MATTHEWS, N.C.-Third-quarter net income for Family Dollar rode the back of a healthy sales increase to finish up 12.1 percent to $124.5 million.
Net sales for the quarter, which ended on May 26, jumped 9.6 percent to $2.4 billion, including a 5 percent gain in same-store sales. Increases in register transactions and average customer transaction value helped bolster sales. Seasonal, electronics and consumables were the strongest categories for the dollar-store retailer.
Gross margin fell 39 basis points to 35.8 percent, driven down by increased sales in lower-margin consumables, higher markdowns and increased inventory shrinkage. Selling, general and administrative expenses were up 8.5 percent in dollars, but fell back 28 basis points as a percentage of sales to 27.4 percent.
Family Dollar said it expects same-store sales in the fourth quarter to rise between 5 and 7 percent, which will deliver a total sales increase of between 9 and 10 percent. Howard R. Levine, chairman and CEO, said the company launched a number of initiatives late in the third quarter, such as broadening its consumables assortment, “to increase our relevancy to the customer and drive greater store productivity.” Levine said the results of these efforts should be reflected in the fourth-quarter results.