MATTHEWS, N.C. — Family Dollar Stores on Thursday reported that for the third quarter fiscal 2014 ended May 31, net sales increased 3.3% to $2.7 billion. Comparable-store sales for the 13-week period decreased 1.8% as a result of fewer customer transactions, partially offset by an increase in the average customer transaction value. Sales in the third quarter of fiscal 2014 were strongest in the consumables category, driven primarily by strong growth in refrigerated/frozen food and tobacco.
“We are executing our previously announced restructuring initiatives to improve our performance,” stated Howard Levine, chairman and CEO. “Our recent investment to permanently lower prices is resonating with customers; we are seeing savings from our workforce optimization efforts; and we are on track to close approximately 370 underperforming stores by the end of the fiscal year. We remain confident that these steps will position the company to improve our financial performance and deliver higher long-term shareholder returns," he said.
“Our results continue to reflect the economic challenges facing our core customer and an intense competitive environment,” Levine added. “We are pleased that our comparable store sales results in the third quarter in all four merchandise categories improved relative to our second quarter results. Although our sales results remain below our expectations, we are encouraged by the improving trends.”
As part of its ongoing business review, Family Dollar has thus far lowered prices on nearly 1,000 basic items, investing more than $50 million, on an annualized basis, to deliver more compelling values to customers; reduced corporate overhead and re-aligned key organizational functions to improve execution and reinforce a commitment to being an efficient, low-cost retailer; launched a process to close approximately 370 underperforming stores in the second half of fiscal 2014; and made plans to slow new store growth beginning in fiscal 2015.
The company now expects to open 350 to 400 new stores in fiscal 2015, down from approximately 525 new stores in fiscal 2014.
Going forward, Family Dollar is building on efforts to capture more food trips. The company intends to further expand its cooler program beginning in fiscal 2015. Family Dollar will also continue to expand traffic-driving categories with a multi-year rollout of beer and wine, beginning in fiscal 2015. And Family Dollar plans to launch a multi-year clustering initiative designed to enhance store productivity.
For the fourth quarter of fiscal 2014, the company expects that comparable store sales will be approximately flat and that earnings per diluted share will be between $0.75 and $0.85, excluding approximately $0.37 related to restructuring charges. Including the restructuring charges, the company expects earnings per diluted share will be between $0.38 and $0.48.
For the 52-week year ending Aug. 30, 2014, Family Dollar expects that earnings per diluted share will be between $3.07 and $3.17, excluding approximately $0.51 per share related to restructuring charges. Including the restructuring charges, the company expects earnings per diluted share will be between $2.56 and $2.66.