Sales rose but profits fell at Family Dollar during its third quarter, the discount retailer reported Wednesday, reflecting both strong sales of lower-margin products like tobacco and beauty aids and more money spent on new stores.
Family Dollar’s quarterly sales rose 9 percent compared to the third quarter last year, and finished at $2.57 billion. The Matthews-based retailer said both high customer traffic and a boost in the sales of consumables -- food, health and beauty aids, and tobacco -- helped drive the sales jump. Consumable sales were up 14.8 percent from the same time last year.
Sales at stores open a year or more, considered a key aspect of a retailer’s health, climbed 2.9 percent.
Despite a rise in sales, Family Dollar’s profit dropped by more than $4 million from the same time last year, sinking to $120.9 million in the third quarter. The retailer earned $1.05 per diluted share for the quarter, down from $1.06 last year.
The retailer said the strong sales of lower-margin products compared to discretionary items that offer higher profit margins, like apparel and accessories, contributed to the weakened profits. Apparel and accessory sales were down 8.9 percent in the third quarter.
“Our discretionary sales remained challenged as our costumers have been forced to make spending choices between basic needs and want,” CEO Howard Levine said. “Consistent with market trends, we expect that our customers will continue to face financial headwinds.”
In accordance with their fiscal year 2013 plan, the company has also invested more money in new stores so far this year. The company has spent more than $200 million more in capital expenditures than in fiscal year 2012, primarily due to the increased investment in new stores, it said. The company has opened 380 stores so far this year, 93 more than it had opened at the same time last year. It’s also closed 22 less stores, and now operates more than 7,800 stores across 45 states, it said.
