Family Dollar profit rises

Family Dollar Stores Inc. (NYSE:FDO - news) posted a 6 percent increase in quarterly profit on Wednesday, matching Wall Street forecasts, as sales of cellular phones and food helped make up for lackluster clothing demand.

The discount retailer, which sells items such as toys, cleaning supplies and clothing at its more than 6,200 U.S. stores, said December sales at stores open at least a year remained on track to meet its forecast for flat to 2 percent growth.

"The biggest shopping days of the season have not yet occurred, and results for the full month will be significantly impacted by the next several days," the retailer said.

Family Dollar earned $54.4 million, or 36 cents per share, in the fiscal first quarter, ended November 25, up from $51.4 million, or 32 cents per share, a year earlier.

The earnings per share matched the average of analysts' estimates, according to Reuters Estimates.

Family Dollar said the results did not take into account any adjustments that may be required when it completes a previously announced review of stock option grant policies.

The Matthews, North Carolina-based retailer said an incorrect date was used for accounting purposes on options granted to newly hired employees and in connection with its annual grant of options in one or more years. It has not yet determined the amount of any charges.

As a result of the options review, Family Dollar has not filed its annual report with the U.S.
Securities and Exchange Commission, and does not expect to file its first-quarter report on time. The retailer said it will not repurchase its shares until it completes all required filings.

First-quarter sales rose 6 percent to $1.6 billion, helped by demand for prepaid cellular phone plans. The average amount spent per transaction rose, but the number of shoppers fell.

The discount retailer maintained its earnings forecast for the current year, but said sales of lower-margin items would likely weigh on profitability.

Full-year earnings are expected to be in the range of $1.57 to $1.69 per share. For the second quarter, earnings per share are expected to range from 58 cents to 64 cents per share.

Analysts, on average, expected a full-year profit of $1.65 per share and second-quarter earnings of 62 cents per share, according to Reuters Estimates.