Family Dollar's profits soar

Family Dollar Stores Inc. said Friday fiscal fourth-quarter profit rose 41%, above analysts' expectations as shoppers used their government stimulus checks to buy items like consumables in a softening economy.

The discount-store operator said profit for the period ended Aug. 30 rose to $53.2 million, or 38 cents per share, from $37.8 million, or 26 cents per share, a year earlier.

Sales rose 8% to $1.77 million from $1.63 million.

Analysts polled by Thomson Reuters expected earnings of 34 cents and sales of $1.76 billion.

"Fourth-quarter sales benefited from the effect of the government stimulus checks distributed this summer," Chairman and Chief Executive Howard R. Levine said in a statement. "Strong sales of consumables and effective management of inventory risk, combined with disciplined expense control resulted in robust earnings growth."

Same-store sales, or sales at stores open at least a year, rose 5.6% because of an increase in the average customer transaction value and higher customer traffic.

For the fiscal year ending Aug. 30, profit rose 2% to $233.1 million, or $1.66 per share, from $242.9 million, or $1.62 per share, a year earlier.

Sales rose 2.2% to $6.98 billion from $6.83 billion.

Looking ahead, Levine said, "While we are not immune to the current economic conditions, our strategy of providing customers with value and convenience positions us well within today environment."

For the fiscal first quarter, Family Dollar (FDO, Fortune 500) expects earnings between 38 cents and 42 cents per share, and sales to rise between 4% and 6%. Same-store sales are expected to rise 2% to 4%.

Wall Street expects 40 cents per share and sales of $1.75 billion.

For the fiscal year ending Aug. 29, earnings per share are expected between $1.58 per share and $1.78 per share and sales are expected to rise 3% to 5%. Same-store sales are expected to rise 1% to 3%.

Analysts forecast earnings of $1.70 per share and sales of $7.22 billion.