On the heels of its less than stellar third-quarter financial results, officials for Family Dollar Stores are seeking to strengthen the value proposition for their customers.
Although third-quarter net sales increased 3.3%, to $2.66 billion, it fell short of company expectations. The company’s restructuring initiatives focus on strengthening its value proposition, increasing operational efficiencies, and improving financial performance.
“We are executing our previously announced restructuring initiatives to improve our performance,” Howard R. Levine, Chairman and CEO of Family Dollar Stores, said in a release. “Our recent investment to permanently lower prices is resonating with customers; we are seeing savings from our workforce optimization efforts; and we are on track to close approximately 370 underperforming stores by the end of the fiscal year. We remain confident that these steps will position the company to improve our financial performance and deliver higher long-term shareholder returns.”
Levin added that the company’s results reflect the “economic challenges facing our core customer and an intense competitive environment. We are pleased that our comparable store sales results in the third quarter in all four merchandise categories improved relative to our second quarter results. Although our sales results remain below our expectations, we are encouraged by the improving trends.”
Comparable store sales for the 13-week period decreased 1.8% as a result of fewer customer transactions, partially offset by an increase in the average customer transaction value.
Net income for the third quarter of fiscal 2014 was $81.1 million. Adjusted third quarter fiscal 2014 net income was $96.5 million, compared to $120.9 million in the third quarter of fiscal 2013.
During the third quarter of fiscal 2014, the company opened 111 new stores, closed three stores, and renovated, relocated, or expanded 266 stores.
As part of its ongoing business review, the company plans has:
- Lowered prices on nearly 1,000 basic items, investing more than $50 million, on an annualized basis, to deliver more compelling values to customers;
- Reduced corporate overhead and re-aligned key organizational functions to improve execution and reinforce a commitment to being an efficient, low-cost retailer;
- Launched a process to close approximately 370 underperforming stores in the second half of fiscal 2014; and
- Made plans to slow new store growth beginning in fiscal 2015. The company now expects to open 350-400 new stores in fiscal 2015, down from approximately 525 new stores in fiscal 2014.
What’s more, the company is investing in longer-term initiatives to drive more profitable growth. These initiatives include:
- Building on efforts to capture more food trips, the company intends to further expand its cooler program beginning in fiscal 2015;
- Continuing to expand traffic-driving categories with a multi-year rollout of beer and wine, beginning in fiscal 2015; and
- Leveraging the scale and considerable diversity of the chain to launch a multi-year clustering initiative designed to enhance store productivity.