MATTHEWS, N.C., Dec. 17 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO), a discount store chain operating 5,571 stores in 44 states,
reported that sales for the first quarter ended November 27, 2004, were
approximately $1.380 billion, or 10.8% above sales of approximately
$1.245 billion for the first quarter ended November 29, 2003. Net income was
$55.4 million, or 14.1% below net income of $64.5 million for the first
quarter of the prior fiscal year, and net income per diluted share decreased
to $.33 from $.37.
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 in the first quarter ended November 27,
2004, versus the comparable period ended November 29, 2003, increased
approximately 2.5%. The Company attributes approximately 1% of this increase
to sales produced by an advertising circular that was distributed in the first
week of November. The 2.5% increase in sales in existing stores includes an
increase of approximately 4.5% in sales of hardlines and a decrease of
approximately 4.6% in sales of softlines. Hardlines represented about 79% of
sales and softlines about 21% of sales in the first quarter this fiscal year.
Hardlines represented about 77% of sales and softlines about 23% of sales in
the first quarter last fiscal year. The customer count, as measured by the
number of register transactions in existing stores, increased approximately
0.3%, and the average transaction increased approximately 2.2% to $8.91.
Sales in existing stores in the first quarter ended November 27, 2004,
increased approximately 1.5% in the September reporting period, 0.9% in the
October reporting period and 5.2% in the November reporting period. Sales of
basic consumables, such as household chemicals, paper products and food, in
the first quarter ended November 27, 2004, were good. However, sales of more
discretionary merchandise, including hanging apparel and home decor, were
below the Company's plan.
During the first quarter ended November 27, 2004, 98 new stores were
opened and 9 stores were closed, compared to the opening of 101 stores and
closing of 26 stores during the first quarter ended November 29, 2003. As
previously announced, the Company plans to open 500 to 560 stores and close 60
to 70 stores during the fiscal year ending August 27, 2005.
The gross profit margin as a percent to sales decreased from 34.7% in the
first quarter last year to 33.4% in the first quarter this year. The
continuing shift in the merchandise mix of sales to more lower margin basic
consumables and less higher margin discretionary goods and increased shrinkage
and freight costs adversely impacted the gross profit margin. Sales of
sharply priced merchandise in the advertising circular in the first week of
November also contributed to the gross profit margin decrease. Expenses as a
percent to sales increased from 26.5% in the first quarter last year to 27.1%
in the first quarter this year. The Company incurred expenses as planned in
connection with the urban initiative and other previously announced
initiatives which are expected to positively impact sales later in the fiscal
year. Hurricane related costs and continued increases in insurance costs,
including workers' compensation, also contributed to the deleveraging of
expenses.
The Company's inventories at the end of the first quarter this year were
approximately 10% higher on a per store basis than at the end of the first
quarter last year, excluding merchandise in transit to the distribution
centers. The Company aggressively set the stores to more effectively leverage
increased holiday traffic. Most of this increase was in basic consumable
merchandise but the Company also selectively invested in more toys and other
seasonal merchandise. Both home decor and hanging apparel inventories at the
end of the first quarter this year were at about the same levels as at the end
of the first quarter last year as the Company positioned these areas more
defensively to better control markdown exposure.
In commenting on the first quarter results, Howard R. Levine, Chairman and
Chief Executive Officer, stated that: "During the first quarter good progress
has been made on the four key initiatives that our Company is focusing on in
fiscal 2005. As previously announced, we believe the urban initiative, the
addition of "treasure hunt" merchandise, the installation of coolers in
selected stores and the continuation of an aggressive new store opening
program will be the growth engines that will drive increases in sales and
earnings.
"The urban initiative is our most significant initiative. During the
first quarter investments in process changes, technology and people have been
made in approximately 300 stores in major urban markets. We are on schedule
with the implementation of the urban initiative to improve the operating
performance, including higher sales and lower shrinkage, in more than 1,000
stores in thirty large urban markets this fiscal year.
"Beginning with this holiday season and continuing throughout the year,
our stores will have additional opportunistically purchased goods to
supplement the basic assortment of merchandise. This "treasure-hunt"
merchandise offers an ever-changing assortment that provides customers with a
more exciting shopping experience and our Company with an opportunity to
favorably impact the gross profit margin.
