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Family Dollar Q2 Rises, Lifts Full Year Earnings Forecast - Update


Family Dollar Stores, Inc. (FDO) on Wednesday reported an 11 percent growth in second-quarter profit, helped by a nearly 9 percent rise in revenues. Earnings per share topped Wall Street consensus. The retail discounter raised the lower end of its annual earnings forecast range.

Howard Levine, chairman and CEO, said, "I'm very pleased to report that we delivered our 16th consecutive quarter of double-digit earnings per share growth. Our investments to improve the shopping experience and broaden our customer appeal are gaining momentum and continue to drive higher returns for our shareholders."

Net income increased to $136.42 million or $1.15 per share from $123.18 million or $0.98 per share in the prior year. On average, 26 analysts polled by Thomson Reuters expected earnings of $1.13 per share for the quarter. Analysts' estimates typically exclude special items.

Total net sales increased 8.6 percent to $2.46 billion from $2.26 billion in the prior year. Analysts expected revenues of $2.46 billion.

Comparable store sales increased 4.5 percent as a result of increased customer traffic and a slight increase in the average customer transaction value. Sales were strongest in the Consumables and Seasonal and Electronics categories.

Gross margin dropped to 34.9 percent from 35.7 percent, reflecting stronger sales of lower-margin consumables as well as higher markdowns and increased inventory shrinkage.

Looking ahead to the third quarter, the company anticipates that earnings per share will be between $1.01 and $1.11, compared to $0.91 in the third quarter of fiscal 2011. The firm sees comparable store sales increasing between 5 percent and 7 percent.

Wall Street expects third-quarter earnings between $0.99 per share and $1.10 per share with a consensus of $1.06 per share.

For the full year, the company now expects that earnings per share will be between $3.55 and $3.75 compared to $3.12 in fiscal 2011. The previous forecast was for earnings in the range of $3.50 to $3.75 per share.

Wall Street looks for full year earnings of $3.61 per share with the estimates varying between $3.42 per share and $3.72 per share.

Annual net sales are expected to grow between 9 percent and 10 percent. Comparable store sales are estimated to grow between 5 percent and 6 percent.

FDO closed on Tuesday at $58.24, down from the prior close of $58.44, on a volume of 1.98 million shares.

by RTTNews Staff Writer

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