Boston, MA 04/28/2014 (wallstreetpr) – Family Dollar Stores, Inc. (NYSE:FDO) announced its executives will present at the upcoming Barclays retailer conference on April 30. The event will involve presentations to the participants that mostly include the investment community. The event comes at a time when the company is struggling to keep its head up amid mounting challenges.
As its customers, Family Dollar Stores, Inc. (NYSE:FDO) wants to save money, and it is looking for all possible ways to do it. Although the company and many other general merchandize retailers boomed at the height of the financial recession in 2009, the ground has shifted. The company is currently troubled by declining sales and soaring expenses that means that something must be done if the business is to remain stable or at least grow.
Therefore, the company announced that it will reduce the number of its stores, cut jobs and take more austerity measures. That sounds like a reversal of course given that just recently the company was exuding confidence with plans to establish about 500 new stores.
Weakening performance
Family Dollar Stores, Inc. (NYSE:FDO)’s 2Q2014 was weaker compared with the same quarter a year ago. Nonetheless, it met Wall Street expectations. Revenue in the quarter was $2.7 billion, almost in-line with Wall Street estimate, but declined 6 percent from the same quarter in 2013. Moreover, net income declined to $90.9 million in the latest quarter. Net income in a year ago quarter was $140 million. Earnings per share latest quarter were $0.80, short of a year ago figure by $0.40 and Wall Street estimate by $0.10.
Addressing the problem
Under such weakening financial performance, Family Dollar Stores, Inc. (NYSE:FDO) believes that putting a stop to further store creations and reducing the number of current stores together with job cuts will help support strong earnings in the coming quarters. Therefore, the company expects to reduce about 400 stores from its current list of about 8,100 stores. It also plans to reduce its workforce although the exact number of positions to be chopped is yet to be disclosed.
Once the expected adjustments are made, the company looks forward to realizing up to $45 million in operating profits by the third quarter of the current fiscal year.
