Family Dollar Announces Lower Earnings, Plans To Sell Beer And Wine
Family Dollar yesterday announced net income for the third quarter fell by 33 percent to $81.1 million. Same store sales dropped 1.8 percent over the same period last year.
It’s been a tough year for Family Dollar. In April, less than a year after it made plans to expand its footprint, the company announced it was closing 370 stores. Then last month, Activist investor Carl Icahn took a 9.4% stake and started pushing the board to put the company up for sale. Now, the Matthews-based discount store chain says earnings fell by a third over the past quarter.
But CEO Howard Levine is optimistic. He told investors on a conference call today the board started a detailed review of the business in January, and he’s starting to see a light at the end of the tunnel.
“We are actively taking steps to improve our results, and our trends are beginning to improve. We have a great business and are in the early stages of a turnaround,” he says.
One of those steps is to start selling beer and wine in most of its stores. The company has been selling alcohol in about 200 stores for the past two years. Levine says customers who buy beer and wine tend to buy more of other products while they’re in the store.
“While it is a lower-margin category, what we’re also excited about is the size of that basket being two to three times what our normal basket---our average basket---is,” he says.
Family Dollar will finish store closings by the end of August. The company’s stock ended the day down 12 cents, at $64.12.