MATTHEWS, N.C., June 23 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO), reported that net income per diluted share decreased 23.8%
to $0.32 from $0.42, and that net income was $53.8 million, or 25.7% below net
income of $72.4 million for the third quarter of the prior fiscal year. The
Company's current plan is for net income per diluted share of Common Stock for
the fourth quarter ended August 27, 2005, to be between $0.21 and $0.24,
compared to $0.25 in the prior fiscal year.
"As we indicated in our comments at the beginning of this fiscal year, we
expected the third quarter to be our most challenging quarter of the year as a
result of anticipated gross profit margin pressure and planned investments in
our key initiatives. Unfortunately, the challenging sales environment this
Spring, resulting from unseasonably cool weather and a difficult economy for
the Company's low and low-middle income customer, aggravated the operating
profit margin pressures in the quarter," said Howard R. Levine, Chairman and
Chief Executive Officer. "However, we continue to be pleased with the early
results of our major initiatives.
"At the end of the third quarter, we had initiated investments in process
changes, technology and people in approximately 800 stores in major urban
markets, and we expect to expand this initiative to approximately 1,300 stores
by September. While these stores are also affected by macro-economic factors,
they have had consistently higher comparable store sales than the rest of the
chain, and we are encouraged by the early operating results of these stores.
"We are also excited about the preliminary results from the installation
of refrigerated coolers in selected stores. The customer response has been
strong, and we have decided to accelerate the implementation from 500 stores
to 1,000 stores by the end of the fiscal year. At the end of the third
quarter, coolers had been installed and fully stocked with perishable food in
approximately 650 stores."
Mr. Levine concluded, "The third quarter was difficult for our customers
and our Company. However, we remain confident that these initiatives will
position Family Dollar for long-term profitable growth."
Sales for the third quarter ended May 28, 2005, were approximately $1.428
billion, or 9.0% above sales of approximately $1.310 billion for the third
quarter ended May 29, 2004. Sales in comparable stores in the third quarter
of 2005 increased approximately 1.3% above the third quarter 2004, including
an increase of approximately 2.4% in sales of hardlines and a decrease of
approximately 2.6% in sales of softlines. The customer count, as measured by
the number of register transactions in comparable stores, decreased
approximately 1.5% and the average transaction increased approximately 2.6% to
$9.10. The Company expects comparable store sales in the fourth quarter to
increase 2 to 4%.
During the third quarter of 2005, the Company opened 90 stores and closed
9 stores. In the first three quarters of 2005, the Company opened 278 new
stores and closed 63 stores. For the full year, the Company expects to open
approximately 500 new stores and close 65 to 70 stores.
The gross profit margin, as a percentage of sales, decreased from 34.9% in
the third quarter last year to 33.6% in the third quarter this year. This
decline was a result of the impact of higher markdowns, higher inventory
shrinkage and higher freight costs, all as a percentage of sales. In
addition, sales of lower-margin basic consumables continued to be stronger
than sales of higher-margin discretionary goods, reflecting unseasonably cool
weather and the difficult economy, including higher energy prices, for the
Company's low and low-middle income customer base.
Expenses, as percentage of sales, increased from 26.2% in the third
quarter last year to 27.6% in the third quarter this year. Lower than
expected sales in the third quarter and the planned expenses incurred in
connection with the urban initiative and the installation in stores of coolers
for the sale of perishable goods contributed to the increase in expenses, as a
percentage of sales.
The Company's effective income tax rate for the third quarter was 36.7%
compared to 36.5% in the third quarter last year.
The Company's inventories at the end of the third quarter this year were
$990.8 million, or 8.6% above inventories of $912.5 million last year.
Inventory on a per store basis at the end of the third quarter was 1.5% lower
than last year, excluding merchandise in transit to the distribution centers.
The majority of this decrease was in softline merchandise.
For the first three quarters of 2005, capital expenditures were
$147.7 million compared with $131.4 last year. The Company also announced
that in the first three quarters of 2005, the Company had purchased
2.9 million shares of the Company's Common Stock in the open market at a cost
of $80.6 million.
Family Dollar will host a conference call today, June 23, 2005, at 10:00
A.M. ET to discuss the financial results for the third quarter ended May 28,
2005. If you wish to listen, please dial 1-888-323-9811 for domestic USA
calls and 1-630-395-0017 for international calls at least 10 minutes before
the call is scheduled to begin. The passcode for the call is "FAMILY DOLLAR."
A replay of the call will be available from 12:00 Noon ET, June 23, 2005,
through June 30, 2005, by dialing 1-800-945-5759 for domestic USA calls and
1-203-369-3502 for international calls.
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, June
23, 2005.
