MATTHEWS, N.C., Aug. 4 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO) reported that net sales for the four weeks ended July 30,
2005, increased 5.7% to approximately $418.8 million from $396.3 million for
the four weeks ended July 31, 2004. For the four-week period ended July 30,
2005, compared with the four-week period ended July 31, 2004, comparable store
sales decreased approximately 1.6%. As of July 30, 2005, there were 5,797
stores in operation, including 57 stores that were opened in fiscal July 2005.
Comparable Stores
Sales Total Comparable Hardline Softline
(millions) Sales Store Sales Sales Sales
Change Change % Change % Change
July $418.8 5.7 % -1.6 % -0.2 % -6.6 %
Quarter-to-date $985.7 7.4 % 0.1 % 1.1 % -3.7 %
Year-to-date $5,380.7 10.4 % 2.3 % 3.6 % -2.5 %
The Company expects comparable store sales in August to be flat to up 2%,
which will result in flat comparable store sales for the fourth quarter. The
Company also expects pressure on its gross margin to continue as a result of
the ongoing shift of the merchandise mix to more lower-margin, basic
consumables and higher freight costs. With comparable store sales below plan
and with the projected decline in the gross margin, the Company's current plan
is for net income per diluted share of Common Stock in the fourth quarter to
be around $0.17, compared to $0.25 in the fourth quarter of the prior fiscal
year. For the full year, the Company expects net income per diluted share of
Common Stock to be around $1.29, compared to $1.50 for the prior fiscal year.
Commenting on July sales, Howard Levine, Chairman and CEO said, "In the
first and second quarters, our consumable division, which represents more than
half of our sales, consistently reported mid-single digit comparable store
sales increases. In March, we made some changes in our consumable area in an
effort to improve our markup in these key categories. Our customers have not
responded as favorably as we had expected, and as a result, July consumable
sales were approximately flat in comparable stores. We have reviewed our
assortment, and we are now replacing weaker items with stronger, sales-driving
brands. These schematic corrections should be completed in stores by the end
of August.
"While we are disappointed with recent results, we continue to believe
that investments in our key initiatives will position Family Dollar for future
profitable growth," continued Levine. "We are encouraged by the results of
our cooler initiative. In July, consumable sales in comparable stores with
coolers increased approximately 7%, reflecting strong customer response to
this initiative. During the next year, we plan to install coolers in 2,500
additional stores. Stores in the Urban Initiative are now reporting sales
growth of 4% higher than would have been expected in the absence of this
program, which is sufficient to offset the increased costs of the program.
While it is too early to fully measure the favorable impact of the program on
shrink results and employee turnover, these benefits are expected to further
improve the performance of these stores. Next year, we will focus on
enhancing the process and improving returns before we expand the program
beyond the 1,300 stores that will be in the program at the end of September.
"After much consideration, I have decided to realign our management team
to better meet the challenges we now face. As previously announced, Robert
George will join our team as Executive Vice President -- Chief Merchandising
Officer. His 19-year experience with a leading retailer will support our
increased efforts to drive higher sales and better inventory returns. The
addition of Robert will also enable me to focus on improving coordination
among our operating groups. To improve communication and create better
synergies to support our strategic initiatives, merchandising, supply chain
and store operations will all report to me. In addition, Dorlisa Flur, Senior
Vice President - Strategy and Business Development, will assume executive
management responsibility for real estate and facility management. In her new
role, Dorlisa will enhance the strategic focus of our real estate investments
and will drive continued process improvement in our store opening and
facilities management practices.
"David Alexander, President and Chief Operating Officer, has resigned to
pursue other opportunities. David has been a valued part of our team, and we
wish him the best.
"Our new management alignment will improve our focus and coordination and
will ensure that we better leverage our key initiatives," concluded Levine.
Family Dollar will host a conference call today, August 4, 2005, at 10:00
A.M. ET to discuss recent developments. If you wish to listen, please dial
1-888-809-8969 for domestic USA calls and 1-210-234-0029 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, August 4, 2005, through August 11, 2005, by dialing 1-866-508-
6480 for domestic USA calls and 1-203-369-1902 for international calls.
There also will be a live webcast of the conference call that can be
accessed at http://www.familydollar.com in the "Investors" section. A replay
of the webcast will be available at the same address after 2:00 P.M. ET,
August 4, 2005.
With over 5,800 stores in a 44-state area ranging as far northwest as
Idaho, northeast to Maine, southeast to Florida, and southwest to Arizona,
Family Dollar is one of the fastest growing discount store chains in the
United States. Family Dollar has provided value-conscious consumers with
competitive prices at neighborhood stores for over forty-five years. Offering
a consistent selection of name-brand and good quality merchandise in an
attractive and convenient shopping environment, the Company is focused on
continuing to meet the needs of shoppers looking for excellent value.
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.
SOURCE Family Dollar Stores, Inc.
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Related links:
http://www.familydollar.com
Company News On-Call:
http://www.prnewswire.com/comp/300875.html
CONTACT:
Kiley F. Rawlins, CFA, Divisional Vice
President, +1-704-849-7496, of Family Dollar Stores, Inc.
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