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Family Dollar Stores Inc. (FDO - Analyst Report), the operator of self-service retail discount store chains and an S&P 500 company, is slated to report its first-quarter 2013 financial results on January 3, 2013.

The current Zacks Consensus Estimate for the quarter is 74 cents a share, which reflects growth of 8.8% from the prior-year quarter earnings. The estimates in the current Zacks Consensus range between a low of 70 cents and a high of 78 cents a share. The Zacks Consensus estimates revenue at $2,383 million for the quarter.

Management expects earnings between 69 cents and 78 cents for the first quarter and in the band of $4.10 to $4.40 per share for fiscal 2013. The current Zacks Consensus Estimates of 74 cents and $4.25 for the first quarter and fiscal 2013, respectively, dovetail with management’s guidance range. No movement in the Zacks Consensus Estimate was noticed either in the last 7 or 30 days.

With respect to earnings surprises, Family Dollar has met as well as topped the Zacks Consensus Estimate over the last 4 quarters in the range of 0.0% to 1.8%. Family Dollar’s earnings met the Zacks Consensus Estimate in the first, third and fourth quarters of fiscal 2012. It topped the Estimate in the second quarter of 2012 by 1.8%.

The economic recovery is still unstable, and bargain hunters have no choice but to go from one shop to another to grab the best deal, with their principal focus on essential items, such as food. Family Dollar, with its low cost options, remains successful in luring budget-constrained consumers amidst the fragile economic recovery.

The company’s strategic initiatives to improve merchandising, marketing and store operations have resulted in sustained growth in the top and bottom lines. For fiscal 2013, management expects growth of 13% to 15% in net sales and an increase of 12.6% to 20.9% in earnings per share.

The company remains committed toward better price management, cost containment efforts, effective inventory management, private label offering and expanded operating hours that should augur well for sales. Moreover, in order to enhance its market share, Family Dollar intends to focus on both consumables and discretionary categories.

Currently, we maintain our long-term ‘Outperform’ recommendation on the stock. Moreover, Family Dollar, which competes with Wal-Mart Stores Inc. (WMT - Analyst Report) and Dollar General Corporation (DG - Analyst Report), maintains a Zacks #1 Rank that translates into a short-term ‘Strong Buy’ rating.

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