MATTHEWS, N.C., June 25 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO), a discount store chain operating 4,856 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 31, 2003,
sales were $1,176.9 million, or 15.1% above sales of $1,022.1 million for the
third quarter ended June 1, 2002. Net income was $69.6 million, or 14.0% above
net income of $61.1 million for the third quarter of the prior fiscal year,
and net income per diluted share increased to $.40 from $.35.
For the three quarters ended May 31, 2003, sales were $3,541.7 million, or
14.1% above sales of $3,104.4 million for the three quarters ended June 1,
2002. Net income for the three quarters ended May 31, 2003, was $199.8
million, or 14.2% above net income of $175.0 million for the three quarters
ended June 1, 2002, and net income per diluted share increased to $1.15
from $1.01.
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 4.6% in the third
quarter ended May 31, 2003, above the third quarter last fiscal year,
including increases of approximately 5.4% in sales of hardlines and 2.2% in
sales of softlines. The customer count, as measured by the number of register
transactions in existing stores, increased approximately 3.6% and the average
transaction increased approximately 0.8% to $8.72.
Sales in existing stores increased approximately 3.5% in the three
quarters ended May 31, 2003, above the comparable period last fiscal year,
including increases of approximately 4.0% in sales of hardlines and 1.9% in
sales of softlines. The customer count increased approximately 1.3% and the
average transaction increased approximately 2.0% to $8.95.
During the first three quarters ended May 31, 2003, 285 new stores opened
and 62 stores closed, compared to the opening of 336 new stores and the
closing of 46 stores in the first three quarters last year. The openings in
the third quarter this year included the first store in Wyoming, and Family
Dollar now operates in 43 states. The Company plans to open 475 stores and
close 65 stores during the current fiscal year ending August 30, 2003. The
Company is realizing its objective of improving new store performance as for
the first three quarters of fiscal 2003, the sales performance of new stores
was equal to more than 90% of the chain average store sales.
The operating results of the third quarter ended May 31, 2003, extend
Family Dollar's record of consistent strong performance in a difficult retail
sales environment. With the 14.0% increase in net income in the third
quarter, the Company has now reported 29 consecutive quarters of earnings
increases on a comparable quarter basis. Expenses as a percent to sales
remained constant at 25.4% in both the third quarter last year and this year.
Increased insurance and utility costs offset expense leverage in other
categories. The gross profit margin as a percent to sales decreased slightly
from 34.8% in the third quarter last year to 34.7% in the third quarter this
year. Markdowns taken in the home fashions, domestics and housewares areas
contributed to this decrease as the Company is introducing new assortments in
these areas. Increased transportation fuel costs also impacted the gross
profit margin. Inventories on a per store basis are at approximately the same
level as last year. The Company also continues to have no long-term or short-
term debt.
As previously announced, the Company's plan is for sales in existing
stores in the fourth quarter ending August 30, 2003, to increase in the 3% to
5% range. The Company also confirmed that its plan is for net income per
diluted share of Common Stock in the fourth quarter ending August 30, 2003, to
increase approximately 14% to 16%.
With respect to next fiscal year, the Company announced that it will
continue its aggressive store opening program. Preliminary plans are to add
approximately 10% net new stores and 11% net square footage growth in the
fiscal year beginning August 31, 2003. With large numbers of new stores
planned to open in urban markets, the Company expects that its new stores
sales performance will continue to improve. Assuming the sluggish retail
sales environment continues, the Company's preliminary estimate is for net
income per diluted share of Common Stock in fiscal 2004 to continue to
increase in the 14% to 16% range.
To serve the growing number of stores, a 907,000 square foot distribution
facility in Odessa, Texas, will begin shipping goods next month. The Company
has begun planning for construction of an eighth distribution center, which is
expected to be in operation by December 2004.
The Company also announced that in the third quarter ended May 31, 2003,
it had purchased in the open market 420,000 shares of the Company's Common
Stock at a cost of $13,192,000. As previously reported, the Board of
Directors in October 2002 authorized the purchase of up to five million shares
of Common Stock from time to time as market conditions warrant, and through
the third quarter ended May 31, 2003, the Company has purchased 2,202,200
shares of Common Stock at a cost of $65,851,000.
Family Dollar will host a conference call on Wednesday, June 25, 2003, at
10:00 A.M. ET to discuss the financial results for the third quarter ended
May 31, 2003. If you wish to listen, please call (334) 420-1230 at least 10
minutes before the call is scheduled to begin. A replay of the call will be
available from 12:00 Noon ET, June 25, 2003, until 6:00 P.M. ET, June 26,
2003, by calling 703-925-2474 and entering the access code 3574760. 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 25,
2003.
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 delays or
interruptions, dependence on imports, changes in currency exchange rates,
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 the 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 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 31, 2003 June 1, 2002
Net Sales $ 1,176,877 $ 1,022,082
Cost of Sales 768,495 666,735
Gross Margin 408,382 355,347
Selling, General and
Administrative Expenses 298,767 259,189
Income Before Income Taxes 109,615 96,158
Income Taxes 40,010 35,098
Net Income 69,605 61,060
Net Income Per Common Share-Basic $.40 $.35
Average Shares-Basic 172,075 173,074
Net Income Per Common Share-Diluted $.40 $.35
Average Shares-Diluted 173,049 174,357
Dividends Declared Per Common Share $.07-1/2 $.06-1/2
For the Three Quarters Ended
May 31, 2003 June 1, 2002
Net Sales $ 3,541,697 3,104,380
Cost of Sales 2,334,962 2,049,875
Gross Margin 1,206,735 1,054,505
Selling, General and
Administrative Expenses 892,092 778,859
Income Before Income Taxes 314,643 275,646
Income Taxes 114,845 100,611
Net Income 199,798 175,035
Net Income Per Common Share-Basic $1.16 $1.01
Average Shares-Basic 172,434 172,641
Net Income Per Common Share-Diluted $1.15 $1.01
Average Shares-Diluted 173,344 173,968
Dividends Declared Per Common Share $.21-1/2 $.19
Consolidated Condensed Balance Sheets (unaudited)
(In thousands, except share amounts)
May 31, 2003 June 1, 2002 August 31, 2002
ASSETS
Current assets:
Cash and cash equivalents $ 246,399 $ 159,536 $ 220,265
Merchandise inventories 771,809 709,024 766,631
Deferred income taxes 53,415 44,718 49,941
Income tax refund receivable -- -- 6,469
Prepayments and other
current assets 30,964 13,255 12,553
Total current assets $1,102,587 $ 926,533 $1,055,859
Property and equipment, net 757,038 657,103 685,617
Other assets 13,931 9,613 13,143
$1,873,556 $1,593,249 $1,754,619
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 523,785 $ 406,498 $ 530,780
Income taxes payable 4,602 10,580 --
Total current
liabilities 528,387 417,078 530,780
Deferred income taxes $ 75,393 $ 54,713 $ 68,891
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par;
authorized and unissued
500,000 shares
Common stock, $.10 par;
authorized 600,000,000
shares $ 18,665 $ 18,569 $ 18,583
Capital in excess of par 81,051 60,445 63,294
Retained earnings 1,280,839 1,087,388 1,118,015
1,380,555 1,166,402 1,199,892
Less common stock held in
treasury, at cost 110,779 44,944 44,944
1,269,776 1,121,458 1,154,948
$1,873,556 $1,593,249 $1,754,619
SOURCE Family Dollar Stores, Inc.
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CONTACT:
George R. Mahoney, Jr., Executive Vice
President of Family Dollar Stores, Inc., +1-704-814-3252
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