Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
Basic Chart Interactive Chart
Company Headlines Press Releases Market Stream
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks

Family Dollar Stores (FDO)

Q4 2012 Earnings Call

October 03, 2012 10:00 am ET


Kiley F. Rawlins - Vice President of Investor Relations & Communications

Howard R. Levine - Executive Chairman, Chief Executive Officer and Member of Equity Award Committee

Michael R. Bloom - President and Chief Operating Officer

Mary A. Winston - Chief Financial Officer, Chief Accounting Officer and Executive Vice President


Deborah L. Weinswig - Citigroup Inc, Research Division

John Heinbockel - Guggenheim Securities, LLC, Research Division

Daniel T. Binder - Jefferies & Company, Inc., Research Division

Scot Ciccarelli - RBC Capital Markets, LLC, Research Division

Meredith Adler - Barclays Capital, Research Division

Matthew R. Boss - JP Morgan Chase & Co, Research Division

Joseph Parkhill - Morgan Stanley, Research Division



Good morning. My name is Wendy, and I will be your conference facilitator today. I would like to welcome everyone to the Family Dollar Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. I would now like to introduce Ms. Kiley Rawlins, Vice President of Investor Relations and Communications. Ms. Rawlins, you may begin your conference.

Kiley F. Rawlins

Thank you, Wendy. Good morning, everyone, and thank you for joining us today. For those of you who have dialed in, please note that we have posted accompanying slides on the Investor Relations page of our website.

Before we begin, you should know that our comments today will include forward-looking statements regarding various operating initiatives, sales and profitability metrics and capital expenditures, as well as our expectations for future financial performance. While these statements address plans or events which we expect will or may occur in the future, a number of factors, as set forth in our SEC filings and press releases, could cause actual results to differ from our expectations. We refer you to and specifically incorporate the cautionary and risk statements contained in today's press release and in our SEC filings. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, October 3, 2012. We have no obligation to update or revise our forward-looking statements except as required by law, and you should not expect us to do so.

In addition, this morning, we'll reference some non-GAAP financial measures, which are intended to help investors understand Family Dollar's ongoing business performance. These measures include operating profit, net income, earnings per diluted share, return on invested capital and return on equity, each excluding litigation charges. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is included in our earnings release issued this morning and available on our website.

Our call today will begin with some opening comments from Howard Levine, Chairman and CEO; then Michael Bloom, President and COO, will share an operational update; and Mary Winston, CFO, will review our financial results for fiscal 2012 and our outlook for fiscal 2013. [Operator Instructions]

Now I'd like to turn the call over to Howard Levine. Howard?

Howard R. Levine

Thanks, Kiley, and good morning, everyone. Thanks for joining us today. 2012 was a great year to be a Family Dollar team member, a Family Dollar customer and a Family Dollar shareholder. Operating in a tough economy and a very competitive retail environment, we delivered another great year. In fiscal 2012, total sales increased 9.2%; comparable store sales increased 4.7% as we built nice momentum throughout the year; and on an adjusted basis, we grew earnings per share by about 17% to $3.64; and we improved return on equity to 35.4%.

We finished the year on a high note as comps in the fourth quarter increased 5.4%, our best quarterly performance of the year. Adjusted earnings per share increased about 14% to $0.75, resulting in our 18th consecutive quarter of double-digit EPS growth. This is a great accomplishment that speaks to the consistency of the Family Dollar business model.

2012 was full of significant accomplishments, and I can't remember a time in our company's 53-year history when we accomplished so much so quickly. We accelerated square footage growth and opened 475 new stores, including our first stores in California. These stores are off to a great start, and we are excited about our future growth opportunities. As part of our renovation program that began in the fall of 2010, we renovated, relocated or expanded 854 stores. And we introduced a new store layout that better positions the company for growth in our consumable categories. Our renovated stores continued to outperform the chain in year 1, and more importantly, we continued to see growth in year 2.

We continue to expand our supply chain to support our growth. In June, we opened our 10th distribution center in Ashley, Indiana. Ashley is now fully operational, servicing over 600 stores. With the opening of Ashley, we have reduced stem miles and added capacity to support our square footage growth and rising comps. And this summer, we broke ground on our 11th distribution center in St. George, Utah, which is expected to open in late summer 2013. St. George will be key to supporting our growth out west.

In an effort to become more relevant and to drive more trips, we successfully executed a number of merchandising initiatives in fiscal 2012 to increase our consumable assortment. We expanded our health, beauty and personal care assortment by about 600 SKUs. We introduced new impulse fixtures to carry popular items like candy, snacks, magazines and mall gift cards. We added Pepsi in April, and I'm pleased to report that all stores are now selling both warm and cold Pepsi products.

Read the rest of this transcript for free on