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Dollar General Q2 sales go up 12.5%

26 Aug '05
4 min read

Leading departmental chain store Family Dollar Stores Inc reported net income for the second quarter of fiscal 2005 of $75.6 million, or $0.23 per share, compared to net income of $71.3 million, or $0.22 per share, in the second quarter of fiscal 2004. Earnings per share ("EPS") for the quarter increased five percent over the prior year quarter.

As previously disclosed, excluding adjustments made in the second quarter of fiscal 2004 to reduce certain income tax-related liabilities and related interest accruals by $7.4 million, net income for the second quarter of fiscal 2004 would have been $63.9 million, or $0.19 per share. Excluding last year's adjustment, fiscal 2005 results equate to a 21 percent growth in EPS.

Net sales for the second quarter ended July 29, 2005, were $2.07 billion, a 12.5 percent increase over net sales of $1.84 billion for the same period of fiscal 2004. The increase is primarily a result of 633 net new stores and a same-store sales increase of 3.9 percent.

As a percentage of sales, gross profit for the fiscal 2005 second quarter declined to 28.6 percent from 29.2 percent for the comparable period in fiscal 2004. The decrease in the gross profit rate is primarily attributable to: 1) lower sales, as a percent of total sales, of the Company's home products, basic clothing and seasonal categories, all of which have higher than average markups; 2) higher transportation costs, primarily resulting from increased fuel expenses; 3) increased inventory markdowns taken in connection with the Company's per-store inventory reduction initiatives; and 4) the unfavorable impact (17 basis points) resulting from the expansion from fiscal 2004 of the number of departments used in the Company's retail inventory method calculation of merchandise inventories and related profit margin ("RIM expansion").

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