Family Dollar Stores

Family Dollar Stores, Inc. (FDO - Analyst Report) is outperforming the market on a record fourth quarter. Analysts are upbeat on earnings forecasts for the year ending August 2009. The company is faring well amid the market mayhem. It continues to outpace the Dow Jones ($DJI), S&P 500 (SPX) and the Nasdaq (COMP).

Company Description

Family Dollar is a discount retail chain operator in the United States. Family Dollar offers a core assortment of name-brand and quality consumable merchandise supplemented by fashion and seasonal merchandise. A Fortune 500 company that is based in Matthews, North Carolina, FDO operates more than 6,500 stores in 44 states.

A Record Quarter

The company recently posted record fiscal fourth-quarter earnings of 38 cents per share, exceeding last year’s 26 cents and topping the consensus estimate by 12%. During the past 5 straight quarters, FDO missed analyst estimates only once and, on average, was 7% ahead of expectations.

Fourth-quarter sales grew 8.2% on a year-over-year basis, reaching $1.766 billion. Sales in comparable stores increased 5.6%.

Family Dollar generated $515.8 million in operating cash flow, versus the year-prior $415.8 million.

"As expected, fourth quarter sales benefited from the effect of the government stimulus checks distributed this summer. Strong sales of consumables and effective management of inventory risk, combined with disciplined expense control resulted in robust earnings growth," said Howard R. Levine, Chairman and Chief Executive Officer. "After a challenging first half, these results reflect how quickly our team has adapted to the changing macro environment. The investments we made to drive revenue growth delivered strong results, and our Associates did a great job managing expenses and inventory risk in this uncertain environment."

The company said it anticipates that strong sales of consumables combined with tight expense control will result in earnings per share for the first quarter of fiscal 2009 of between $0.38 and $0.42 compared with $0.37 in the first quarter of fiscal 2008.

Analysts are upbeat on earnings forecasts for the fiscal first quarter and the year ending August 2009. The first-quarter consensus expectation of 40 cents per share is above last month's 39 cents. For the full year, estimates of $1.69 per share were upwardly revised from $1.66 over the past 90 trading days.

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