Family Dollar Stores Inc. on Wednesday reported sales and profit
that met Wall Street expectations, despite severe winter weather at
the end of February and lower transaction values.
"While our trends in late-February were adversely impacted by
severe winter weather, our sales trends in March rebounded nicely,
reflecting both improved traffic trends and the benefit of an
earlier Easter," said Family Dollar Chief Executive Howard R.
Levine in a release.
Family Dollar declined to offer guidance for the year, citing
its impending deal to be bought by Dollar Tree Inc., but said its
same-store sales grew a strong 3.7% in March.
The results come as Family Dollar and Dollar Tree near
regulatory approval for their merger.
On Tuesday, Dollar Tree said the Federal Trade Commission has
substantially completed its review of the acquisition and
identified about 340 stores for divestiture. Dollar Tree intends to
close the merger in May but said the timing is subject to certain
factors beyond its control, including FTC approval.
After the merger, Dollar Tree will have about 13,000 stores and
$19 billion in revenue and will likely overtake Dollar General
Corp. as the biggest dollar chain in the U.S. Dollar General, which
has 11,789 stores and posted $18.9 billion in revenue in 2014, had
also pursued a deal with Family Dollar, offering about $9 billion
in cash for the retailer, but was rebuffed by the company over
antitrust concerns.
The consolidation comes as consumers remain price-conscious amid
uneven economic recovery, forcing discount retailers to squeeze
more costs out of their operations to keep prices low.
Family Dollar, for its part, has moved to a more promotional
model to one that depends on everyday lower prices. The strategy
has squeezed margins, though the company said it is now seeing key
categories stabilize and customer traffic trends improve.
In the latest quarter, margins edged up to 33.3% from 33.2% a
year earlier.
Same-store sales grew 0.5% as an increase in the number of
customer transactions was offset by a decrease in transaction
value. Consensus Metrix had forecast 1.8% growth in the metric.
Overall, for the quarter ended Feb. 28, Family Dollar posted a
profit of $76.7 million, or 67 cents a share, down from $90.9
million, or 80 cents a share, a year earlier. Excluding merger fees
and other special items, earnings were 74 cents a share.
Net sales grew 3% to $2.8 billion.
Analysts projected earnings of 73 cents a share and revenue of
$2.8 billion.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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