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Family Dollar Calls Holiday Disappointing, Narrows Outlook and Quarterly Profit

Family Dollar, bargain shopping, discount


Shares of Family Dollar (FDO) tumbled Thursday morning after the retailer said the holiday selling season proved a disappointment and lowered its fiscal 2013 earnings below Wall Street expectations.

Family Dollar now sees full-year earnings in the range of $3.95 to $4.20 from an earlier forecast of $4.10 to $4.40. Analysts on average are looking for full-year EPS of $4.24.

It sees earnings for the current quarter of $1.18 to $1.28, below the Street’s $1.39 view.

“The holiday selling season proved to be more challenging than we expected as customers faced increasing financial uncertainty,” Family Dollar CEO Howard Levine said in a statement.

Shares of Family Dollar fell more than 13% Thursday morning to $55.55.

On the backdrop of the soft holiday season, Family Dollar posted mixed first-quarter earnings, though margins were weighed down by high restructuring investments as part of the retailer’s efforts to focus on consumables.

The Matthews, N.C.-based operator of general merchandise retail discount stores posted net income of $80.3 million, or 69 cents a share, compared with a year-earlier $80.4 million, or 69 cents. The results fell short of average analyst estimates of 75 cents in a Thomson Reuters poll.

Revenue for the three months ended Nov. 24 climbed 12.7% to $2.42 billion from $2.15 billion a year ago, topping the Street’s view of $2.38 billion. Same-store sales, a key growth metric that measures sales at stores open longer than a year, increased by 6.6%.

“The investments we have made to increase our relevance to the customer are delivering results,” Levine said. “While the near-term economic environment remains difficult to predict, I continue to be excited about the long-term opportunity for our business.”

Sales were driven by high demand for consumables, partially offset by a $65 million increase in capital expenditures.

Follow Jennifer Booton on Twitter at @Jbooton