US variety retailer Family Dollar Stores has revealed plans to push ahead with accelerated expansion and development plans after posting strong results yesterday (29 September).
The company revealed plans to increase the rate of new store openings by 50%, with 300 new stores set to open in 2011, as well as renovating 600-800 stores and grow its private label programme.
Speaking on the company’s earnings call, chief financial officer Ken Smith said: “Reaccelerating new store openings is an important component of our plans to drive greater revenues, but we recognise that to deliver sustainable long-term growth, we must balance growth from new stores with growth from comp stores.”
He said the renovation programme will leverage what the company learned from its “Concept Renewal” scheme, while the new outlets will benefit from “enhanced merchandising and supply chain capabilities, a refreshed store technology platform, and a better trained, and more productive workforce”.
The renovated and new stores are focused on three basic customer factors which include ease of use, cleanliness and ambience and customer service. To that end, Smith said the renovation will “impact all three of these drivers of customer satisfaction”.
The new stores will utilise a race track flow, with a store-within-a-store presentation, using “more customer friendly adjacencies and improved navigational signage”. The company is also installing new fixtures to improve customer sightlines, increase merchandising capacity and help simplify restocking and recovery.
Additionally, Family Dollar has expanded its range in consumable categories like food and health as well as adjusting its checkout to encourage more customer interaction “while also supporting our shrink control efforts”, Smith said. Family Dollar is also planning to redesign the exterior of its stores as part of efforts to strengthen its brand identity.
Family Dollar is planning to invest US$100,000-130,000 in renovating each of the 600-800 outlets slated to be rejuvenated, with the first 200 completed before the holiday season begins. Meanwhile, the company is forecasting its total capital expenditure for the year will be between US$300m and $350m.
Regarding its planned expansion for 2011, CEO and chairman Howard Levine said he new outlets would be within the current operating area, which would give it the opportunity to improve leverage from “a management point of view and a marketing point of view and a transportation point of view”.
However, Levine said that the chain was likely to move further west in fiscal 2011, “the state out west on the left coast is certainly out there and we are looking to open stores out in the west. Not in this fiscal year, more than likely some time at the beginning of the following fiscal year,” he said.
Over the fiscal year, Family Dollar saw its net income rise 23% to U$356.1m for the year. Sales grew 6.3% to $7.87bn and comparable-store sales grew 4.8%.