Family Dollar's fiscal Q1 earnings grew 8% from a year ago to US$80.4M as revenue rose to US$2.15B from US$2B, revenue at stores open at least a year climbed 4.1%; revenue, EPS narrowly missed Wall Street's expectations

Cindy Allen

NEW YORK , January 6, 2012 (Associated Press) – Family Dollar Stores Inc. said Thursday that its net income rose 8 percent in its first fiscal quarter as demand for its discount products rose in the uncertain economy.

But revenue missed Wall Street expectations, and shares of the Matthews, N.C.-based company fell in after-hours electronic trading.

For the three months ended Nov. 26, the company earned $80.4 million, or 68 cents per share, compared with $74.3 million, or 58 cents per share, in the year-ago period. Analysts polled by FactSet on average were expecting income of 67 cents per share.

Sales were $2.15 billion, up from $2 billion last year but below the average estimate of $2.17 billion. Revenue at stores open a year rose 4.1 percent as a result of a higher average customer transactions and increased customer traffic, the company said. Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.

Shares of Family Dollar fell $1.47, or 2.5 percent, in after-hours trading, to $56.49, after closing up 81 cents at $57.96.

Family Dollar said it opened 101 stores in the quarter, which was almost 20 percent more than in the year-ago quarter. It operates more than 7,100 locations in 45 states.

Gross profit slipped to 35.3 percent from 36 percent a year ago. The decline was due primarily to the impact of stronger sales of lower-margin consumables. Meanwhile, inventories rose 14.3 percent year over year.

"The environment continues to be challenging for our customers, and our experienced team remains focused on executing our long-term strategy," said Howard Levine, chairman and CEO.

The retailer backed its full-year profit guidance calling for earnings per share between $3.50 and $3.75, compared with the average analyst estimate of $3.65.

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