Family Dollar's Messiah

This article was originally published by Seeking Alpha on June 9, 2014 
 
By Sarfaraz A. Khan 

 

Carl Icahn has just become the biggest shareholder of Family Dollar. Icahn’s arrival can start another round of takeover speculations. Family Dollar has lagged behind its rivals and needs a major overhaul.
 

Carl Icahn, of Icahn Enterprises, has just become the biggest shareholder of Family Dollar by purchasing a 9.39% stake in the company. The struggling dollar-store chain operator has been eyeing a turnaround following years of underperformance.

Family Dollar Keeps Falling Short

This article was originally published by TheStreet on May 13, 2014

By Sarfaraz A. Khan. Research Asst. Gohar Yousuf

NEW YORK (TheStreet) -- Family Dollar (FDO_) has been struggling -- and it looks like it's about to get worse.

The company's revenue and income could fall in the coming years due to the closure of more than 300 stores, a drop in the pace of new store openings, and price cuts. Its competitors, on the other hand, aren't slowing down. As a result, Family Dollar could see its market share shrink.

Stay Away From This Dollar Store

This article was originally published by GuruFocus

By Sarfaraz A. Khan, Research Assistant: Gohar Yousuf
February 28, 2014

The current economic environment in the U.S., with sluggish economic recovery, slow growth of the labor market and cautious consumers, seems ripe for the growth of dollar stores. Despite the favorable business environment, Family Dollar (FDO) continues to struggle. The store has disappointed its investors with an earnings miss and a significant cut in its guidance. Moreover, the COO’s exit has further exacerbated the situation.

The company’s shareholders did get some support from Credit Suisse in which the bank suggested that Wal-Mart (WMT) should consider acquiring Family Dollar. This would give a significant boost to Wal-Mart’s efforts to expand its small stores. As a result, Family Dollar’s shares rose 1.7% on Wednesday.

Earnings Miss

In its previous quarterly results which included the holiday season, Family Dollar ended up giving more discounts to customers than it had originally planned.

Although the company’s quarterly sales rose 3.2% to $2.50 billion, its net income dropped 2.8% to $78 million, or $0.68 per share. Family Dollar missed both revenue and earnings estimates by $10 million and $0.01 per share, respectively.

The company showed strongest performance in the consumables category, which accounts for 75% of its quarterly sales. In this segment, Family Dollar witnessed a 4.7% sequential growth in sales. However, this growth was driven largely by low margin products. Therefore, the company’s income dropped, despite an increase in revenues.

Moreover, Family Dollar has announced that its president and chief operating officer, Michael Bloom, has resigned. Family Dollar has been implementing some significant … read full article at GuruFocus

What Do the Earnings of Discount Stores Reveal?

From The Motley Fool.
By Sarfaraz A. Khan
Research Assistant: G. Yousuf

The discount retailer Dollar Tree (NASDAQ: DLTR) looks more attractive after it reported solid results as the company has effectively maneuvered itself through challenging business conditions.  On the other hand, earlier this month, its rival Dollar General (NYSE: DG) released its first quarter earnings that met the market’s expectations. But the company lowered its guidance causing a considerable drop in its shares. Unfavorable weather, intense competition, increasing sales of consumables and lower margin goods is having a negative effect on its profitability.