(FDO) Family Dollar Analyst Initiates Coverage at Neutral

We have recently initiated coverage on Family Dollar Stores Inc. (FDO), a self-service retail discount store chain, with a Neutral recommendation and a target price of $29.00, as we anticipate it to perform in line with the industry.

Headquartered in Matthews, North Carolina, Family Dollar offers general merchandise in four categories – consumables, home products, apparel and accessories, and seasonal and electronics ? and sells merchandise at prices from under $1 to $10.

Despite a challenging macro environment, the company’s strategic initiatives to improve the merchandising, marketing, and store operations have resulted in sustained growth in the top and bottom lines. Management now expects a growth of 5% to 7% in net sales, 3% to 5% in comparable-store sales and 3.9% to 13.5% in earnings per share in fiscal year 2010.

We believe there is a tremendous opportunity to increase gross margin through renewed effort on the store brand portfolio. Family Dollar’s point-of-sale technology and store realignment initiatives position it to drive traffic, meet customer demand and improve in-store shopping experience.

However, intense competition from other established players such as Wal-Mart Stores Inc. (WMT) and shift in demand to lower margin consumable merchandise categories triggered by the economic downturn will play spoiler.

Consequently, Family Dollar’s first-quarter 2010 sales underachieved the guidance. Although comparable store-sales for the quarter rose 2.4%, a jump of 30 basis points year-over-year, it remained below its guidance of 3% to 5%. The volatility in sales trend and the financial distress continue to adversely affect sales.

Family Dollar currently operates a chain of more than 6,600 general merchandise retail discount stores in 44 states and the District of Columbia.

Zacks Investment Research

More on this topic (What's this?) Read more on Family Dollar Stores at Wikinvest

Related Posts:

  1. (FDO) Family Dollar Stores, Inc. – Growth And Income – Zacks Rank BuyFamily Dollar Stores, Inc. (FDO) continues to perform well as analysts boost earnings forecasts. Brokerage...
  2. (FDO) Family Dollar Stores, Inc. – Growth And Income – Zacks Rank BuyFamily Dollar Stores, Inc. (FDO) is trading near a 52-week high on bullish earnings forecasts...
  3. (FDO) Family Dollar Stores, Inc. – Momentum – Zacks Rank BuyFamily Dollar Stores, Inc. (FDO) continues to surge higher on strong second-quarter results and bullish...
  4. (FDO) Family Dollar Stores – recently hiked its dividend by 8%Family Dollar Stores, Inc. (FDO) recently hiked its dividend by 8% to 13.5 cents per...
  5. (FDO) Family Dollar Stores – beat analyst estimates in each of the last four quartersFamily Dollar Stores (FDO) reported excellent first-quarter results in early January that sent its share...
  6. (FDO) Family Dollar Stores – company also saw strong holiday salesFamily Dollar Stores, Inc. (FDO), the discount store chain with more than 6,600 stores in...


Search Posts by Tag: | | | | Discount Variety Stores | Services

RSS Feeds by Tag: Family Dollar Stores Inc. | FDO | Wal-Mart Stores Inc. | WMT | Discount Variety Stores | Services |

Other Posts by: | RSS Feed for this author