The Alabama case, which centered on a claim that Family Dollar was classifying certain employees as salaried managers, making them ineligible for overtime pay, is under appeal but company officials said legal fees could cost the firm up to $45 million, a figure that was included against the company's second-quarter profits. Excluding that litigation charge, profits for the firm was 53 cents per share, 5 cents more than the 48 cents per-share average estimated by analysts.
The Matthews, NC-based company, which operates more than 6,000 stores, said despite that legal setback, second-quarter sales remained strong, rising 9.4% overall to $1.74 billion, and increasing 3.2% at stores open at least a year.
Aiding that sales growth was an "urban initiative" launched last year to add coolers to stores to further attract customers. The company expects to have coolers in about 3,500 stores by the end of August. Enhanced food assortment and a continued focus on its treasure hunt merchandise strategy also helped sales grow, execs at the company said.
For the third quarter, Family Dollar expects comparable store sales to increase 4% to 6%, bringing in earnings of between 33 cents and 36 cents per share, on par with analysts' average expectations of 36 cents for the quarter. The company said it expects full-year earnings, excluding the litigation charge, to be $1.37 to $1.42 per share excluding the litigation charge. Analysts expect earnings to be $1.36.
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