Profit Flat for Family Dollar in Q1
MATTHEWS, N.C.-First-quarter net income for Family Dollar finished essentially dead even with its first-quarter profit from last year, totaling $80.3 million.
The dollar-store retailer was unable to move the bottom-line needle in spite of a gain of 12.7 percent in net sales in the quarter, which ended on Nov. 24. Net sales were $2.4 billion and included a same-store sales gain of 6.6 percent. Howard Levine, Family Dollar's chairman and CEO, said the top line benefited from early results from its sales-driving initiatives, and from strong performances in consumables, whose sales picked up 18.5 percent in the quarter.
However, Levine acknowledged that those sales-driving efforts eventually pressured gross margin more than the company expected. As a result, gross margin dropped 112 basis points to finish the quarter at 34.1 percent. In addition, selling, general and administrative expenses increased 11.5 percent in dollars--although they fell 31 basis points as a percentage of sales to 28.9 percent.
Looking ahead, Levine said the economic environment as a whole remains difficult to predict. About what lies ahead for Family Dollar, he said, "We are seeing tangible benefits from our margin-enhancing investments in global sourcing and private brands, and as we work to drive further benefit from the investments we are making to expand profitability, I remain confident that our efforts will deliver stronger results as we progress through fiscal 2013 and beyond."