MATTHEWS, N.C., June 24 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO), a discount store chain operating 5,298 stores in 43 states,
reported the highest sales and earnings for any third quarter and first three
quarters in the Company's history. For the third quarter ended May 29, 2004,
sales were $1,310.2 million, or 11.3% above sales of $1,176.9 million for the
third quarter ended May 31, 2003. Net income was $73.8 million, or 6.0% above
net income of $69.6 million for the third quarter of the prior fiscal year,
and net income per diluted share increased to $.43 from $.40.
For the three quarters ended May 29, 2004, sales were $3,957.6 million, or
11.7% above sales of $3,541.7 million for the three quarters ended May 31,
2003. Net income for the three quarters ended May 29, 2004, was $219.7
million, or 10.0% above net income of $199.8 million for the three quarters
ended May 31, 2003, and net income per diluted share increased to $1.27 from
$1.15.
The sales gains are attributable to increased sales in existing stores and
to sales in new stores opened as part of the Company's store expansion
program. Sales in existing stores increased approximately 1.9% in the third
quarter ended May 29, 2004, above the third quarter last fiscal year,
including an increase of approximately 3.4% in sales of hardlines and a
decrease of approximately 3.4% in sales of softlines. The customer count, as
measured by the number of register transactions in existing stores, was at the
same level in both quarters and the average transaction increased
approximately 1.7% to $8.87.
Sales in existing stores increased approximately 2.2% in the three
quarters ended May 29, 2004, above the comparable period last fiscal 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
increased approximately 1.1% and the average transaction increased
approximately 1.0% to $9.04.
During the first three quarters ended May 29, 2004, 297 stores opened and
55 stores closed, compared to the opening of 285 stores and the closing of 62
stores in the first three quarters last year. The Company's current plan is
to open about 500 stores and close 64 stores during the current fiscal year
ending August 28, 2004.
The 6% increase in net income in the third quarter ended May 29, 2004, was
achieved in a difficult economic environment, marked by rising energy prices,
for the Company's low to low-middle income customer base. Sales of basic
consumable merchandise, such as household chemicals, paper products and food,
continued to be satisfactory. However, sales of more discretionary
merchandise, including hanging apparel, domestics, giftwear and seasonal goods
were below the Company's plan. The below plan sales and continued increases
in insurance costs, including workers' compensation, contributed to the
deleveraging of expenses. Expenses as a percent to sales increased from 25.4%
in the third quarter last year to 26.0% in the third quarter this year. The
increase in expenses was partially offset in the third quarter by an increase
in the gross profit margin as a percent to sales from 34.7% in the third
quarter last year to 34.9% in the third quarter this year. This improvement
is attributable to a change in the treatment of certain vendor allowances in
conformity with a recent accounting pronouncement which also contributed to
the increase in the third quarter this year in expenses as a percent to sales.
The gross profit margin as a percent to sales in the third quarter was
positively impacted by lower levels of markdowns as a result of purchasing
seasonal goods on a conservative basis and better allocation of those goods to
the stores, and adversely impacted by increased shrinkage and freight costs.
The Company's inventories at the end of the third quarter this year were
approximately 8.5% higher on a per store basis than at the end of the third
quarter last year. In a difficult sales environment, the Company became more
aggressive in assuring that the stores were amply stocked with the basic
consumable goods customers need day-in and day-out. The additional
inventories in the stores are primarily these consumable goods, as apparel
inventories were only approximately 1.5% higher on a per store basis. The
Company expects consumables inventories to be at more normal levels at the end
of the fourth quarter.
As previously announced, the Company's plan is for sales in existing
stores in the fourth quarter ending August 28, 2004, to increase in the 2% to
4% range. The Company also confirmed that its plan is for net income per
diluted share of Common Stock in the fourth quarter ending August 28, 2004, to
increase approximately 8% to 12%.
The Company also announced that it will continue its aggressive store
opening program in fiscal 2005. Preliminary plans are to open about 500 to
560 stores and close 60 to 70 stores resulting in about 8% to 9% net new store
growth and 9% to 10% net square footage growth in the fiscal year beginning
August 29, 2004. To achieve this target, the Company is retaining real estate
brokers in certain major metropolitan areas and also is adding personnel to
its Real Estate Department. Urban markets will continue to be the focus, but
additional resources also are being allocated to small and mid-sized towns,
where new stores can often be opened more quickly and predictably.