Certain statements contained in this press release or in other press
releases, public filings, or other written or oral communications made by the
Company or our representatives, 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, activities or events which the Company expects
will or may occur in the future. These forward-looking statements may be
identified by the use of the words "plan," "estimate," "expect," "anticipate,"
"probably," "should," "project," "intend," "continue," and similar terms and
expressions. Various risks, uncertainties and other factors could cause
actual results to differ materially from those expressed in any forward-
looking statements. Such risks, uncertainties and other factors include, but
are not limited to:
- competitive factors and pricing pressures,
- changes in economic conditions,
- the impact of acts of war or terrorism,
- changes in consumer demand and product mix,
- unusual weather that may impact sales,
- the impact of inflation,
- merchandise supply and pricing constraints,
- success of merchandising and marketing programs,
- 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, potential problems and achievement of results associated with
the implementation of new programs, systems and technology, including
supply chain systems, store technology, cooler installations and urban
initiative programs,
- changes in food and energy prices and their impact on consumer spending
and the Company's costs,
- adverse impacts associated with legal proceedings and claims,
- changes in shrinkage,
- changes in health care and other insurance costs,
- changes in the Company's ability to attract and retain employees,
- changes in state or federal legislation or regulations, including the
effects of legislation and regulations on wage levels and entitlement
programs.
Consequently, all of the forward-looking statements made by the Company in
this and other documents or statements 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.
FAMILY DOLLAR STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share amounts)
For the Third Quarter Ended
May 29,
May 28, % of Net 2004 % of Net
2005 Sales (Restated) Sales
Net sales $1,427,966 100.0% $1,310,159 100.0%
Cost of sales 948,614 66.4% 852,783 65.1%
Gross margin 479,352 33.6% 457,376 34.9%
Selling, general and
administrative expenses 394,400 27.6% 343,395 26.2%
Income before income taxes 84,952 6.0% 113,981 8.7%
Income taxes 31,178 2.2% 41,598 3.2%
Net income $53,774 3.8% $72,383 5.5%
Net income per common share - basic $0.32 $0.42
Average shares - basic 166,858 170,862
Net income per common share - diluted $0.32 $0.42
Average shares - diluted 167,160 171,571
Dividends declared per common share $0.095 $0.085
For the Three Quarters Ended
May 29,
May 28, % of Net 2004 % of Net
2005 Sales (Restated) Sales
Net sales $4,394,965 100.0% $3,957,640 100.0%
Cost of sales 2,934,342 66.8% 2,595,125 65.6%
Gross margin 1,460,623 33.2% 1,362,515 34.4%
Selling, general and
administrative expenses 1,164,009 26.5% 1,021,978 25.8%
Income before income taxes 296,614 6.7% 340,537 8.6%
Income taxes 108,338 2.5% 124,285 3.1%
Net income $188,276 4.3% $216,252 5.5%
Net income per common share - basic $1.12 $1.26
Average shares - basic 167,400 171,759
Net income per common share - diluted $1.12 $1.25
Average shares - diluted 167,846 172,736
Dividends declared per common share $0.275 $0.245
FAMILY DOLLAR STORES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands, except per share amounts)
May 29, August 28,
May 28, 2004 2004
2005 (Restated) (Restated)
Assets
Current assets:
Cash and cash equivalents $80,719 $90,823 $87,023
Investment securities 98,320 182,620 120,840
Merchandise inventories 990,828 912,510 980,124
Deferred income taxes 93,383 76,389 84,084
Income tax refund receivable - - 1,304
Prepayments and other current assets 48,470 34,252 16,937
Total current assets 1,311,720 1,296,594 1,290,312
Property and equipment, net 979,581 859,309 918,449
Other assets 23,502 16,096 15,600
Total assets $2,314,803 $2,171,999 $2,224,361
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued
liabilities $807,513 $732,286 $800,585
Income taxes payable 3,867 3,869 -
Total current liabilities 811,380 736,155 800,585
Deferred income taxes 88,760 83,588 86,694
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $1 par; authorized
and unissued 500,000 shares
Common stock, $.10 par; authorized
600,000,000 shares 18,830 18,746 18,767
Capital in excess of par 122,445 102,090 106,853
Retained earnings 1,641,314 1,471,453 1,498,890
1,782,589 1,592,289 1,624,510
Less: common stock held in treasury,
at cost 367,926 240,033 287,428
Total shareholders' equity 1,414,663 1,352,256 1,337,082
Total liabilities and shareholders'
equity $2,314,803 $2,171,999 $2,224,361
Investments in auction rate securities and variable rate demand notes have
been reclassified from "Cash and cash equivalents" to "Investment
securities." Also, outstanding checks were reclassified from "Cash and
cash equivalents" to "Accounts payable and accrued liabilities."
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:
Kiley F. Rawlins, CFA, Divisional Vice
President of Family Dollar Stores, Inc., +1-704-849-7496
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