Discount Stores Down as Family Dollar’s Results Disappoint

Wednesday, 05 Jan 2011 01:12 PM

 

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Shares of discount store operators declined on Wednesday as Family Dollar Stores Inc. reported lackluster first-quarter earnings and gave second-quarter guidance below Wall Street's expectations.

The Matthews, N.C.-based chain said its quarterly net income rose 10 percent to 58 cents per share, but this missed the 61 cents per share that analysts predicted.

Family Dollar also forecast second-quarter earnings between 92 cents and 97 cents per share. Analysts are looking for higher net income of $1 per share.

The company's stock dropped $3.76, or 7.6 percent, to $45.55 in midday trading. The shares have traded in a range of $27.15 to $51.81 over the past year.

Dan Wewer of Raymond James said in a client note that Family Dollar's stock movement was likely a reaction to the quarterly performance, balance sheet concerns and a slow start to the second quarter.

"Family Dollar's recent performance will likely be viewed as an unfavorable leading indicator for the rest of the sector," he wrote.

Wewer maintained an "Outperform" rating.

Elsewhere in the group, shares of Dollar General Corp. fell 46 cents to $30.08. Dollar Tree Inc.'s stock slid $2.65, or 4.8 percent, to $52.09.

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