Tags: US | Earns | Family | Dollar | Stores

Family Dollar Shares Fall After It Issues Weak Outlook

Wednesday, 07 Jul 2010 02:30 PM

Shares of Family Dollar Stores Inc. fell sharply in trading Wednesday after the discount retailer forecast fourth-quarter profit short of analysts' expectations.

Family Dollar said its fiscal third-quarter profit jumped 19 percent and its sales trends were strong but it expected to earn 46 cents to 51 cents per share for the fourth quarter and between $2.53 and $2.58 per share for the full year. Analyst surveyed by Thomson Reuters were expecting to see 53 cents per share for the fourth quarter and $2.59 per share for the year.

The guidance may have surprised investors who've come to count on Family Dollar for strong returns during this weak economy. Dollar stores in general have thrived as shoppers turn to them for basics from food to clothing. Family Dollar has been one of the best performers as it took a number of steps to seize on this opportunity.

Raymond James analyst Dan Wewer said the guidance is a mixed bag. Family Dollar regularly beats expectations, suggesting it often gives conservative guidance. But the size of the difference between Wall Street's and management's forecasts could be weighing down the company's stock, Wewer said.

The shares fell $3.48, nearly 9 percent, to $35.93 by early afternoon. They have traded between $25.52 and $42.07 during the past year.

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