Family Dollar Q3 Net Falls 2.9 Percent; Company Sets New Merchandising Leadership
MATTHEWS, N.C.-With expenses rising and margins declining, Family Dollar's bottom line took a 2.9 percent hit in its fiscal third quarter, to $120.9 million.
Along with presenting its quarterly results, the dollar-store retailer said it has made changes to its merchandising leadership. Michael Bloom, president and chief operating officer, has assumed the merchandising responsibilities held by Paul White, previously executive vice president and chief merchandising officer, who has left the company to pursue other interests. Bloom takes on the role on an interim basis, while Family Dollar conducts a search for White's successor.
Also, Jason Reiser has been appointed senior vice president of merchandising, succeeding John Scanlon, who retired from Family Dollar in March. In his new role, Reiser is responsible for the company's merchandising teams in health, beauty, personal care and household products. He has joined Family Dollar after a 17-year career with Sam's Club, most recently serving as vice president of merchandising for health and family care.
In the quarter, which ended on June 1, selling, general and administrative expenses, although dropping 27 basis points as a percentage of sales, jumped 8 percent in dollars. Interest expense increased by 7.8 percent. Gross margin was down 114 basis points to 34.7 percent.
All three of these items trumped a 9 percent sales gain to $2.6 billion, which included a 2.9 percent uptick in same-store sales. As Howard Levine, Family Dollar's chairman and CEO, explained, the retailer's shoppers "have been forced to make spending choices between basic needs and wants"--with many of them choosing the "basic needs" which involved lower-margin products, over discretionary items at higher tickets.
This situation will prevail over the next few months, according to Levine. "Consistent with market trends, we expect that our customers will continue to face financial headwinds," he said. "We are adapting accordingly, and we are focused on stabilizing gross margin, controlling expenses, improving inventory productivity and driving greater operational efficiencies."