Shares have dropped 6.8% to $61.81 after the release of worse-than-expected first-quarter earnings. The retailer reported net income of 68 cents a share, missing consensus by a penny. Revenue of $2.5 billion, 3.2% higher than the year-ago period, was $10 million less than expected. Comparable store sales dropped 2.8%.
"As expected, comparable stores sales were pressured, as we anniversaried strong consumable sales growth last year. In addition, our core customers continued to face economic uncertainties, and the promotional environment intensified," said CEO Howard R. Levine in a statement.
Pulling shares lower, the company cut second-quarter earnings guidance to between 85 cents and 95 cents a share. Analysts surveyed by Thomson Reuters had hoped for net income of $1.18 a share. For fiscal 2014 ending August, earnings guidance was in the range of $3.25 to $3.55 a share, significantly less than the $3.92 a share expected.
The Charlotte, N.C.-based business also announced its president and chief operating officer Michael K. Bloom had departed the company to pursue other opportunities. A search for a replacement will be undertaken immediately.
TheStreet Ratings team rates FAMILY DOLLAR STORES as a Buy with a ratings score of A. The team has this to say about their recommendation:
"We rate FAMILY DOLLAR STORES (FDO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
- You can view the full analysis from the report here: FDO Ratings Report