MATTHEWS, N.C. (AP) — Family Dollar plans to cut some jobs
and close about 370 underperforming stores as it tries to reverse
sagging sales and earnings. The discount store operator will also lower
prices on about 1,000 basic items.
Family Dollar did not provide details on how many jobs were expected to be eliminated.
The
chain said the store closings and job cuts should reduce annual
operating expenses by $40 million to $45 million, starting with the
fiscal third quarter. Family Dollar Stores Inc. currently has more than
8,100 stores in 46 states.
The job cuts and store closings are
estimated to result in an approximately $85 million to $95 million
restructuring charge during fiscal 2014’s second half.
The
Matthews, N.C., company also said it will slow new store openings
beginning in fiscal 2015 to bolster its return on investment. It now
anticipates opening 350 to 400 new stores. In fiscal 2014 it had about
525 new stores.
The announcement came as Family Dollar reported
its profit and revenue declined in the fiscal second quarter, which was
hampered by bad winter weather.
Chairman and CEO Howard Levine
said in a statement that the poor weather led to numerous store
closings, disrupted merchandise deliveries and higher-than-expected
utility and store maintenance expenses.
The quarter that ended
March 1 included the critical holiday shopping season, which Levine said
was "challenged" because shoppers had tighter financial constraints and
rivals were more promotional.
Family Dollar reported that its net
income dropped to $90.9 million, or 80 cents per share, from $140.1
million, or $1.21 per share, a year earlier. Revenue fell to $2.72
billion from $2.89 billion. Analysts surveyed by FactSet expected
earnings of 90 cents per share on revenue of $2.77 billion.
Last year’s quarter included one extra week.
Family Dollar said it believes the bad winter weather hurt its earnings by at least 5 cents per share.

Sales
at stores open at least a year, a key gauge of a retailer’s health,
declined 3.8 percent. This figure excludes results from stores recently
opened or closed.
Levine said the company’s quarterly performance
was below its expectations and that it’s started a review of the
business to increase operational efficiencies and boost its financial
performance. Levine said the price cuts, store closings and job
eliminations are part of actions it is taking immediately to lift its
performance during the review.
Looking ahead, Family Dollar
anticipates third-quarter adjusted earnings of 85 cents to 95 cents per
share. Fourth-quarter adjusted earnings are expected in a range of 75
cents to 85 cents per share. Fiscal 2014 adjusted earnings are predicted
between $3.05 and $3.25 per share.
Wall Street is calling for
third-quarter earnings of 98 cents per share, fourth-quarter earnings of
84 cents per share and full-year earnings of $3.38 per share.
Shares of Family Dollar rose 48 cents to $59.55 in morning trading Thursday.
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