"Our two other key initiatives in fiscal 2005 also are on schedule.
During the first quarter, planning continued for the installation of coolers
for the sale of perishable food. Selected stores will have coolers installed
beginning next month, and by the end of the fiscal year in August 2005 at
least 500 stores are expected to have coolers. Also, we continue to plan to
open 500 to 560 new stores this fiscal year."
Mr. Levine concluded that: "In this tough retail sales environment for
low and low-middle income consumers, we are investing in these initiatives to
position our Company for continued long-term profitable growth."
With respect to December sales, the Company previously stated that for the
five week period ending January 1, 2005, the plan is for sales in existing
stores to increase in the 2% to 3% range. Based on sales to date, the
Company's plan continues to be for a sales increase in that range.
The Company's plan is for sales in existing stores in the four weeks
ending January 29, 2005, to increase in the 2% to 3% range. As the fiscal
2005 initiatives are implemented, the Company continues to expect that
increases in sales in existing stores will accelerate to the 3% to 5% range in
the fourth quarter ending August 27, 2005.
The investments in these initiatives will result in additional expenses,
as they did in the first quarter, and the Company's current plan is for net
income per diluted share of Common Stock to be between $1.53 and $1.55 in
fiscal 2005.
Family Dollar will host a conference call today, December 17, 2004, at
10:00 A.M. ET to discuss the financial results. If you wish to listen, please
call 888-791-5525 for domestic USA calls and 773-756-4619 for international
calls at least 10 minutes before the call is scheduled to begin. A replay of
the call will be available from about 1:00 P.M. ET, December 17, 2004, through
December 24, 2004, by calling 866-380-6748 for domestic USA calls and
203-369-0349 for international calls.
There also will be a live webcast of the conference call that can
be accessed at http://www.familydollar.com/investors.aspx?p=irhome
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, December 17, 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, 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, legal
proceedings and claims, changes in shrinkage, 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 First Quarter Ended
November 27, November 29,
2004 2003
Net Sales $1,380,245 $1,244,683
Cost of Sales 919,893 813,358
Gross Margin 460,352 431,325
Selling, General and
Administrative Expenses 373,724 329,826
Income Before Income Taxes 86,628 101,499
Income Taxes 31,273 37,047
Net Income 55,355 64,452
Net Income Per Common Share-Basic $.33 $.37
Average Shares-Basic 167,619 172,353
Net Income Per Common Share-Diluted $.33 $.37
Average Shares-Diluted 168,008 173,641
Dividends Declared
Per Common Share $.08-1/2 $.07-1/2
Consolidated Condensed Balance Sheets (unaudited)
(In thousands, except share amounts)
November 27, November 29, August 28,
2004 2003 2004
ASSETS
Current assets:
Cash and cash equivalents $129,690 $247,809 $149,602
Merchandise inventories 1,032,754 846,958 980,124
Deferred income taxes 80,681 65,628 77,341
Income tax refund receivable - - 1,304
Prepayments and other
current assets 25,164 43,038 16,937
Total current assets $1,268,289 $1,203,433 $1,225,308
Property and equipment, net 944,585 813,399 926,514
Other assets 14,543 19,108 15,600
$2,227,417 $2,035,940 $2,167,422
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $695,316 $551,479 $713,551
Income taxes payable 29,139 31,048 -
Total current liabilities 724,455 582,527 713,551
Deferred income taxes $95,055 $84,226 $93,471
Commitments and contingencies
Shareholders' equity:
Preferred stock, $1 par;
authorized and unissued
500,000 shares
Common stock, $.10 par;
authorized 600,000,000
shares $18,796 $18,715 $18,767
Capital in excess of par 113,232 94,133 106,853
Retained earnings 1,563,307 1,367,118 1,522,208
1,695,335 1,479,966 1,647,828
Less common stock held in
treasury, at cost 287,428 110,779 287,428
1,407,907 1,369,187 1,360,400
$2,227,417 $2,035,940 $2,167,422
SOURCE Family Dollar Stores, Inc.
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Related links:
http://www.familydollar.com
http://www.familydollar.com/investors.aspx?p=irhome
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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