Family Dollar Stores Inc. (FDO): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Family Dollar decided to stick to Dollar Tree and rejected Dollar General's buyout offer on grounds of antitrust concerns. The giant that will arise will have the ability of generating sales of over $18 billion and reach out more consumers through its vast network of stores. Moreover, the deal could bring breather to Family Dollar, which has been in troubled waters for some time now. The heightened competition from other retail bellwethers has affected the company's profitability. In the recently concluded quarter, the company saw its earnings per share declining 35.3% year over year, and missing the Zacks' expectation for the fifth straight quarter. Battered by a competitive retail landscape, Family Dollar has outlined a set of strategic actions to rein in the hay wired financial performance, which has started yielding results. This is well evident from the comps growth of 1.2% in December. Consequently, we upgraded our recommendation on the stock to Neutral.


Overview:

Founded in 1959 and headquartered in Matthews, NC, Family Dollar Stores, Inc. (FDO) operates a chain of self-service retail discount stores in the United States. It offers general merchandise in four categories: Consumables, Home Products, Apparel and Accessories, and Seasonal and Electronics. The company trades in merchandise generally priced in the range from under $1 to $10. The company operates over 8,101 general merchandise retail discount stores across 46 states, as of November 29, 2014.

The company offers general merchandise in four categories: Consumables, Home Products, Apparel and Accessories, and Seasonal and Electronics.

The Consumables category (73% of fiscal 2014 total revenue) consists of household chemicals paper products candy, snacks and other food health and beauty aids hardware and automotive supplies and pet food and supplies.

The Home Products category (10% of fiscal 2014 total revenue) includes domestic items, such as blankets, sheets, and towels housewares giftware and home decor.

The Apparel and Accessories category (7% of fiscal 2014 total revenue) comprises men's and women's clothing boys', girls' and infants' clothing shoes and fashion accessories.

The Seasonal and Electronics category (10% of fiscal 2014 total revenue) includes toys, stationery and school supplies seasonal goods and personal electronics, including pre-paid cellular phones and service.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




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