Mixed Bag for Family Dollar

CHARLOTTE, NC-By the measure of comp-store sales in its fiscal second quarter of 2005, discounter Family Dollar Stores Inc. did well: comps were up 4.5% in the quarter ended Feb. 26 compared with the same period a year ago. Moreover, comp-store sales for the first half of its fiscal 2005 also traveled in positive territory—up 3.6% over the previous period last year. Sales were up too: at about $1.58 billion in Q2 2005, sales were 13.1% above Q2 2004. In the first half of 2005, sales tallied about $2.96 billion, or 12% above sales in the same period a year ago.

Net income was another matter. In the second quarter of ’05, net income for the company was $80.1 million, or 0.4% below the same period last year. Net income for the first half of 2005 was $134.5 million, or 6.5% below net income of the first half of 2004. “Sales of lower-margin basic consumables continued to be stronger than sales of higher-margin discretionary goods,” noted George Mahoney, EVP, during Tuesday’s earnings conference call, offering a partial explanation for the disparity between good comps and weaker net income.

“Net income for the quarter was basically flat,” said R. James Kelly, vice chairman and CFO, but he added that the Q2′s numbers were actually signs of a positive trend for the company. “After two down quarters, it was good to reverse that trend,” he said. “We’re on the right track to turn income around even more in the future.”