said during the company's fourth quarter and fiscal 2005 year-end call that food continues to be a popular category with shoppers and will be enhanced to help drive traffic and increase sales for non-consumable goods.

Last year, the company added coolers to 1,000 units.

“Customer response was immediate, with cooler stores growing sales in the mid-single digit range,” he said. “The increased traffic generated by coolers is expected to increase not only food sales but also sales throughout the store.”

This year, Family Dollar intends to double the pace of cooler installations, adding them to 2,500 additional units by the end of this new fiscal year. At that point, more than half of the chain's stores will be equipped with coolers, Levine said.

Urban markets also continue to represent “an incredible opportunity” for Family Dollar's future growth, Levine said. Last year, the retailer made several technological improvements and management restructures as part of this program — all of which paid off, according to Levine.

“Again, customer response was almost instantaneous, as these stores have also increased sales in the mid-single digit range,” he continued.

But, Levine said, fine-tuning is now the new strategy for this initiative.

“The urban initiative is a significant investment and its incremental cost is currently offsetting the favorable impact of sales growth,” Levine explained. “While urban stores continue to be profitable, we have not achieved our objective of improving our profitability.”