Family Dollar Stores Q1 2015 EPS down to $0.36 from $0.68
Article continues below
Excluding fees related to the pending merger with Dollar Tree, first quarter fiscal 2015 net income per diluted share was $0.44.
Total net sales in the first quarter of fiscal 2015 increased 2.3% to $2.56 billion from $2.50 billion in the first quarter of fiscal 2014. Comparable store sales for the 13-week period decreased 0.4% as a result of slight decreases in both the average customer transaction value and the number of customer transactions.
75.8%
of total net sales were consumables.
“As expected, the first quarter of fiscal 2015 was very challenging, as we continued our transition from a very promotional merchandising strategy to a more everyday low price strategy.
"During the quarter, gross margin continued to be pressured by the impact of our pricing investments, as well as strong growth of lower-margin consumable categories, including food and tobacco. Our team did a good job of controlling expenses; however, ongoing topline challenges and continued margin pressures impacted our net profitability,†said Howard R. Levine, chairman and CEO.
“As we look to the rest of fiscal 2015, we are focused on driving more profitable sales growth, and the second quarter is off to a solid start. Comparable store sales in December increased 1.2%, with fewer in-season promotional markdowns than last year and growth in customer traffic.â€
“In fiscal 2014, we implemented a number of initiatives designed to drive sales and reposition our cost structure. We invested $50 million, on an annualized basis, to reduce prices in key areas; we closed 377 underperforming stores; and we took actions to reduce corporate overhead and re-align key organizational functions to reduce our infrastructure costs.
"While we are still in the early stages of our turnaround plan, we are beginning to see some stabilization in key areas, and we continue to believe that the strategic actions we have taken will position the Company for better long-term performance,†continued Levine.
Gross profit for the first quarter of fiscal 2015 was $852.9 million, or 33.4% of net sales, compared to $856.8 million, or 34.3% of net sales, in the first quarter of fiscal 2014. As a percentage of sales, the impact of lower markups and stronger sales of lower-margin consumables was partially offset by lower markdowns.
Selling, general and administrative (“SG&Aâ€) expenses in the first quarter of fiscal 2015 were $773.4 million, or 30.3% of sales, as compared to $736.5 million, or 29.5% of sales, in the first quarter of fiscal 2014. Reflecting the decrease in comparable stores sales, many expenses were deleveraged in the quarter. The increase in SG&A, as a percentage of net sales, was primarily a result of higher occupancy costs, including rent, depreciation, property taxes, and utilities.
Operating profit for the first quarter of fiscal 2015 was $70.7 million or 2.8% of sales. In the first quarter of fiscal 2015, the Company incurred $8.9 million in expenses related to the Company's pending merger with Dollar Tree. Excluding these merger expenses, adjusted operating profit in the first quarter of fiscal 2015 was $79.5 million, or 3.1% of sales, as compared to $120.3 million, or 4.8% of sales, in the first quarter of fiscal 2014.
The effective tax rate in the first quarter of fiscal 2015 was 41.7%. The increase in the effective tax rate in the first quarter of fiscal 2015, as compared to the first quarter of fiscal 2014, was primarily due to non-deductible expenses associated with the pending merger with Dollar Tree and lower federal job tax credits.
Various federal jobs tax credit programs expired at the end of 2013 but were retroactively reinstated in December 2014. Excluding the impact of the merger fees, the effective income tax rate in the first quarter of fiscal 2015 was 37.1% as compared to 35.4% in the first quarter of fiscal 2014.
Net income in the first quarter of fiscal 2015 was $41.4 million. Adjusted net income for the first quarter of fiscal 2015 was $50.2 million, excluding fees related to the Company's pending merger with Dollar Tree, compared with $78.0 million in the first quarter of fiscal 2014. ■