MATTHEWS, N.C.-First-quarter net income for Family Dollar finished essentially dead even with its first-quarter profit from last year, totaling $80.3 million.
The dollar-store retailer was unable to move the bottom-line needle in spite of a gain of 12.7 percent in net sales in the quarter, which ended on Nov. 24. Net sales were $2.4 billion and included a same-store sales gain of 6.6 percent. Howard Levine, Family Dollar’s chairman and CEO, said the top line benefited from early results from its sales-driving initiatives, and from strong performances in consumables, whose sales picked up 18.5 percent in the quarter.
However, Levine acknowledged that those sales-driving efforts eventually pressured gross margin more than the company expected. As a result, gross margin dropped 112 basis points to finish the quarter at 34.1 percent. In addition, selling, general and administrative expenses increased 11.5 percent in dollars—although they fell 31 basis points as a percentage of sales to 28.9 percent.
Looking ahead, Levine said the economic environment as a whole remains difficult to predict. About what lies ahead for Family Dollar, he said, “We are seeing tangible benefits from our margin-enhancing investments in global sourcing and private brands, and as we work to drive further benefit from the investments we are making to expand profitability, I remain confident that our efforts will deliver stronger results as we progress through fiscal 2013 and beyond.”