MATTHEWS, N.C.-A 17.7 percent gain in net sales provided the fuel for Family Dollar’s 2.7 percent increase in net income in its second quarter, to $141.1 million.
Net sales reached $2.9 billion in the quarter, which ended on March 2. The top line included a pickup of 2.9 percent in same-store sales, thanks to elevated customer traffic and an increase in average transaction value. Howard Levine, Family Dollar’s chairman and CEO, said the dollar-store retailer delivered “positive results” and “continued market-share gains” despite persistent financial pressures on its customers.
Much of Family Dollar’s sales increase occurred in its consumables category, whose sales jumped 26.6 percent in the quarter. However, the pickup in consumables, a low-margin category, also crimped the company’s overall gross margin, which lost 145 basis points to finish the quarter at 33.4 percent. Selling, general and administrative expenses increased 16.8 percent in dollars but dropped 19 basis points as a percentage of sales, to 25.9 percent.
Family Dollar said it expects same-store sales in the second half of this fiscal year will pick up 2 to 4 percent, with many of the sales and margin trends continuing at least through the third quarter. Sales in more discretionary categories will be under pressure throughout the rest of this fiscal year, the company said.