Family Dollar on its New Strategy to Increase Store Traffic (FDO 4Q05 Conf Call Quotes)

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by: Ezra Marbach

Discount-store operator Family Dollar (ticker: FDO) is newly focused on opening stores in urban markets around the US. According to the company urban markets are the home of greatest consumer consumption and they typically present less competition from big-box retailers. Family Dollar Chairman and CEO Howard Levine explained his company's other strategic initiatives during management's Q4 2005 earnings results conference call:

First, as you know, our customers are spending more and more of their disposable income on fulfilling basic needs. Food is one of the most basic needs and one of the largest spends of our customers. We believe that we can position Family Dollar to meet many of the food fill-in trips our customers make and drive more traffic through our stores. A significant part of this strategy was the installation of coolers in about 1000 of our stores last year. Customer response was immediate with Cooler stores growing sales in the mid-single-digit range. We will more than double the pace of cooler installations next year, targeting around 2500 additional stores and by the end of the fiscal year we will have coolers in more than half of our chain. The increased traffic generated by coolers is expected to not only increase food sales but also sales throughout the store.

Both the Cooler and Urban initiatives drive more traffic through our stores. Leveraging this opportunity is the objective of the Treasure Hunt Initiative. We showed during Christmas -- the Christmas season last year that exciting values sell even during difficult economic times.

(Quotes are from the CCBN StreetEvents transcript.)

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