Family Dollar Stores Inc. (NYSE: FDO) reported second-quarter fiscal 2014 results before markets opened Thursday. The discount retailer reported diluted earnings per share (EPS) of $0.80 on revenues of $2.7 billion. In the same period a year ago, Family Dollar Stores reported EPS of $1.21 on revenue of $2.9 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $90 and $2.77 billion in revenue.

Same-store sales dropped 3.8% in the second quarter, which the company attributed to a decline in customer transactions. The decline was partially offset by an increase in the average transaction value. Second-quarter sales were driven by consumables, primarily refrigerated items, frozen foods and tobacco.

Family Dollar Stores will close about 370 underperforming stores in the second-half of the year and slow its planned opening of new stores from about 525 in 2014 to a total of 350 to 400 in 2015.

The company’s outlook for its third quarter is not particularly rosy. Family Dollar Stores expects same-store sales to fall in the low-single-digit range. EPS for the third quarter are projected in a range of $0.85 to $0.95, which excludes a restructuring charge of $85 million to $95 million, or about $0.13 per share. The company expects a boost of $40 million to $45 million in annualized operating profit beginning in the third quarter. The consensus estimate calls for EPS of $0.98 in the third quarter.

For the fourth quarter, the store expects to post EPS of $0.75 to $0.85 on flat sales, excluding a restructuring charge of $0.37 a share.

The forecast for full-year EPS is now $3.05 to $3.25, excluding some $0.50 in restructuring charges. The consensus estimate calls for EPS of $3.38. Same-store sales for the full year are expected to decline by a low-single-digit amount.

The company’s CEO said:

Our second quarter results did not meet our expectations. The 2013 holiday season was challenged by a more promotional competitive environment and a more financially constrained consumer. … Notwithstanding the macro-economic pressure, competitive environment and severe weather, we are not satisfied with our results, and we hold ourselves accountable for improving our performance.

In addition to the store closings, Family Dollar Stores plans to lower prices on about 1,000 basic items and reduce corporate overhead (i.e., fire people).

Shares were down about 0.8% in premarket trading Thursday, at $58.59 in a 52-week range of $57.28 to $75.29. Thomson Reuters had a consensus analyst price target of around $60.60 before the results were announced.

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