Aelflaed blog

Family Dollar expects strong year after Q2 profit beat

Family Dollar Stores Inc's (FDO.N) quarterly profit edged past analysts' revised estimates as shoppers flocked to its stores for low-priced holiday items and groceries, prompting the discount chain to forecast a strong year ahead.

Family Dollar sells most of its items for $10 or less and caters to consumers with household income of $40,000 and below.

For the second quarter ended on February 26, it earned $123.2 million, or 98 cents per share. Analysts, on average were expecting it to earn 97 cents, according to Thomson Reuters I/B/E/S.

The results come barely a fortnight after Family Dollar raised its second-quarter earnings forecast after its sales jumped in the quarter.

At that time, it had estimated a profit of 97-98 cents a share, while analysts were expecting earnings of 95 cents.

The company said total quarterly sales for the quarter rose 8.3 percent to about $2.26 billion, with sales at stores open at least a year, or same-store sales, up 5.1 percent.

The retailer, which has more than 6,880 discount stores in 44 U.S. states, rebuffed a buyout offer from Nelson Peltz's Trian Group earlier this month, saying his offer "substantially" undervalued the company.

Instead, Family Dollar is continuing to open more stores and renovate older ones as it tries to capture more of shoppers' spending on basic items such as food. The company plans to open about 300 new stores and shut some 80-100 doors this year.

For the full year, the company expects to earn $3.13-$3.23 a share, while analysts were expecting earnings of $3.12 -- with sales up 8 to 10 percent.

Shares of the company were trading up at $53.15 on Wednesday before the markets opened. They had closed at $52.40 on the New York Stock Exchange on Tuesday.

(Reporting by Nivedita Bhattacharjee in Bangalore and Jessica Wohl in Chicago; Editing by Saumyadeb Chakrabarty)