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Weaker-than-expected sales for Family Dollar in Q4

BY Vivian Lee

New York — Family Dollar saw strong growth in refrigerated and frozen food, health aids and tobacco, which buoyed sales in consumables to 8.3% for the fourth quarter ended Aug. 31. Despite the increase, comparable store sales for the quarter were flat.

The company’s total net sales for the quarter increased 5.8% to $2.5 billion compared with total net sales of $2.4 billion in the fourth quarter of fiscal 2012. However, customer traffic and the average customer transaction value were flat during the quarter.

“This morning we reported record sales and earnings results for the fourth quarter and fiscal 2013,” said Howard R. Levine, chairman and CEO. “While the environment was more challenging than expected, I am pleased with our progress. We have increased our market share, we have stabilized margins and we are increasing profitability. Our strategy is working, and we remain on course with our long-term goal to drive continued profitable growth and increase shareholder returns.”

Gross profit for the quarter increased 8.6% to $868.4 million, or 34.7% of net sales, compared with $799.7 million, or 33.8% of net sales, in the fourth quarter of fiscal 2012. As a percentage of net sales, higher markups and lower freight expense were partially offset by the impact of stronger sales of lower-margin consumables, higher markdowns and increased inventory shrinkage.

Net income for the quarter increased 26.3% to $102.2 million compared with $80.9 million in the fourth quarter of fiscal 2012.

The company is taking a cautious approach to fiscal 2014, given uncertain economic environment and how it’s affected consumers.

“Building on the progress we’ve made to increase market share, stabilize gross margin and improve inventory productivity, we will continue to invest in fiscal 2014 to increase our relevancy, provide customers with more value, and drive more trips,” explained Levine. “While the first quarter will be our most difficult sales comparison, as we cycle a 6.6% increase in comparable store sales, these comparisons will ease as we move through the year. An improving sales trend, combined with continued gross margin expansion and tight expense control, should result in higher profitability as we move through fiscal 2014.”

In other company-related news, Family Dollar has entered into a multi-year agreement with Checkpoint Systems that includes the deployment of Checkpoint’s electronic article surveillance solutions in all of its existing and future stores.

The rollout in the chain’s existing 7,900 stores is expected to be completed by December 2014.

For the past three years, Family Dollar and Checkpoint have been analyzing results in test stores across the nation. Based on the results, Family Dollar is installing Checkpoint’s Evolve P10 ECO solution, which is designed to reduce shrink and lower energy costs. (Evolve reduces energy consumption up to 75% over alternatives, according to Checkpoint.)

"We are encouraged by the success we have already experienced in our test stores, and I am confident that installing Checkpoint’s system in all our locations will deliver an immediate impact on our profitability by reducing our shrink and increasing sales," said Chris Nielsen, VP-loss prevention, Family Dollar.

Family Dollar operates more than 7,900 stores in rural and urban settings across 46 states.

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Costco sales rise but miss forecasts in Q4

BY Vivian Lee

New York — Changes in foreign exchange rates had a negative impact on Costco’s comparable store sales for the fourth quarter ended Sept. 1, but the wholesaler still reported increases in both its U.S. and international markets.

The company’s comparable sales for the quarter increased 5%. U.S. comparable store sales increased 5% for the quarter, while international comparable store sales increased 4%.

Excluding the impact of changes in foreign exchange rates, the company’s comparable sales for the quarter increased 5%. U.S. comparable store sales for the quarter increased 5%, while international comparable store sales increased 7%.

Net sales for the 16-week fourth quarter were $31.77 billion, an increase of one percent from $31.52 billion in the 17-week fourth quarter of fiscal 2012 ended September 2, 2012. Net sales for the 52-week fiscal year 2013 were $102.87 billion, an increase of six percent from $97.06 billion in the prior 53-week fiscal year.

Net income for the quarter was $617 million, or $1.40 per diluted share, compared to $609 million, or $1.39 per diluted share, during the prior-year quarter.

Costco currently operates 638 warehouses, including 454 in the United States and Puerto Rico, 85 in Canada, 34 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, nine in Korea and three in Australia. The company plans to open an additional 11 new warehouses before the end of calendar year 2013.

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The Bon-Ton Stores enters Utah market

BY CSA STAFF

The Bon-Ton Stores has signed a lease with Rouse Properties for a new Herberger’s store at Cache Valley Mall in Logan, Utah — its first in the state.

The company expects to begin remodeling the 62,000-sq.-ft. facility in early spring 2014 and to be completed in the second half of 2014.

“We are excited to be entering both a new market and a new state through this latest transaction with Rouse Properties. We believe this is an attractive market for a Herberger’s store and will enhance the overall shopping experience for consumers in this market.”

The Herberger’s store, which will feature a full merchandise assortment, including home, will join J.C. Penney and T.J. Maxx as anchors at the center. In addition, Cache Valley Mall is also home to several specialty stores, including Aeropostale, American Eagle, Buckle, The Children’s Place, Rue21, Bath & Body Works and Justice.

The Bon-Ton Stores, Inc., with corporate headquarters in York, Pa., and Milwaukee, Wis., operates 272 department stores, which includes 10 furniture galleries, in 25 states in the Northeast, Midwest and upper Great Plains under the Bon-Ton, Bergner’s, Boston Store, Carson’s, Elder-Beerman, Herberger’s and Younkers nameplates. The department stores offer a broad assortment of national and private brand fashion apparel and accessories for women, men and children, as well as cosmetics and home furnishings.

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