US: Sales boost Family Dollar Q3 profits
By Michelle Russell | 29 June 2012
- Net profit increases 12.1% to US$124.5m
- Net sales climb 9.6% to reach $2.36bn
- Operating profit grows 8.2%
US retailer Family Dollar Stores has booked another record quarter, after higher sales led to a double-digit rise in third-quarter profits.
In the three months ended 28 May, net profit increased 12.1% to US$124.5m. Operating profit grew 8.2% to $199.4m.
Net sales climbed 9.6% in the period to reach $2.36bn, while comparable-store sales increased 5%. The increase in sales was due to increased customer traffic and an increase in the average customer transaction value.
Family Dollar Reports 17th Consecutive Quarter of Double-Digit Earnings Per Share Growth
Earnings Per Diluted Share Increased 16.5% to a Record $1.06
Comparable Store Sales Increased 5.0%
Two Sale-Leaseback Transactions Completed, Generating $356.4 Million in Proceeds
Management Reaffirms Guidance for FY12
MATTHEWS, N.C.--(BUSINESS WIRE)--Jun. 28, 2012-- Family Dollar Stores, Inc. (NYSE: FDO) today reported that net income for the third quarter of fiscal 2012, ended May 26, 2012, increased 12.1% to $124.5 million compared with net income of $111.1 million for the third quarter of fiscal 2011. Net income per diluted share for the quarter increased 16.5% to $1.06 compared with $0.91 for the third quarter of fiscal 2011.
"Today, we reported another quarter of strong double-digit earnings growth. I am especially pleased that we delivered these record results even as we launched multiple initiatives late in the quarter to increase our relevancy to the customer and drive greater store productivity," said Howard R. Levine, Chairman and CEO.
"Delivering stronger shareholder returns begins with increasing sales per square foot, and this quarter, we began to implement a number of initiatives to broaden our consumable assortment and satisfy more of our customers' shopping trips. As planned, most of these initiatives began late in the quarter and had little impact on our third quarter sales results," continued Levine. "We are on schedule, and I am very pleased with the progress our teams have made in such a short period of time. As we complete most of these initiatives in the fourth quarter, we will have a fully competitive assortment and will be well-positioned to accelerate sales productivity further."
Third Quarter Results
Total net sales for the third quarter of fiscal 2012 increased 9.6% to $2.36 billion compared with total net sales of $2.15 billion in the third quarter of fiscal 2011. Comparable store sales increased 5.0%. This increase was a result of increased customer traffic, as measured by the number of register transactions, and an increase in the average customer transaction value. Sales were strongest in the Seasonal and Electronics and the Consumables categories.
Gross profit in the third quarter of fiscal 2012 increased 8.4% to $845.3 million compared with $779.8 million in the third quarter of fiscal 2011. Gross profit, as a percentage of net sales, was 35.8% in the quarter compared to 36.2% in the third quarter of fiscal 2011. As a percentage of sales, the impact of stronger sales of lower-margin consumables, higher markdowns and increased inventory shrinkage were partially offset by higher markups resulting from the Company's continued investments in private brands, global sourcing and price management capabilities, and lower freight expense.
Selling, general and administrative (SG&A) expenses, as a percentage of net sales, were 27.4% in the third quarter of fiscal 2012 compared with 27.7% in the third quarter of fiscal 2011. As a percentage of net sales, lower insurance expense and lower store labor expenses were partially offset by higher legal expenses.
Operating profit increased 8.2% to $199.4 million for the third quarter of fiscal 2012 as compared to $184.4 million in the third quarter of fiscal 2011. As a percentage of net sales, operating profit was 8.4% in the third quarter of fiscal 2012 as compared to 8.6% in the third quarter of fiscal 2011.
The income tax rate in the third quarter of fiscal 2012 was 35.8% as compared to 37.5% in the third quarter of fiscal 2011. The lower tax rate was primarily a result of changes in uncertain tax positions and lower state income taxes.
The Company's inventory at May 26, 2012, was $1.39 billion compared with $1.13 billion at May 28, 2011. Average inventory per store at the end of the third quarter of fiscal 2012 was approximately 17% higher than the average inventory per store at the end of the third quarter of fiscal 2011. The increase in inventories was the result of investments to expand the Company's Consumable categories, primarily health and beauty aids and food assortments.
In the first three quarters of fiscal 2012, capital expenditures were $391.4 million compared with $230.3 million in the first three quarters of fiscal 2011. The increase in capital expenditures was primarily a result of increased new store openings, expenditures related to the construction of the Company's 10th distribution center, and investments related to store renovations, relocations and expansions. During the first three quarters of fiscal 2012, the Company opened 287 new stores, closed 43 stores and renovated, relocated or expanded 583 stores.
During the third quarter, the Company completed a sale-leaseback transaction for 137 stores with net proceeds, after transaction expenses, of $177.6 million. In June 2012, the Company completed an additional sale-leaseback transaction for another 137 stores with net proceeds of $178.8 million, after transaction expenses.
During the first three quarters of fiscal 2012, the Company repurchased approximately 1.7 million shares of its common stock for a total cost of $91.6 million. As of May 26, 2012, the Company had the authorization to purchase up to an additional $245.7 million of its common stock.
For the fourth quarter, the Company expects that comparable store sales will increase between 5% and 7% and that earnings per diluted share will be between $0.71 and $0.81, compared with $0.66 in the fourth quarter of fiscal 2011.
For the full year, the Company expects that earnings per diluted share will be between $3.60 and $3.70, compared with $3.12 in fiscal 2011.
The Company's outlook for fiscal 2012 is based on the following assumptions which may or may not prove valid:
An increase in net sales of between 9% and 10%;
An increase in comparable store sales of around 5%;
Approximately 450-500 new store openings and 60-80 store closings;
Gross margin pressure for the full year;
SG&A expense growth of between 6% and 7%;
An effective income tax rate between 36.5% and 37%;
Weighted average diluted shares of approximately 118 million; and
Capital expenditures of between $650 million and $675 million to support new store openings, store renovations, purchases of stores, merchandising initiatives, and expansion of the Company's supply chain.
Original source: http://corporate.familydollar.com/pages/news-releases.aspx
Companies: Family Dollar
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