Family Dollar Profit, Sales Rise as Consumers Flock to Discount Stores

Discount retail chain Family Dollar Stores ( FDO) reported solid second-quarter earnings Wednesday, also raising its full-year EPS estimates for the second time.

The Charlotte-based company said its fiscal second-quarter profit was $84.1 million, or 60 cents per share, compared with $63.3 million, or 45 cents per share, in the year-ago period. These earnings matched analyst estimates of 60 cents per share.

Sales for the quarter rose 8.7% to $1.99 billion.

Back in March, Family Dollar said that second-quarter same-store sales, considered the key indicator of a retailer's health, rose 6.4%, easily beating estimates for a 3.6% gain.

In a similar fashion to other discount retailers, Family Dollar has benefited from the economic downturn as more and more shoppers seek out discounts on everyday goods. Family Dollar sells items ranging from paper towels to laundry detergent and food products in over 6,600 stores in 44 states.

The company raised its full-year profit forecast for the second time this year, now expecting sales to increase between 5% and 7%, a rise in same-store sales between 3% and 5%, and EPS of $1.90 to $2.00 per share, up from previous estimates of $1.63 to $1.81 per share. On average, analysts expect full-year earnings of $1.91 per share.

Family Dollar also guided above analyst estimates for the fiscal third quarter, now expecting EPS of 54 cents to 58 cents per share, while analysts expect 51 cents per share.

Shares of Family Dollar rose $1.53, or +4.7%, in late morning trading Wednesday.

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