MATTHEWS, N.C., March 23 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO), a discount store chain operating 5,182 stores in 43 states,
reported the highest sales and earnings for any second quarter and first half
in the Company's history. For the second quarter ended February 28, 2004,
sales were $1,402.8 million, or 11.7% above sales of $1,256.2 million for the
second quarter ended March 1, 2003. Net income was $81.4 million, or
12.0% above net income of $72.7 million for the second quarter of the prior
fiscal year, and net income per diluted share increased to $.47 from $.42.
For the two quarters ended February 28, 2004, sales were $2,647.5 million,
or 12.0% above sales of $2,364.8 million for the two quarters ended March 1,
2003. Net income for the two quarters ended February 28, 2004, was
$145.9 million, or 12.1% above net income of $130.2 million for the two
quarters ended March 1, 2003, and net income per diluted share increased to
$.84 from $.75.
The sales gains are attributable to increased sales in existing stores and
to sales recorded in new stores opened in the Company's store expansion
program. Sales in existing stores in the second quarter ended February 28,
2004, increased approximately 2.2% above the second quarter last year,
including an increase of approximately 3.2% in sales of hardlines and a
decrease of approximately 1.2% in sales of softlines. The customer count, as
measured by the number of register transactions in existing stores, increased
approximately 1.0% and the average transaction increased approximately 1.0% to
$9.52. During the second quarter ended February 28, 2004, the Company opened
95 stores and closed 22 stores, compared to the opening of 88 stores and the
closing of 13 stores during the second quarter last year.
Sales in existing stores in the two quarters ended February 28, 2004,
increased approximately 2.4% above the comparable period last year, including
an increase of approximately 3.1% in sales of hardlines and a decrease of
approximately 0.1% in sales of softlines. The customer count increased
approximately 1.6% and the average transaction increased approximately 0.7% to
$9.13. During the two quarters ended February 28, 2004, the Company opened
196 stores and closed 48 stores, compared to the opening of 179 stores and
closing of 42 stores during the first two quarters last year.
In commenting on the operating results, Howard R. Levine, Chairman and
Chief Executive Officer, noted that the 12.0% increase in net income in the
second quarter ended February 28, 2004, was the 32nd consecutive quarter in
which net income had increased above the prior comparable quarter. The
earnings increase in the second quarter was achieved despite the fact that
sales in existing stores increased only 0.7% in the December reporting period.
When consumers 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 3.0% in the January reporting period and 4.3% in the
February reporting period. While sales in existing stores improved in January
and February, the 2.2% increase in such sales in the second quarter ended
February 28, 2004, was below the Company's plan. The below plan sales and
continued increases in workers' compensation costs contributed to the
deleveraging of expenses. Expenses as a percent to sales increased from
24.1% in the second quarter last year to 24.6% in the second quarter this
year. The increase in expenses was offset in the second quarter by an
increase in the gross profit margin as a percent to sales from 33.2% in the
second quarter last year to 33.8% in the second quarter this year. This
improvement is attributable, in part, to improved initial margins on
merchandise through better sourcing of goods and to lower levels of markdowns
as a result of purchasing seasonal goods on a conservative basis and better
allocation of those goods to the stores. A change in the treatment of certain
vendor allowances in conformity with a recent accounting pronouncement also
contributed to the increase in the second quarter this year in both expenses
as a percent to sales and gross profit margin as a percent to sales. The
Company's inventories at the end of the second quarter this year were in a
good position, with more basic consumable merchandise in the stores resulting
in per store inventories being slightly above the inventory level as at the
end of the second quarter last year. Fall apparel inventories at the end of
the second quarter this year were about 20% below such inventories on a per
store basis at the end of the second quarter last year.
The Company also announced that during the fiscal year ending August 28,
2004, it expects to open approximately 525 to 565 stores. Originally the plan
was to open approximately 565 stores. Approximately 30 fewer stores than
planned were opened during the six months ended February 28, 2004. The
Company's focus on urban markets has contributed to the strong sales
performance of new stores, but the lead times for the opening of urban stores
continue to be less predictable. While urban markets continue to be a focus,
the Company plans to allocate some additional resources to small and mid-sized
towns, where new stores can often be opened more quickly and predictably.
Operating results in small and mid-sized towns have been improving as the
Company has raised store standards and improved merchandise quality.
For the second half of the fiscal year ending August 28, 2004, the Company
confirmed its previous guidance that its plan is for net income per diluted
share of Common Stock to increase approximately 14% to 16%. This guidance is
based on the assumption that sales in existing stores in the second half of
the fiscal year will increase in the 3% to 5% range.
The Company also announced that in the second quarter ended February 28,
2004, it had purchased in the open market 956,000 shares of the Company's
Common Stock at a cost of $33.5 million. No shares were purchased in the
first quarter ended November 29, 2003. As previously reported, in October
2002 the Board of Directors authorized the purchase of up to five million
shares of Common Stock from time to time as market conditions warrant, and in
the fiscal year ended August 30, 2003, the Company purchased 2.2 million
shares of Common Stock at a cost of $65.9 million.
