Family Dollar sees increase in profit, remains cautious for 2014

Family Dollar sees increase in profit

Family Dollars has posted a higher quarterly profit, according to the data released Wednesday morning. The company credits the improvement on working to keep costs down while shoppers focused more on everyday necessities, such as food. The company has indicated that it will approach 2014 in a cautious manner.

The discount chain was warned several months ago that the economy was taking a toll on its shoppers. The company earned $102.2 million, or 88 cents per share, for the fiscal fourth quarter, which ended on August 31. That figure was up from $80.9 million, or 69 cents per share, at the same time the previous year.

Sales increased 5.8 percent, climbing to $2.5 billion. Same-store sales, or sales that have been open at least a year, have stayed flat. The company anticipated its same-store sales would see a 2 percent increase during the quarter back in July. However, when looking at that aspect, sales are definitely off.

Founded in 1959, Family Dollar operates more than 7,100 retail stores across 48 states plus the District of Columbia. It is headquartered in Matthews, N.C. The regional chain of variety stores targets the customers who are lower income or middle class. Reports indicate that 90 percent of the store’s inventory sells for $10 or less. The items that are more expensive are competitively priced.

Stagnant sales in retail stores indicate that consumers are still struggling with the economy. Consumers are only spending on necessities, which are obvious as the company has noted that shoppers have stayed focused on purchasing items such as food, rather than home decor. Unemployment rates have remained up in certain areas across the country, and nationwide the average is slightly higher than 7 percent. However, the government shutdown has furloughed more than 800,000 workers, not including the private companies that contract with the government who have been forced to furlough employees as well.

The new jobs that have been created often pay lower wages, so the consumers still have less money to spend. With the current political issues at hand, it is obvious that consumer spending is not up to par at this time. Considering the circumstances, Family Dollar has fared quite well, still reaping a profit.

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About the author

Rob is a analyst and reporter covering stocks and business news.