Family Dollar Stores Q1 Profit Misses Estimates - Quick Facts

(RTTNews) - Family Dollar Stores, Inc. (FDO) reported that its first quarter net income decreased year-over-year to $41.38 million from $78.03 million. Net income per share was $0.36, compared to $0.68. Excluding fees related to the pending merger with Dollar Tree, Inc. (DLTR), first-quarter net income per share was $0.44.

On average, 22 analysts polled by Thomson Reuters expected the company to report profit per share of $0.62 for the quarter. Analysts' estimates typically exclude special items.

Total net sales increased 2.3% to $2.56 billion from $2.50 billion, a year ago. The company reported that its comparable store sales for the 13-week period decreased 0.4% as a result of slight decreases in both the average customer transaction value and the number of customer transactions. Analysts expected revenue of $2.57 billion for the quarter.

Family Dollar Stores reported that its comparable store sales in December increased 1.2%, with fewer in-season promotional markdowns than last year and growth in customer traffic.

"As expected, the first quarter of fiscal 2015 was very challenging, as we continued our transition from a very promotional merchandising strategy to a more everyday low price strategy. During the quarter, gross margin continued to be pressured by the impact of our pricing investments, as well as strong growth of lower-margin consumable categories, including food and tobacco. Our team did a good job of controlling expenses; however, ongoing topline challenges and continued margin pressures impacted our net profitability," said Howard Levine, Chairman and CEO.