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Family Dollar Earnings Drop Significantly In Its First Quarter

Family Dollar corporate offices, Matthews, N.C.
Jennifer Lang

Family Dollar saw its first quarter earnings drop significantly. The Matthews-based discount retailer said Thursday the period was a “very challenging” one for the company. 

Family Dollar’s net income fell 47 percent over the same quarter a year ago, from 68 cents to 36 cents a share. The company has struggled to maintain profits as it moves away from promotional pricing to what it calls “everyday low prices.” CEO Howard Levine says, "many of the headwinds we faced in the fourth quarter of fiscal ’14 continued into the first quarter of fiscal ’15."

One of the challenges is that Family Dollar is getting more of its revenue from products with lower profit margins, such as food and tobacco. Levine says that’s why profits were down despite a slight increase in sales.

There’s also instability at corporate headquarters in Matthews. Competitors Dollar Tree and Dollar General are both vying to take over the company. Levine says that’s led some executives to jump ship.

"There’s no question that’s impacted our overall business, with this uncertainty out there, and we’d like to see that come together soon," he says.

Family Dollar shareholders have twice pushed back a vote on a takeover bid from Dollar Tree; they’re waiting for federal regulators to weigh in on a competing bid from Dollar General. That vote is now scheduled for later this month.