Family Dollar Stores, Inc. Misses Estimates; Guides Below Analyst Views (FDO)

Family Dollar Stores, Inc. Misses Estimates; Guides Below Analyst Views (FDO)


Before the opening bell on Thursday, Family Dollar Stores (FDO) announced its Q1 results, posting higher net sales while comparable store sales declined.

FDO Earnings in Brief

-Family Dollar reported Q1 revenues of $2.5 billion, up from last year’s Q1 revenues of $2.42 billion.

-Though revenue rose, the company’s net income for the quarter was down to $78 million from last year’s Q1 net income of $80.28 million.

-FDO reported Q1 EPS of 68 cents, which was down slightly from last year’s Q1 EPS of 69 cents.

-Family Dollar just missed analysts’ expectations of 69 cents EPS on revenues of $2.51 billion.

-Looking ahead to next quarter, FDO reported that it expects EPS in the range of 85 cents to 95 cents, which is well below analysts’ views of $1.21. For FY2014, FDO expects EPS in the range of $3.25 to $3.55, which is also below the analyst view of $3.98.

CEO Commentary

Howard R. Levine, FDO’s chairman and CEO, had the following comments about the company’s lackluster report: “Today, we reported sales and earnings for the first quarter of fiscal 2014 that were in-line with our previously provided guidance. As expected, comparable stores sales were pressured, as we anniversaried strong consumable sales growth last year. In addition, our core customers continued to face economic uncertainties, and the promotional environment intensified. While the top line was pressured, we expanded gross margin and managed inventory levels well. In addition, we continued to make progress in our longer-term initiatives. We opened 126 new stores and renovated, relocated or expanded 179 stores. We also expanded our penetration of private brands, increased our percentage of direct imports, and improved our store manager retention.”

No Change to Dividend

Family Dollar made no mention of change to its dividend payout in its quarterly report. The company last raised its dividend last March, and has made similar moves in the year preceding. FDO’s lower-than-expected earnings and forecast could put a damper on potential plans for a dividend raise in 2014, so investors should not expect a large uptick in its payout this March.

Stock Performance

Family Dollar stocks dropped significantly in pre-market trading, and were $3.80, or 5.81%, at the time of writing. The company is 11.89% off its 52-week high.

The Bottom Line

Shares of Family Dollar Stores (FDO) have a yield of 1.57% based on Wednesday’s closing price of $66.34 and the company’s annualized payout of $1.04.

Family Dollar Stores (FDO) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.