Family Dollar Posts 14 Percent Jump In Earnings, Boosts Forecast

January 7, 2009 2:34 p.m. EST

Matthews, NC (AHN) - Family Dollar Stores Inc. announced Wednesday fiscal first quarter earnings rose 14 percent as the company saw same-store sales grow 2.1 percent despite the soft consumer market.

The discount store operator posted first quarter earnings of $59.3 million or 42 cents a share, up from $51.9 million or 37 cents a share in the same period last year.

The result topped analyst estimates for earnings of 40 cents a share, according to Reuters Estimates.

Revenue grew to $1.75 billion, up 4.2 percent from $1.68 billion last year. Same-store sales, up 2.1 percent, helped boost revenue growth. Family Dollar attributed sales growth to increased customer traffic and higher average customer transactions.

"As more families face financial challenges in this environment, they are relying on Family Dollar for more of their everyday needs," said Chairman and CEO Howard R. Levine, in a press releaser. "As a result, we're gaining market share and driving both increased customer traffic and transaction value."

Family Dollar said gross profit margin ticked up to 35 percent in the first quarter, from 34.2 percent last year. Lower freight costs and smaller seasonal markdowns helped boost margins.

The company boosted its sales and earnings outlook, expecting to earn $1.63 to $1.81 a share for fiscal year 2009, up from original estimates of $1.58 to $1.78 a share. Analysts are looking for $1.68 a share.

Family Dollar expects sales for the year to be 4 percent to 6 percent higher with same-store sales adding 2 percent to 4 percent. The company original estimated sales growth of 3 percent to 5 percent.

Shares of Family Dollar jumped on the news and trade 13.5 percent higher at $27.63 in midday action.