Family Dollar earnings rise 23%

The discount retailer beats expectations as its stock continues to outperform.

By TheStreet Staff Sep 29, 2010 1:31PM

stock picks, business news and investing advice from thestreetBy Andrea Tse, TheStreet

 

Family Dollar (FDO) predicts first-quarter earnings of between 55 and 60 cents after reporting consensus-beating fourth-quarter earnings.

 

In the year-earlier first quarter, Family Dollar earned 49 cents a share. Analysts expect the discount retailer to earn 57 cents a share in the first quarter. The company expects first-quarter comparable-store sales of between 5% and 7%.

 

Family Dollar said fourth-quarter net income rose 23% to $74 million, or 56 cents a share, from $60.1 million, or 43 cents, a year earlier.

 

Fourth-quarter net sales were $1.96 billion, 8% above sales of $1.81 billion the previous year. Comparable-store sales increased 6.1%. Sales in the quarter were strongest in the consumables category.

The consensus estimate for the quarter was earnings of 51 cents a share on revenue of $1.96 billion.

 

The company plans to purchase $750 million of its common stock. RealMoney.com contributor Timothy Collins wrote, "I believe the $750 million buyback is the main driver behind the move."

 

Colins added, "This is one I could get behind . . . with the buyback and a 1.4% dividend. However, I would be much more comfortable buying at $40 or even $42 rather than chase it over $45."

 

Family Dollar has been a strong performer for most of 2010, gaining 60% year to date. Shares were up 2.7% to $44.50 Wednesday afternoon.

 

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