Family Dollar's profit beats the Street

SAN FRANCISCO (Reuters) - Family Dollar Stores Inc (FDO) reported a 36 percent jump in quarterly profit, topping market estimates, as more shoppers scoured its aisles for low prices on food, shampoo and household cleaners.

The company, whose shares rose 8.1 percent, also gave a current-quarter forecast in line with or above analysts' estimates and said comparable-store sales in June should be up about 2 percent.

Family Dollar, which sells most of its merchandise for below $10, said it had earned $87.7 million, or 62 cents per share, in the third quarter ended May 30, up from $64.7 million, or 46 cents per share, a year earlier.

Analysts on average had expected profit of 59 cents per share, according to Reuters Estimates.

"We were really pleased to see the results," said retail analyst Joseph Feldman of Telsey Advisory Group.

He said the 2 percent rise in June comparable-store sales was impressive given that a year ago, the company benefited from shoppers spending tax rebate cash in its stores.

SALES GAINS

Discounters such as Family Dollar, Wal-Mart Stores Inc (WMT) and Dollar Tree Inc (DLTR) have been attracting more shoppers in the recession as consumers seek out low-priced essentials like food, paper towels and beauty aids in their stores.

Family Dollar has also added 200 new food products, like Triscuit crackers and Kraft salad dressing.

Last month, Family Dollar said third-quarter sales rose 8.2 percent to $1.84 billion, while sales at stores open at least a year, or comparable-store sales, rose 6.2 percent.

For the fourth quarter ending on August 29, the company expects net sales to increase 4 percent to 6 percent, and it forecast a rise of 2 percent to 4 percent in comparable-store sales.

It also forecast fourth-quarter earnings of 39 cents to 43 cents per share, while analysts on average were expecting 39 cents.

Family Dollar shares rose to $30.00 in trading before the before the market opened on Wednesday. They closed at $27.75 Tuesday on the New York Stock Exchange.

Source: Reuters

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