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MATTHEWS, N.C. - National discount chain Family Dollar Stores, Inc. said yesterday its net income for the first quarter of fiscal 2007 ended Nov. 25, 2006 was $54.4 million -- a 5.8 percent jump from the same period last year. In a conference call, management said it would expand the chain's commitment to food merchandising.
Net sales were approximately $1.60 billion, or 5.9 percent above sales for the first quarter of fiscal 2006. Sales in comparable stores, adjusted for prepaid cellular services, increased approximately 0.9 percent. The company attributed the improvement to an increase in average customer transaction, which offset a slight decline in customer traffic, as measured by the number of register transactions.
Howard Levine, chairman and c.e.o. said the chain will increase the number of stores in its plan to boost food offerings in 2007, and that expanded food would be available in approximately 2,000 stores by August.
"As a result of the dedicated efforts of all our hard-working associates, Family Dollar is providing customers with a better shopping experience," said Howard R. Levine, chairman and c.e.o, in a statement. "During the last several quarters, we have lowered inventory levels and improved our merchandising presentations. We have also worked to enhance our associate development and retention efforts, and I am especially pleased with the results in stores, where our store manager retention has increased significantly. The result is a more compelling place to shop, work, and invest."
In the first quarter of fiscal 2007, Family Dollar opened 87 new stores and closed eight stores. Looking ahead, the company expects comparable store sales to modestly improve during the remainder of the 53-week fiscal year ending Sept. 1, 2007. It noted that sales growth in lower-margin consumables and low single-digit comparable store sales will pressure its operating margin, but it expects to largely offset this pressure with better purchase markups, lower inventory shrinkage, lower freight expense, and the benefits from a continued refinement of operational and administrative processes. Using these assumptions, the company continues to expect that earnings per share for fiscal 2007 will be between $1.57 and $1.69.
The retailer noted that the financial results are preliminary, due to a previously announced review by the company of its stock option grant practices.