Discount retailing chain, Family Dollar Stores Inc. (NYSE: FDO) edged up in premarket hours on Wednesday after the company announced 1.4% increase in its fiscal fourth-quarter profits thanks to 10.8% jump in sales of food and other basic commodities in the wake of higher same-store sales even as margins continued to face the pressure.
Family Dollar Stores said that it has recorded a charge of 6 cents a share against a litigation settlement with some of its workers. However, excluding those charges earnings were consistent with street’s estimates.
Family Dollar, which deals in variety of general household products, is attempting to boost its growth by opening more stores and adding more products in shelves. In order to compete with rivals such as Dollar General Corp. (NYSE: DG), FDO expanded varieties in its food, health and beauty segment even as it added increased its product portfolio by including items such as magazine, gift cards and tobacco, during the recently concluded quarter.
Commenting over the results, FDO Chief Executive, Howard Levine said to analysts in a conference call, “Fiscal 2012 was a year of great progress for Family Dollar..We expanded our merchandise assortment to increase our relevancy to our customers; we continued to improve the shoppability of our stores; and we repositioned our leadership team to better support our growth.”
For the quarter which ended on August 25, the company reported net profit of $80.9 million, or 69 cents per share, compared to $79.8 million, or 66 cents per share, in the year quarter. Analysts’ consensual estimate was for earnings of 75 cents a share.
After omitting the expenses related to litigation charges, earnings came at 75 cents a share.
Sales climbed 10.8 percent to $2.36 billion while same-store-sales soared 5.4%.
Gross profit stood at 33.8 percent of net sales against 34 percent a year earlier as increased competition shrunk margins.
For the current quarter, Family Dollar expects to earn between 69 cents and 78 cents per share and $4.10 to $4.40 in the fiscal 2013. Analysts are expecting earnings of 77 cents a share in the current quarter and $4.22 for fiscal 2013.
The company said that it expects same-store-sales to increase 4% to 6% both for the fiscal first quarter and fiscal 2013.
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