While some retailers struggle to stay competitive (or even solvent) during the recession, the deep-discount retailing sector is having no trouble making money. Family Dollar Stores Inc., for instance, said Wednesday it raised its earnings estimates to $1.63 to $1.81 per share for its fiscal year, which
ends Aug. 29, up from a prior estimate of $1.58 to $1.78. Additionally, Family declared that net income for the
first quarter increased 14.1% to $59.3 million compared with net income of
$51.9 million for the first quarter of fiscal 2008.
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These numbers aren't awe inspiring, but fellow retailers Wal-Mart Inc., Gap Inc. and Macy's Inc. would likely settle for that upward trend in this downward spiraling economy. The three lowered their forecast for future earnings while Macy's Inc. announced Thursday it will close 11 stores in nine states.
Meanwhile, a bevy of recent retail bankruptcies, including discount clothing chains Steve & Barry's LLC and Goody's Family Clothing Inc., as well as KB Toys Inc., have reduced the retailing landscape. But perhaps those losses have become Family Dollar's gain.
"We're gaining market share and driving both increased customer traffic and transaction value. These results reflect our continued focus on providing value for our customers while also managing inventory risk and driving overall profitability," Family Dollar chairman and CEO Howard Levine said.
If the economy continues to worsen, look for the prospects of Family Dollar continuing to brighten as Americans look to stretch their dollars. Family Dollar has paid for investors in 2008, jumping nearly 30%, while the S&P 500 fell 40%. - Gerald Magpily
See Family Dollar press release
