Family Dollar Profit Drops

The discount retailer, which operates more than 5,900 stores,earned $51.4 million, or 32 cents per share, in the quarter ending Nov. 26, beating Wall Street estimates of 31 cents per share for the period. In the same quarter last year, the Matthews, NC-based firm earned $54.4 million, or 32 cents per share.

December sales growth was expected to be on the lower end ofcompany projections, however, as customers wait until the last minute to purchase holiday gifts, the discount merchandiser said.Howard Levine, the firm's chief executive officer, said during aconference call that the company's recent growth initiatives, such asits decision to add coolers to stores for perishable items, are gainingmomentum. The firm added coolers to about 400 stores during the quarterand plans to have them in 3,500 stores by fiscal year-end. The coolers,along with other growth initiatives, helped increase quarterly sales by3% at stores open a least a year.

Same-store sales, a key measure ofperformance, have showed continued improvement since August, the companysaid. Total quarterly sales were also up, increasing by 9.5% to $1.5 billion.

Aided by increased sales of toys and fashion accessories, grossmargins also improved during the quarter, expanding to 33.6% from 33.4%.The company had expected its gross margins to be flat.

Family Dollar, which opened 73 new stores during the quarter,also stood by its second quarter earnings forecast of 45 cents to 50cents a share and said its earnings for the fiscal year should bebetween $1.30 and $1.39 per share.