Discount chain Family Dollar Stores Inc. said Wednesday that its fiscal first-quarter profit rose 14 percent as more consumers came in for bargains.
The company raised its earnings forecast on the strength of the results and its recent investments. Its shares soared $3.25, up nearly 12 percent, to $30.74 by midday trading on the news.
Family Dollar and other discount-store operators have seen their business grow during the weak economy as more shoppers, who are still feeling the economy's pressures on their lives, searched their stores for deals.
Family Dollar reported that the number of shoppers coming through its stores grew for the sixth consecutive quarter.
While its core customers remain low-income consumers and account for two-thirds of its sales, a growing number of Family Dollar shoppers earn more than $40,000 a year.
Family Dollar said it continues to improve the shopping experience in its stores, selling more food and store-brand products and accepting credit cards and food stamps for payment. And it said those changed aided its growth in the first quarter.
The company's profit rose to $67.6 million, or 49 cents per share, for the quarter that ended Nov. 28, while analysts expected it to report earning 47 cents per share. Family Dollar earned $59.3 million, or 42 cents per share, in the same quarter last year.
Revenue rose 4 percent to $1.82 billion. Analysts polled by Thomson Reuters expected the company to bring in $1.83 billion.
Family Dollar expects to earn 65 cents to 70 cents per share for the second quarter and $2.15 to $2.35 per share for the year. Analysts anticipate profit of 64 cents per share for the second quarter and $2.24 for the year.
BMO Capital Markets analyst Wayne Hood maintained an "outperform" rating on Family Dollar's stock, saying the company still has long-term potential to grow its sales and expand margins through better sourcing, expense control and increased store brand sales and remains attractively priced.
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