The 6,200-store chain said it expects first quarter earnings to rise 5.8% to $54.4 million, or 36 cents per share, compared with last year's first quarter when net income was $51.4 million, or 32 cents per share. Revenue for the quarter ended Nov. 25 was up by 6% to $1.6 billion from $1.51 billion the prior year.
The company says the quarterly results were preliminary due to an internal review of the firm's stock option granting practices. The review is the result of a lawsuit filed against the firm, which alleges some of its stock option grants were backdated. Family Dollar said the first quarter results did not take into account any adjustments that may be needed once the review is complete.
The Matthews, NC discount retailer, which opened 87 new stores and closed eight during the quarter, said the quarterly results reflected improved inventory controls and better merchandising efforts that have helped increase customer spending while cutting back on inventory expenses.
Despite a slight drop in customer traffic, sales at stores open at least a year grew 0.9% in the quarter due largely to an increase in customer spending, the company said. Director James Martin said in a conference call with analysts that last year's hurricanes negatively affected comparative store performance by about 1%.
Family Dollar said it expects earnings of between 58 cents and 64 cents for the second quarter, which ends March 3, and a rise in net sales of between 12% and 14%. Full-year earnings are projected to be between $1.57 to $1.69 per share.
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