Family Dollar Stores Inc.
) inaugurated its 11th distribution center in St. George, Utah.
The facility covering an area of 817,000 square feet will deploy
400 associates to handle the work and will provide services to
about 800 stores. Running at its optimum capacity, the center
will be capable of shipping 40 million cases in a year.
Last week this self-service retail discount store chain came
out with its fourth-quarter fiscal 2013 results. The quarterly
earnings of 86 cents a share beat the Zacks Consensus Estimate by
a couple of cents, and rose 14.7% from 75 cents delivered in the
prior-year quarter. Consumables category was the driving factor
behind the sturdy results.
The strength witnessed in the Consumables category came on the
back of robust growth across refrigerated and frozen food, health
aids and tobacco. Strong focus on consumables helped Family
Dollar drive business from budget-constrained consumers.
Family Dollar posted a 5.8% increase in revenue to $2,502.3
million from the prior-year quarter, but fell short of the Zacks
Consensus Estimate of $2,556 million.
Moreover, this Matthews, NC-based company said that
comparable-store sales remained flat with the traffic count and
average consumer transaction value also remained even. Earlier,
management had forecasted a 2% rise in comparable-store
Management took a cautious stance while providing guidance for
fiscal 2014. Family Dollar now projects earnings in the band of
65 cents to 75 cents a share for the first quarter and between
$3.80 and $4.15 per share for fiscal 2014.
Consequently, the Zacks Consensus Estimates have been
portraying a downtrend. For the first quarter and fiscal 2014,
the Zacks Consensus Estimates dropped 9.1% to 70 cents and 3.4%
to $4.01 per share, respectively, in the last 30 days.
The economy is still not completely out of hibernation and
consumers will remain cautious on their spending, buying only
basic necessities. Consequently, we could witness more
competitive pricing and new products to attract shoppers.
A price war would definitely eat away margins, which in turn
would affect the company's results. In order to remain
competitive, it would be effective to try out innovative
strategies to lure target consumers. Family Dollar currently
holds a Zacks Rank #4 (Sell).
Other stocks worth considering in the retail industry, include
The TJX Companies, Inc.
Dollar General Corp.
Ross Stores Inc.
), all of which hold a Zacks Rank #2 (Buy).
DOLLAR GENERAL (DG): Free Stock Analysis
FAMILY DOLLAR (FDO): Free Stock Analysis
ROSS STORES (ROST): Free Stock Analysis
TJX COS INC NEW (TJX): Free Stock Analysis
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