Family Dollar will host a conference call today, Tuesday, March 23, 2004,
at 10:00 A.M. ET to discuss the financial results for the second quarter ended
February 28, 2004. If you wish to listen, please call (703) 736-7292 at least
10 minutes before the call is scheduled to begin. A replay of the call will
be available from 1:00 P.M. ET, March 23, 2004, through March 24, 2004, by
calling 703-925-2474 and entering the access code 4021489. There also will be
a live webcast of the conference call that can be accessed
at http://www.familydollar.com/investors.asp or by clicking on the webcast
icon on the "Investors" page at http://www.familydollar.com . A replay of the
webcast will be available at the same address after 2:00 P.M. ET, March 23,
2004.
Certain statements contained in this press release which are not
historical facts are forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements address the Company's plans and activities or
events which the Company expects will or may occur in the future. A number of
important factors could cause actual results to differ materially from those
expressed in any forward-looking statements. Such factors include, but are
not limited to, competitive factors and pricing pressures, general economic
conditions, the impact of acts of war or terrorism, changes in consumer demand
and product mix, unusual weather that may temporarily impact sales, inflation,
merchandise supply constraints, general transportation or distribution delays
or interruptions, dependence on imports, changes in currency exchange rates,
trade restrictions, tariffs, quotas, and freight rates, availability of real
estate, costs and delays associated with building, opening and operating new
distribution facilities and stores, costs and potential problems associated
with the implementation of new systems and technology, including supply chain
systems and electronic commerce, changes in energy prices and their impact on
consumer spending and the Company's costs, legal proceedings and claims,
changes in health care and other insurance costs, and the effects of
legislation and regulations on wage levels and entitlement programs.
Consequently, all of the forward-looking statements made are qualified by
these and other factors, risks and uncertainties. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as
of the date of this release. The Company does not undertake to publicly update
or revise its forward-looking statements even if experience or future changes
make it clear that projected results expressed or implied in such statements
will not be realized.
Comparable operating results (unaudited) are as follows:
(In thousands, except per share amounts)
For the Second Quarter Ended
February 28, 2004 March 1, 2003
Net Sales $1,402,798 $1,256,183
Cost of Sales 928,984 838,662
Gross Margin 473,814 417,521
Selling, General and
Administrative Expenses 345,560 303,010
Income Before Income Taxes 128,254 114,511
Income Taxes 46,813 41,796
Net Income 81,441 72,715
Net Income Per Common Share-Basic $.47 $.42
Average Shares-Basic 172,061 172,151
Net Income Per Common Share-Diluted $.47 $.42
Average Shares-Diluted 173,003 173,037
Dividends Declared Per Common Share $.08-1/2 $.07-1/2
For the First Half Ended
February 28, 2004 March 1, 2003
Net Sales $2,647,481 $2,364,820
Cost of Sales 1,742,342 1,566,467
Gross Margin 905,139 798,353
Selling, General and
Administrative Expenses 675,386 593,325
Income Before Income Taxes 229,753 205,028
Income Taxes 83,860 74,835
Net Income 145,893 130,193
Net Income Per Common Share-Basic $.85 $.75
Average Shares-Basic 172,207 172,614
Net Income Per Common Share-Diluted $.84 $.75
Average Shares-Diluted 173,319 173,489
Dividends Declared Per Common Share $.16 $.14
Consolidated Condensed Balance Sheets (unaudited)
(In thousands, except share amounts)
February 28, 2004 March 1, 2003 August 30, 2003
ASSETS
Current assets:
Cash and cash equivalents $ 354,787 $ 266,844 $ 206,731
Merchandise inventories 823,160 728,016 854,370
Deferred income taxes 68,173 57,234 61,769
Prepayments and other
current assets 34,868 15,837 33,622
Total current assets $1,280,988 $1,067,931 $1,156,492
Property and equipment, net 829,002 721,929 812,123
Other assets 19,019 14,204 17,080
$2,129,009 $1,804,064 $1,985,695
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 615,480 $ 491,958 $ 594,660
Income taxes payable 16,406 20,145 671
Total current liabilities 631,886 512,103 595,331
Deferred income taxes $ 87,365 $ 71,502 $ 79,395
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par;
authorized and unissued
500,000 shares
Common stock, $.10 par;
authorized 600,000,000
shares $ 18,743 $ 18,639 $ 18,691
Capital in excess of par 101,261 75,288 87,457
Retained earnings 1,433,959 1,224,120 1,315,600
1,553,963 1,318,047 1,421,748
Less common stock held in
treasury, at cost 144,205 97,588 110,779
1,409,758 1,220,459 1,310,969
$2,129,009 $1,804,064 $1,985,695
SOURCE Family Dollar Stores, Inc.
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Related links:
http://www.familydollar.com
http://www.familydollar.com/investors.asp
Company News On-Call:
http://www.prnewswire.com/comp/300875.html
CONTACT:
George R. Mahoney, Jr., Executive Vice
President of Family Dollar Stores, Inc., +1-704-814-3252
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