Family Dollar 2Q sales hit $1 billion

By Don Hogsett -- Home Textiles Today, 3/30/2001

MATTHEWS, SC -Boosted by new store openings, a lift in same-store sales and one more week of sales than last year, second-quarter sales at Family Dollar Stores Inc. shot up more than 20 percent, giving the low-cost neighborhood retailer its first-ever billion-dollar quarter.

Sales climbed by 20.8 percent, to $1.0 billion from $858.5 million a year ago. Same-store store sales in the second quarter ended March 3 rose by 2.2 percent, gaining strength in January and February-up 5.2 percent and 5.0 percent respectively-after losing ground in December.

Breaking sales out by segment, the retailer said hardlines picked up by 7.6 percent, almost enough to offset a 7.8 percent decline in softlines sales, mostly of hanging apparel.

The improvement in hardlines, the retailer said, was partly due to new merchandising initiatives, including the introduction of additional basic consumables.

Despite the sales gain of almost 21 percent, profits climbed only half as fast as sales, nicked by narrow margins and rising costs. Earnings climbed by 10.0 percent, to $60.5 million from $55.0 million the prior year.

Average gross margin thinned by 50 basis points, to 32.6 percent from 33.1 percent a year ago, hit by lower prices of consumables and lower sales at full price of apparel and seasonal merchandise. SG & A expenses moved up by 40 basis points, to 23.4 percent from 23.0 percent.

During the current third quarter, Family Dollar said it will eliminate an advertising circular that was distributed last year at the end of March and the beginning of April.

Without the circular, the company said it's planning a same-store sales increase during the quarter in the 3 to 5 percent range. Family Dollar forecast earnings in the second half to rise about 10 to 15 percent.