Last month the company postponed a vote to adopt the merger proposal with Dollar Tree Inc. (NASDAQ: DLTR) when not enough votes were present at the special meeting. The month-long delay has given rival bidder Dollar General Corp. (NYSE: DG) another chance to persuade shareholders to accept its higher bid. The postponed vote is now scheduled for January 22, 2015.
Same-store sales dropped 0.4% in the first quarter, which Family Dollar attributed to a decline in both average transaction size and the number of transactions. First-quarter sales were driven once again by consumables, primarily refrigerated items, frozen foods and tobacco that now account for 75.8% of Family Dollar’s total net sales
As might be expected given the pending vote on accepting the merger deal from Dollar Tree, the company did not offer guidance for the next quarter or for the full year. The consensus estimate for full-year EPS is $3.08 on sales of $10.86 billion.
The company’s CEO said:
As expected, the first quarter of fiscal 2015 was very challenging, as we continued our transition from a very promotional merchandising strategy to a more everyday low price strategy. During the quarter, gross margin continued to be pressured by the impact of our pricing investments, as well as strong growth of lower-margin consumable categories, including food and tobacco. … As we look to the rest of fiscal 2015, we are focused on driving more profitable sales growth, and the second quarter is off to a solid start. Comparable store sales in December increased 1.2%, with fewer in-season promotional markdowns than last year and growth in customer traffic.
Shares were down about 0.8% in premarket trading Thursday, at $78.20 in a 52-week range of $55.64 to $80.97. The Dollar Tree offer for Family Dollar works out to $74.50 per share.
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