Family Dollar Stores Inc (FDO.N) posted a higher-than-expected quarterly profit on Friday, helped by shoppers who spent tax rebate checks at the discount retailer and by closely controlling costs.
The company, which prices most of its merchandise below $10, forecast fiscal 2009 earnings that could top analysts' expectations, banking on tight cost controls and strong sales of consumable items like food and household cleaners.
Family Dollar's stores have attracted more consumers squeezed by rising food costs, surging fuel prices, a U.S. housing downturn and credit crunch.
Net income rose to $53.2 million, or 38 cents per share, for its fiscal fourth quarter, ended Aug 30, from $37.8 million, or 26 cents per share, a year ago.
Analysts, on average, expected earnings of 34 cents per share, according to Reuters Estimates.
Sales rose 8.2 percent to $1.77 billion. Sales at stores open at least a year, a key retail gauge known as same-store sales, rose 1.2 percent.
When it reported third-quarter results, Family Dollar said June sales were tracking above initial expectations as U.S. government tax rebate checks made their way into shoppers' hands.
But Chief Executive Howard Levine said at the time that the benefits from tax rebate checks would be relatively short-lived, and the retailer was planning conservatively for Christmas holiday sales.
For fiscal 2009, which ends August 29 next year, the company expects sales to increase 3 percent to 5 percent. Same-store sales are expected to rise 1 percent to 3 percent.
Family Dollar expects to earn between $1.58 per share to $1.78 per share for fiscal 2009.
Analysts expect it to earn $1.68 per share for the year.
The company, which operates more than 6,500 stores, expects to open around 200 new stores in fiscal 2009.
For the first quarter of fiscal 2009, the company forecast sales to rise 4 percent to 6 percent and a same-store sales increase of 2 percent to 4 percent. Family Dollar expects to earn 38 cents per share to 42 cents per share in the quarter.
(Reporting by Aarthi Sivaraman; Editing by Steve Orlofsky)
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