Slow Tax Refunds, Weather Woes Hit Family Dollar Stores

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Family Dollar Stores Inc. (NYSE: FDO) reported second-quarter fiscal 2013 results before markets opened this morning. The discount retailer reported diluted earnings per share (EPS) of $1.21 on revenues of $2.89 billion. In the same period a year ago, Family Dollar Stores reported EPS of $1.15 on revenue of $2.46 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $1.23 and $2.89 billion in revenue.

The company’s CEO said:

Following a difficult December, we were pleased with our sales results in early January. Unfortunately, the unanticipated delay of the 2012 tax refunds impacted our results at the end of January and the beginning of February. We were happy to see sales trends improve towards the end of the quarter as our customers began to receive their tax refunds. As we move into the second half of fiscal 2013, our discretionary sales continue to be challenged by both the financial pressures facing our customers as well as unseasonably cold spring weather. Given this uncertainty, we have adjusted our plans to reflect lower than anticipated Home and Apparel sales as our customers’ discretionary spend is expected to remain constrained.

Those adjusted plans resulted in a change to the store’s outlook for the second half of 2013. Same-store sales growth is now forecast at 2% to 4%, with the third quarter at the low end of that range and the fourth quarter at the high end. Diluted EPS for the third quarter is now estimated at $0.98 to $1.08, and for the fourth quarter the estimate is now $0.85 to $0.95. For the full year, EPS is now forecast at $3.73 to $3.93.

The consensus analysts’ estimate for third-quarter EPS is $1.18. For the full year, the current estimate is $3.98. The weaker outlook will be a drag on shares today.

Shares are down 4.5% in premarket trading this morning, at $57.10, in a 52-week range of $54.06 to $74.73. Thomson Reuters had a consensus analyst price target of around $64.10 before today’s results were announced. That’s down nearly $8.00 in the past 90 days.