Family Dollar Q2'FY14 net sales slip 6.89%

“While this business review is ongoing, we are taking immediate, strategic actions to improve our performance. First, we have made a significant investment to lower prices on about 1,000 basic items. Second, we are reducing our cost structure through the optimization of our workforce. Third, we will close approximately 370 underperforming stores. Once complete, our workforce reduction efforts and store closures are expected to result in $40 million to $45 million of annualized operating profit benefit, beginning in the third quarter of fiscal 2014. Lastly, we intend to slow new store growth beginning in fiscal 2015 to improve our return on investment. We are confident that these steps will position Family Dollar to deliver stronger returns for our shareholders,” concluded Levine.

 

Fiscal 2014 Second Quarter and First Half Results

Net sales for the second quarter ended March 1, 2014, decreased 6.1% to $2.7 billion from $2.9 billion in the second quarter of fiscal 2013 ended March 2, 2013. Consistent with the National Retail Federation Calendar, the second quarter of fiscal 2014 included 13 weeks as compared to 14 weeks in the second quarter of fiscal 2013. The Company estimates that this extra week contributed approximately $189 million in sales in fiscal 2013.

 

Excluding the impact of the extra week, the Company estimates that sales in the second quarter of fiscal 2014 would have increased 0.4% compared to the second quarter of fiscal 2013. Sales in the second quarter of fiscal 2014 were strongest in the Consumables category, driven primarily by strong growth in refrigerated and frozen food and tobacco. Comparable store sales for the 13-week period ended March 1, 2014, decreased 3.8% as a result of decreased customer transactions, partially offset by an increase in the average customer transaction value.