Family Dollar Reports Third Quarter Earnings
Today, more Americans are looking for value and convenience, and our stores are well-positioned to meet that need, said Howard R. Levine, Chairman and Chief Executive Officer. Our investments in key consumable areas are providing customers with great values on the basic items they need every day, and our small, neighborhood stores are very convenient for customers in this environment of rising gasoline prices.
Net income per diluted share in the third quarter of fiscal 2008 ended May 31, 2008, increased 15.0% to $0.46 compared with $0.40 per diluted share in the third quarter of fiscal 2007 ended June 2, 2007. Net income for the third quarter of fiscal 2008 increased 7.1% to $64.7 million, compared with $60.4 million for the third quarter of fiscal 2007.
>Earnings Per Diluted Share Increases 15.0% to $0.46
>Net Income Increases 7.1%
>Operating Margin Increases 30 Basis Points
>Updates Fiscal 2008 Guidance
Today, more Americans are looking for value and convenience, and our stores are well-positioned to meet that need, said Howard R. Levine, Chairman and Chief Executive Officer. Our investments in key consumable areas are providing customers with great values on the basic items they need every day, and our small, neighborhood stores are very convenient for customers in this environment of rising gasoline prices.
Net income per diluted share in the third quarter of fiscal 2008 ended May 31, 2008, increased 15.0% to $0.46 compared with $0.40 per diluted share in the third quarter of fiscal 2007 ended June 2, 2007. Net income for the third quarter of fiscal 2008 increased 7.1% to $64.7 million, compared with $60.4 million for the third quarter of fiscal 2007.
Third Quarter Results
As previously reported, net sales for the third quarter of fiscal 2008 were $1.702 billion, or 2.9% above sales of $1.655 billion for the third quarter of fiscal 2007. Sales in comparable stores increased 0.1%. An increase in the average customer transaction offset lower customer traffic, as measured by the number of register transactions.
Gross profit, as a percentage of sales, was 34.6% in the third quarter of fiscal 2008 compared to 34.9% in the third quarter of fiscal 2007. The decline in gross profit, as a percentage of sales, during the quarter was a result of the effect of stronger sales of lower-margin consumable merchandise, which was partially offset by lower merchandise markdowns.
Selling, general and administrative (SG&A) expenses increased 0.8% to $487.8 million compared to $484.1 million in the third quarter of fiscal 2007. As a percentage of sales, SG&A expenses were 28.7% in the third quarter of fiscal 2008 compared with 29.3% in the third quarter of fiscal 2007. The decrease in SG&A expenses, as a percentage of sales, was primarily a result of lower insurance expense and lower professional fees. Most other expenses were de-leveraged during the quarter as a result of the low comparable store sales increase.
As previously reported, net sales for the third quarter of fiscal 2008 were $1.702 billion, or 2.9% above sales of $1.655 billion for the third quarter of fiscal 2007. Sales in comparable stores increased 0.1%. An increase in the average customer transaction offset lower customer traffic, as measured by the number of register transactions.
Gross profit, as a percentage of sales, was 34.6% in the third quarter of fiscal 2008 compared to 34.9% in the third quarter of fiscal 2007. The decline in gross profit, as a percentage of sales, during the quarter was a result of the effect of stronger sales of lower-margin consumable merchandise, which was partially offset by lower merchandise markdowns.
Selling, general and administrative (SG&A) expenses increased 0.8% to $487.8 million compared to $484.1 million in the third quarter of fiscal 2007. As a percentage of sales, SG&A expenses were 28.7% in the third quarter of fiscal 2008 compared with 29.3% in the third quarter of fiscal 2007. The decrease in SG&A expenses, as a percentage of sales, was primarily a result of lower insurance expense and lower professional fees. Most other expenses were de-leveraged during the quarter as a result of the low comparable store sales increase.
Outlook
While the federal stimulus package is expected to benefit the Company's target customer in the fourth quarter, predicting the magnitude of the impact is difficult. Month-to-date, sales are above the Company's original plan, and comparable store sales for the June period are now expected to increase approximately 6%. For the fourth quarter of fiscal 2008, the Company believes that comparable store sales will increase 4% to 6% compared with the fourth quarter of fiscal 2007. The Company anticipates that sales of consumables will continue to drive comparable store sales increases and expects that earnings per diluted share in the fourth quarter of fiscal 2008 will be between $0.30 and $0.35, compared with $0.26 per diluted share in the fourth quarter of fiscal 2007.
Reflecting current assumptions for the fourth quarter, the Company now expects that earnings per diluted share for fiscal 2008 will be between $1.58 and $1.63, compared with $1.62 per diluted share in fiscal 2007. For the full year, the Company expects to open approximately 200 new stores and close approximately 75 stores and expects that comparable store sales will increase slightly.
While the federal stimulus package is expected to benefit the Company's target customer in the fourth quarter, predicting the magnitude of the impact is difficult. Month-to-date, sales are above the Company's original plan, and comparable store sales for the June period are now expected to increase approximately 6%. For the fourth quarter of fiscal 2008, the Company believes that comparable store sales will increase 4% to 6% compared with the fourth quarter of fiscal 2007. The Company anticipates that sales of consumables will continue to drive comparable store sales increases and expects that earnings per diluted share in the fourth quarter of fiscal 2008 will be between $0.30 and $0.35, compared with $0.26 per diluted share in the fourth quarter of fiscal 2007.
Reflecting current assumptions for the fourth quarter, the Company now expects that earnings per diluted share for fiscal 2008 will be between $1.58 and $1.63, compared with $1.62 per diluted share in fiscal 2007. For the full year, the Company expects to open approximately 200 new stores and close approximately 75 stores and expects that comparable store sales will increase slightly.
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