Family Dollar Stores Inc. said Wednesday that its fiscal first-quarter profit climbed 10 percent as more shoppers came to its stores to purchase items like candy and food.
But the discount store operator's performance missed analysts' expectations and its second-quarter outlook fell short of Wall Street's view. Its stock dropped $3.90, or 7.9 percent, to $45.41 in morning trading.
Family Dollar reported net income of $74.3 million, or 58 cents per share, for the period ended Nov. 27. That's up from $67.6 million, or 49 cents per share, a year ago.
Analysts had expected better, predicting earnings of 61 cents per share.
Revenue increased 10 percent to $2 billion from $1.82 billion, with double-digit sales increases in candy and food. This beat Wall Street's $1.98 billion.
Family Dollar said first-quarter traffic improved but average transaction value was essentially flat.
Revenue at stores open at least a year rose 6.9 percent in the quarter. The figure is a key gauge of a retailer's health because it measures results at existing stores instead of newly opened ones.
The Matthews, N.C.-based company also said revenue at stores open at least a year increased about 4 percent in December, helped by strong sales of toys and consumables.
Family Dollar predicts second-quarter earnings in a range of 92 cents to 97 cents per share and expects revenue at stores open at least a year will rise 5 percent to 6 percent.
But Wall Street is looking for higher second-quarter earnings of $1 per share.
For the year, the chain anticipates fiscal 2011 earnings between $3.08 and $3.23 per share. The company said its guidance assumes revenue at stores open at least a year will climb 5 percent to 7 percent, with total revenue up 8 percent to 10 percent.
Analysts polled by Thomson Reuters expect earnings of $3.18 per share.
Family Dollar currently has more than 6,800 stores in 44 states.
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