To support the focus on urban markets, new and expanded initiatives are
being planned and implemented to enhance operating performance. The Company
believes that investments in process changes, technology, training and people
offer significant opportunities to improve consumers' shopping experience in
these underserved markets. Howard R. Levine, Chairman and Chief Executive
Officer, concluded that: "While we are achieving good results in urban
markets, these markets offer the greatest opportunities for improvement in our
store operations. Based on what we have learned from operating stores in
urban areas for many years, during the next twelve months initiatives will be
implemented in about thirty of our largest metropolitan markets covering more
than 1,000 stores. These initiatives will result in better execution of our
merchandising concept in urban markets and lead to increased sales and
earnings for our Company."
The Company also announced that in the third quarter ended May 29, 2004,
it had purchased in the open market 3,075,800 shares of the Company's Common
Stock at a cost of $95,828,000. An additional 460,000 shares of Common Stock
have been purchased in the open market in June 2004 at a cost of $15,367,000.
Under the current authorization from the Board of Directors, the Company may
purchase up to an additional 3.3 million shares of Common Stock.
Family Dollar will host a conference call on Thursday, June 24, 2004, at
10:00 A.M. ET to discuss the financial results for the third quarter ended
May 29, 2004. If you wish to listen, please dial 1-888-791-5525 for domestic
USA calls and 1-773-756-4619 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 24, 2004,
through June 25, 2004, by dialing 1-800-216-3057 for domestic USA calls and
1-402-220-3763 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 24, 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 Third Quarter Ended
May 29, 2004 May 31, 2003
Net Sales $1,310,159 $1,176,877
Cost of Sales 852,783 768,495
Gross Margin 457,376 408,382
Selling, General and Administrative Expenses 341,140 298,767
Income Before Income Taxes 116,236 109,615
Income Taxes 42,426 40,010
Net Income 73,810 69,605
Net Income Per Common Share-Basic $.43 $.40
Average Shares-Basic 170,862 172,075
Net Income Per Common Share-Diluted $.43 $.40
Average Shares-Diluted 171,571 173,049
Dividends Declared Per Common Share $.08-1/2 $.07-1/2
For the Three Quarters Ended
May 29, 2004 May 31, 2003
Net Sales $3,957,640 $3,541,697
Cost of Sales 2,595,125 2,334,962
Gross Margin 1,362,515 1,206,735
Selling, General and Administrative Expenses 1,016,526 892,092
Income Before Income Taxes 345,989 314,643
Income Taxes 126,286 114,845
Net Income 219,703 199,798
Net Income Per Common Share-Basic $1.28 $1.16
Average Shares-Basic 171,759 172,434
Net Income Per Common Share-Diluted $1.27 $1.15
Average Shares-Diluted 172,736 173,344
Dividends Declared Per Common Share $.24-1/2 $.21-1/2
Consolidated Condensed Balance Sheets (unaudited)
(In thousands, except share amounts)
May 29, 2004 May 31, 2003 August 30, 2003
ASSETS
Current assets:
Cash and cash equivalents $196,451 $246,399 $206,731
Merchandise inventories 912,510 771,809 854,370
Deferred income taxes 70,016 53,415 61,769
Prepayments and other
current assets 34,252 30,964 33,622
Total current assets $1,213,229 $1,102,587 $1,156,492
Property and equipment, net 866,176 757,038 812,123
Other assets 16,096 13,931 17,080
$2,095,501 $1,873,556 $1,985,695
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $627,423 $523,785 $594,660
Income taxes payable 3,869 4,602 671
Total current liabilities 631,292 528,387 595,331
Deferred income taxes $89,964 $75,393 $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 $18,746 $18,665 $18,691
Capital in excess of par 102,090 81,051 87,457
Retained earnings 1,493,442 1,280,839 1,315,600
1,614,278 1,380,555 1,421,748
Less common stock held in
treasury, at cost 240,033 110,779 110,779
1,374,245 1,269,776 1,310,969
$2,095,501 $1,873,556 $1,985,695
SOURCE Family Dollar Stores, Inc.
 back to top
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
|
