MATTHEWS, N.C., Dec. 18 /PRNewswire-FirstCall/ -- Family Dollar Stores,
Inc. (NYSE: FDO), a discount store chain operating 5,117 stores in 43 states,
reported the highest first quarter sales and earnings in the Company's
history. For the first quarter ended November 29, 2003, sales were $1,244.7
million, or 12.3% above sales of $1,108.6 million for the first quarter ended
November 30, 2002. Net income was $64.5 million, or 12.2% above net income of
$57.5 million for the first quarter of the prior fiscal year, and net income
per diluted share increased to $.37 from $.33.
The sales gains are attributable to increased sales in existing stores and
to sales recorded in new stores opened in the Company's store expansion
program. Sales in existing stores in the first quarter ended November 29,
2003, versus the comparable period ended November 30, 2002, increased
approximately 2.6%, including increases of approximately 3.0% in hardlines and
1.1% in softlines. Hardlines represented about 77% of sales and softlines
about 23% of sales in the first quarter both this fiscal year and last fiscal
year. The customer count, as measured by the number of register transactions
in existing stores, increased approximately 2.3%, and the average transaction
increased approximately 0.2% to $8.72.
Sales in existing stores in the first quarter ended November 29, 2003,
increased approximately 5.3% in the September reporting period, 1.6% in the
October reporting period and 0.7% in the November reporting period. Sales of
apparel were favorably impacted by cooler weather this September compared to
last September, and adversely impacted by warmer weather this October and
November compared to last October and November. Sales of consumables in the
first quarter ended November 29, 2003, continued to perform well; however,
sales of seasonal merchandise were below the Company's plan, particularly in
the November Thanksgiving holiday period, and adversely impacted overall
hardlines sales. As some retailers have become more promotional during this
period, the Company has followed its everyday low price policy and has had no
special Thanksgiving related advertising or promotional events in its stores.
During the first quarter ended November 29, 2003, 101 new stores were
opened and 26 stores were closed, compared to the opening of 91 stores and
closing of 29 stores during the first quarter ended November 30, 2002. As
previously announced, the Company plans to open approximately 565 stores and
close approximately 60 stores during the fiscal year ending August 28, 2004.
With the 12.2% increase in net income in the first quarter ended
November 29, 2003, the Company has now reported 31 consecutive quarters of
earnings increases on a comparable quarter basis. The gross profit margin as
a percent to sales increased from 34.4% in the first quarter last year to
34.7% in the first quarter this year primarily due to improved initial margins
on merchandise through better sourcing of goods and the continued favorable
impact of supply chain initiatives. Expenses as a percent to sales increased
from 26.2% in the first quarter last year to 26.5% in the first quarter this
year. Sales that were below the Company's plan and continued increases in
workers' compensation costs contributed to the deleveraging of expenses. A
change in the treatment of certain vendor allowances in conformity with a
recent accounting pronouncement also contributed to the increase in the first
quarter this year in both the gross profit margin as a percent to sales and
expenses as a percent to sales. The Company planned its sales of seasonal
goods conservatively and at the end of the first quarter this fiscal year per
store inventories were slightly below the per store inventory level at the end
of the first quarter last fiscal year.
With respect to December sales, the Company previously stated that for the
five week period ending January 3, 2004, the plan is for sales in existing
stores to increase in the 2% to 4% range. Sales to date have been below plan
and, currently, the Company expects sales in existing stores will be in a
range from 0% to 2% above sales in existing stores in the December reporting
period last year. The Company's low to low-middle income customers
traditionally buy trim-a-tree, giftware and other seasonal merchandise late in
the holiday season making it difficult to estimate sales.
When consumers begin to focus again on basic consumable merchandise in
January and February, as opposed to the focus on seasonal goods in November
and December, the Company believes that with its everyday low pricing policy,
sales will rebound to levels that generally were achieved prior to the holiday
selling season. Accordingly, the Company's plan is for sales in existing
stores in both January and February 2004 to increase in the 3% to 5% range.
Assuming sales increases in existing stores for the second quarter ending
February 28, 2004, are in the 2% to 3% range, the Company's revised plan is
for net income per diluted share of Common Stock in the second quarter to
increase approximately 10% to 12%.
For the second half of the fiscal year ending August 28, 2004, the Company
confirmed its previous guidance that its plan is for net income per diluted
share of Common Stock to increase approximately 14% to 16%. This guidance is
based on the assumption that sales in existing stores in the second half of
the fiscal year will increase in the 3% to 5% range. The Company's original
plan was for an increase in existing store sales in the 4% to 6% range.
Although sales are now planned to be lower, the Company has maintained the 14%
to 16% earnings guidance, primarily because it expects the gross profit margin
as a percent to sales in the second half of the fiscal year to exceed the
original plan. This margin expansion is expected primarily due to continuing
improvements in initial margins on merchandise and the favorable impact of
supply chain initiatives.
Family Dollar will host a conference call today, Thursday, December 18,
2003, at 10:00 A.M. ET to discuss the financial results. If you wish to
listen, please call (334) 420-2608 at least 10 minutes before the call is
scheduled to begin. A replay of the call will be available from 1:00 P.M. ET,
December 18, 2003, through December 19, 2003, by calling 703-925-2474 and
entering the access code 3902944. 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,
December 18, 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 First Quarter Ended
November 29, 2003 November 30, 2002
Net Sales $1,244,683 $1,108,637
Cost of Sales 813,358 727,805
Gross Margin 431,325 380,832
Selling, General and
Administrative Expenses 329,826 290,315
Income Before Income Taxes 101,499 90,517
Income Taxes 37,047 33,039
Net Income 64,452 57,478
Net Income Per Common Share-Basic $.37 $.33
Average Shares-Basic 172,353 173,077
Net Income Per Common Share-Diluted $.37 $.33
Average Shares-Diluted 173,641 173,942
Dividends Declared
Per Common Share $.07-1/2 $.06-1/2
Consolidated Condensed Balance Sheets (unaudited)
(In thousands, except share amounts)
November 29, November 30, August 30,
2003 2002 2003
ASSETS
Current assets:
Cash and cash equivalents $ 247,809 $ 160,369 $ 206,731
Merchandise inventories 846,958 810,524 854,370
Deferred income taxes 65,628 52,034 61,769
Prepayments and other
current assets 43,038 20,755 33,622
Total current assets $1,203,433 $1,043,682 $1,156,492
Property and equipment, net 813,399 691,073 812,123
Other assets 19,108 13,024 17,080
$2,035,940 $1,747,779 $1,985,695
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable and
accrued liabilities $ 551,479 $ 492,578 $ 594,660
Income taxes payable 31,048 26,844 671
Total current liabilities 582,527 519,422 595,331
Deferred income taxes $ 84,226 $ 68,869 $ 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 $ 18,715 $ 18,598 $ 18,691
Capital in excess of par 94,133 66,228 87,457
Retained earnings 1,367,118 1,164,315 1,315,600
1,479,966 1,249,141 1,421,748
Less common stock held in
treasury, at cost 110,779 89,653 110,779
1,369,187 1,159,488 1,310,969
$2,035,940 $1,747,779 $1,985,695
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:
George R. Mahoney, Jr., Executive Vice
President of Family Dollar Stores, Inc., +1-704-814-3252
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