US discount retailer Family Dollar Stores today (29 June) booked “record” third-quarter sales and profits.
The company reported a 6.5% increase in net income to US$111.1m for the three months to 28 May. Operating profit was up 8.4% at $170.1m.
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The rise in profits came as Family Dollar reported a 7.8% rise in net sales for the quarter to $2.15bn. Comparable-store sales were up 4.7% on increased customer traffic and a rise in the average value of a transaction.
In March, Family Dollar rejected a takeover bid from activist US investor Nelson Peltz. Trian Group, Peltz’s fund, first acquired shares in Family Dollar last July and said then that the retailer’s performance could improve.
Family Dollar chairman and CEO Howard Levine has defended the company’s record and said the retailer had “accomplished much this quarter to position us to capture greater market share and execute our longer-term vision”.
He added: “I remain confident that our strategy of providing customers with value and convenience, combined with the impactful investments we are making to improve the shopping experience in our stores and our profitability, will continue to deliver strong shareholder returns.”
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By GlobalDataHowever, the retailer’s gross margin as a percentage of sales dipped from 36.6% in last year’s third quarter to 36.2% this year. Family Dollar pointed to “stronger” sales of lower-margin consumables, increased promotions and higher freight costs.
