Published September 28, 2011
Family Dollar Stores (FDO) revealed on Wednesday a stronger-than-expected fourth-quarter as sales at its more established stores continued to grow and strategic plans implemented a year earlier started to pay off.
The company also announced a new $250 million stock buyback program, which it plans to fund using cash from operations. The timing and amount of repurchases remain subject to market conditions.
The Charlotte, N.C.-based operator of retail discount stores posted net income for the fourth-quarter of $79.85 million, or 67 cents a share, compared with $73.9 million, or 56 cents a share, in the same quarter last year.
Analysts polled by Thomson Reuters were expecting on average a slightly weaker profit of 63 cents a share. Revenue for the three months ended Aug. 27 hit a record high of $2.13 billion, up 9.1% from $1.96 billion a year ago, matching the Street’s view.
“A year ago we launched an ambitious, multi-year plan to accelerate revenue growth, expand operating margins and optimize our capital structure, and I am pleased to announce that we have executed well against our plans in a very difficult operating environment,” Family Dollar CEO Howard Levine said in a statement.
The retailer saw a 5.5% increase in comparable store sales for the fiscal year and opened 300 new stores. For the quarter, comparable sales climbed 5.6%, which the company attributed to higher traffic and average customer transaction values.
As the company heads into a new fiscal year, it anticipates earnings in the range of $4.50 to $3.75 a share, much higher than the $3.12 it achieved in fiscal 2011. Analysts are expecting a profit of $3.58 a share.
The optimistic view reflects predicted sales increase between 8% to 10%, the opening of as many as 500 stores, and estimated comparable store increases in the range of 4% to 6%.
For the current quarter, Family Dollar predicts earnings in the range of 65 cents to 73 cents a share on comparable store increases between 4% and 6%. Wall Street is looking for earnings of 66 cents in the first period.