Family Dollar tanks as costs hurt profit

The discount chain's stock falls after a disappointing first-quarter earnings report.

By TheStreet Staff Jan 5, 2011 2:43PM

Dollar store © Randy Faris/2007/CorbisBy Jeanine Poggi, TheStreet

 

Family Dollar Stores (FDO) shares were falling as much as 9% after the discount retailer's fiscal-first-quarter profit missed Wall Street's forecast.

 

During the quarter, the company earned $74.3 million, or 58 cents a share, from $67.8 million, or 49 cents, in the year-ago period. Analysts were calling for a profit of 61 cents a share. By early afternoon, shares had fallen 8.5% to $45.12.

 

Family Dollar chairman Howard R. Levine said the company had its best first-quarter sales performance in more than 12 years. However, lower gross margins and higher freight costs hurt its profit. Its gross margin slipped to 36% from 36.1%.

Family Dollar revenue rose 10% to $2 billion, while same-store sales grew 6.9%, reflecting a boost from candy and food sales.

 

Family Dollar expects full-year earnings in the range of $3.08 to $3.23 a share, in line with forecasts of $3.18. For the second quarter, the company is calling for a profit of between 92 and 97 cents a share, shy of analysts' predictions of $1 a share.

 

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1Comment
Jan 5, 2011 3:38PM
avatar

No over-reaction there by sellers(insert sarcasm here).

What a bunch or morons. 

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