Big changes at Family Dollar after earnings miss


Family Dollar (FDO) says it will cut jobs and close 370 under-performing stores as it looks to improve its profitability.

The company saw same-store sales fall 3.8% in FQ2 and expects a decline in FQ3 as well. To help it alleviate any further loss in market share, Family Dollar says it will cut prices on 1,000 items.

FDO +0.8% premarket

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Comments (7)
  • Ron Thomas
    , contributor
    Comments (15) | Send Message
     
    Completely in line with my long standing thesis (that practically no SA readers were sharp enough to read) that prices have been way to high for a long time and that Wal-mart is starting to eat their lunch.
    10 Apr 2014, 09:35 AM Reply Like
  • Transcripts&10-K's
    , contributor
    Comments (1215) | Send Message
     
    Spot on Ron; it will only intensify as WMT targets them directly with the roll-out of smaller format stores.
    10 Apr 2014, 10:26 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1450) | Send Message
     
    Agreed. While their individual packages (sku's) seem cheaper in comparison to the grocery store down the street, it's because the packages are smaller and have less product inside. This strategy of ripping off the customer will work only work for a short time, then eventually the customer catches on when she notices that she can get a cart full of groceries out of the local grocer for less than she can out of FDO.

     

    Once the customer realizes she's been getting ripped off, she'll cherry pick FDO and get the rest of her stuff down the street, or stay out of FDO altogether.
    10 Apr 2014, 10:36 AM Reply Like
  • maybenot
    , contributor
    Comments (6623) | Send Message
     
    good points by all above.

     

    I had been looking & looking at FDO...but kept hesitating. Seemed too high in price for the value.

     

    And I wanted it to have a better moat. As others have pointed out -- WMT is proving to be a beast against FDO and other dollar type stores.
    10 Apr 2014, 11:55 AM Reply Like
  • stevepasek
    , contributor
    Comments (37) | Send Message
     
    I think that you're missing the bigger picture. Family Dollar has stores in some pretty nice neighborhoods here in Chicago. I'm not a pauper, but we buy our cat litter there all the time, as well as certain staple items, because it's just the best price. If they are closing certain stores, I'm guessing the one that just expanded in my yuppie neighborhood isn't one of them. They will rebound, I'm sure, and there might be a nice buying opportunity if there is a market reaction to the announcement.
    10 Apr 2014, 12:36 PM Reply Like
  • Joe Ankawi
    , contributor
    Comment (1) | Send Message
     
    I just sold my position in FDO, I don't see any thing good coming out of it for the next 2-4 quartes, Selling cheaper would lead to lower profits, FDO is struggling with profitability, I am keeping my distance.
    10 Apr 2014, 12:36 PM Reply Like
  • KJP712
    , contributor
    Comments (469) | Send Message
     
    Too many stores to begin with.A step in the right direction.
    10 Apr 2014, 02:00 PM Reply Like
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