Family Dollar Reports Third Quarter Results

  Family Dollar Reports Third Quarter Results

  *Net Sales Increased 9.0%
  *Comparable Store Sales Increased 2.9%
  *Earnings per diluted share was $1.05

Business Wire

MATTHEWS, N.C. -- July 10, 2013

Family Dollar Stores, Inc. (NYSE: FDO) today reported that for the third
quarter of fiscal 2013 ended June 1, 2013, net sales increased 9.0% to $2.57 
billion and net income per diluted share for the quarter was $1.05 as compared
to $1.06 in the third quarter of fiscal 2012.

“This morning we reported sales and earnings results for the third quarter
that were at the upper-end of our guidance,” said Howard R. Levine, Chairman
and CEO. “Our consumables sales remained strong and we continued to gain
market share. However, our discretionary sales remained challenged as our
customers have been forced to make spending choices between basic needs and
wants. Consistent with market trends, we expect that our customers will
continue to face financial headwinds. We are adapting accordingly, and we are
focused on stabilizing gross margin, controlling expenses, improving inventory
productivity, and driving greater operational efficiencies. I am confident
that we remain well positioned for long-term profitable growth.”

Fiscal 2013 Third Quarter Results

Net sales for the third quarter ended June 1, 2013, increased 9.0% to $2.57
billion from $2.36 billion in the third quarter of fiscal 2012 ended May 26,
2012. Comparable store sales in the quarter increased 2.9%. The increase in
comparable store sales was a result of an increase in the average customer
transaction value and higher customer traffic. Sales were strongest in the
Consumables category, which increased 14.8% during the quarter, driven
primarily by strong growth in food, health and beauty aids, and tobacco.

Gross profit for the quarter increased 5.6% to $892.5 million, or 34.7% of net
sales, compared to $845.3 million, or 35.8% of net sales, in the third quarter
of fiscal 2012. As a percentage of sales, the impact of stronger sales of
lower-margin consumables, increased inventory shrinkage and higher markdowns
was partially offset by higher purchase markups and lower freight expense.

Selling, general and administrative expenses, as a percentage of net sales,
were 27.4% in the quarter compared to 27.6% in the third quarter of fiscal
2012. As a percentage of net sales, lower advertising and distribution center
costs were offset by higher store occupancy costs and store payroll.

The effective income tax rate in the quarter was 36.2% as compared to 35.8% in
the third quarter of fiscal 2012. The increase in the effective tax rate was
due primarily to changes in uncertain tax positions, partially offset by
higher federal tax credits and foreign tax benefits associated with the
Company’s global sourcing efforts.

Net income for the quarter was $120.9 million compared to net income of $124.5
million for the third quarter of fiscal 2012.

The Company’s merchandise inventories at June 1, 2013, were $1.47 billion
compared with $1.39 billion at May 26, 2012. Average inventory per store at
the end of the quarter was 1.0% lower than the average inventory per store at
the end of the third quarter of fiscal 2012.

In the first three quarters of fiscal 2013, capital expenditures were $599.7
million compared with $391.4 million in the first three quarters of fiscal
2012. The growth in capital expenditures was primarily due to increased
investments in new stores. During the first three quarters of fiscal 2013, the
Company spent $242.9 million related to its Fee Development Program, compared
to $69.3 million in the first three quarters of fiscal 2012.

During the quarter, the Company opened 129 new stores, closed 3 stores, and
renovated, relocated or expanded 228 stores.

Outlook

In the fourth quarter, the Company expects to anniversary many of the
sales-driving initiatives that were launched in the fourth quarter of fiscal
2012. Additionally, the Company believes that sales in more discretionary
categories will continue to be pressured. Based on June sales trends, the
Company expects that comparable store sales in the fourth quarter of fiscal
2013 will increase around 2%. The company also expects that gross margin
pressure and SG&A leverage in the quarter will be minimal. The Company
believes that earnings per diluted share will be between $0.82 and $0.87 per
share compared with $0.69 per share in the fourth quarter of fiscal 2012.
Included in the results for the fourth quarter of fiscal 2012 was a litigation
charge of $0.06 per diluted share.

The Company now expects that diluted earnings per share in fiscal 2013 will be
between $3.77 and $3.82 compared to $3.58 in fiscal 2012. The Company's
outlook for fiscal 2013 is based on the following assumptions which may or may
not prove valid:

  *An increase in comparable store sales of between 3% and 4%;
  *Approximately 500 new store openings and 30-50 store closings;
  *Gross margin pressure driven primarily by an expanding mix of lower-margin
    consumables;
  *SG&A leverage driven by an increase in comparable store sales;
  *An effective income tax rate of around 36%;
  *Weighted average diluted shares of approximately 116 million; and
  *Capital expenditures of between $750 million and $800 million primarily to
    support new store development, store renovations, and expansion of the
    Company’s supply chain.

Cautionary Statements

Certain statements contained in this press release are “forward-looking
statements” that are subject to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking statements
address certain plans, activities or events which the Company expects will or
may occur in the future and relate to, among other things, the state of the
economy, the Company’s investment and financing plans, net sales, comparable
store sales, cost of sales, SG&A expenses, earnings per diluted share,
dividends and share repurchases. Various risks, uncertainties and other
factors could cause actual results to differ materially from those expressed
in any forward-looking statement. Consequently, all of the forward-looking
statements made by the Company in this and in other documents or statements
are qualified by factors, risks and uncertainties, including, but not limited
to, those set forth under the headings titled “Cautionary Statement Regarding
Forward-Looking Statements” and “Risk Factors” in the Company’s most recent
Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q filed
with the Securities and Exchange Commission up to the date of this release.

Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release. The Company
does not undertake to update or revise these forward-looking statements even
if experience or future changes make it clear that projected results expressed
or implied in such statements will not be realized, except as may be required
by law.

Earnings Conference Call Information

The Company plans to host a conference call with investors today, July 10,
2013, at 10:00 a.m. ET to discuss the results. The Company will also provide
an update on various business initiatives and discuss plans and expectations
for the rest of fiscal 2013. After some prepared remarks by management,
participants will have an opportunity to ask questions. The Company’s
responses to questions, as well as other matters discussed during the
conference call, may include information that has not been disclosed
previously.

If you wish to participate, please call (800) 890-0881 for domestic US calls
and (719) 325-2295 for international calls at least 10 minutes before the call
is scheduled to begin. The passcode for the conference call is 3827795 or
“FAMILY DOLLAR.”

A live webcast of the conference call with accompanying slides can be accessed
at the following link:

             http://www.familydollar.com/investors.aspx?p=irhome.

A replay of the webcast will be available at the address noted above after
11:00 a.m. ET, July 10, 2013.

About Family Dollar

For more than 50 years, Family Dollar has been providing value and convenience
to customers in easy-to-shop neighborhood locations. Family Dollar’s mix of
name brands and quality, private brand merchandise appeals to shoppers in more
than 7,800 stores in rural and urban settings across 45 states. Helping
families save on the items they need with everyday low prices creates a strong
bond with customers, who often refer to their neighborhood store as “my Family
Dollar.” Headquartered in Matthews, North Carolina, just outside of Charlotte,
Family Dollar is a Fortune 300, publicly held company with common stock traded
on the New York Stock Exchange under the symbol FDO. For more information,
please visit www.familydollar.com.


FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                                            
                                                                      
                         For the Third Quarter Ended*
(in thousands,           June 1,         % of Net     May 26,         % of Net
except per                                                      
share amounts)           2013            Sales        2012            Sales
                                                                      
Net sales                $ 2,573,506     100.00 %     $ 2,359,957     100.00 %
                                                                      
Cost of sales             1,681,048   65.32  %      1,514,684   64.18  %
                                                                      
Gross margin               892,458       34.68  %       845,273       35.82  %
                                                                      
Selling,
general and               704,038     27.36  %      652,014     27.63  %
administrative
expenses
                                                                      
Operating                  188,420       7.32   %       193,259       8.19   %
profit
                                                                      
Investment                 91            0.00   %       274           0.01   %
income
                                                                      
Interest                   6,071         0.24   %       5,635         0.24   %
expense
                                                                      
Other income              7,196       0.28   %      6,147       0.26   %
                                                                      
Income before              189,636       7.37   %       194,045       8.22   %
income taxes
                                                                      
Income taxes              68,698      2.67   %      69,505      2.95   %
                                                                      
Net income               $ 120,938       4.70   %     $ 124,540       5.28   %
                                                                      
Net income per
common share -           $ 1.05                       $ 1.07
basic
Weighted
average shares             114,977                      116,815
- basic
                                                                      
Net income per
common share -           $ 1.05                       $ 1.06
diluted
Weighted
average shares             115,478                      117,633
- diluted
                                                                      
Dividends
declared per             $ 0.26                       $ 0.21
common share
                                                                      
*Certain reclassifications of the amounts for fiscal 2012 have been made to
conform to the presentation for fiscal 2013.


FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
                                                             
                                                                      
                      For the First Three Quarters Ended*
(in thousands,        June 1,            % of Net     May 26,         % of Net
except per                                                       
share amounts)        2013               Sales        2012            Sales
                                                                      
Net sales             $  7,889,191       100.00 %     $ 6,966,880     100.00 %
                                                                      
Cost of sales           5,202,889     65.95  %      4,506,636   64.69  %
                                                                      
Gross margin             2,686,302       34.05  %       2,460,244     35.31  %
                                                                      
Selling,
general and             2,153,936     27.30  %      1,921,647   27.58  %
administrative
expenses
                                                                      
Operating                532,366         6.75   %       538,597       7.73   %
profit
                                                                      
Investment               275             0.00   %       716           0.01   %
income
                                                                      
Interest                 19,968          0.25   %       18,772        0.27   %
expense
                                                                      
Other income            20,984        0.27   %      16,847      0.24   %
                                                                      
Income before            533,657         6.76   %       537,388       7.71   %
income taxes
                                                                      
Income taxes            192,295       2.44   %      196,079     2.81   %
                                                                      
Net income            $  341,362         4.33   %     $ 341,309       4.90   %
                                                                      
Net income per
common share -        $  2.96                         $ 2.91
basic
Weighted
average shares           115,321                        117,331
- basic
                                                                      
Net income per
common share -        $  2.95                         $ 2.89
diluted
Weighted
average shares           115,869                        118,176
- diluted
                                                                      
Dividends
declared per          $  0.68                         $ 0.60
common share
                                                                      
*Certain reclassifications of the amounts for fiscal 2012 have been made to
conform to the presentation for fiscal 2013.

                                                         
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                                    
                                         As of*
                                         June 1,                 May 26,
(in thousands, except per                2013                    2012
share and share amounts)
Assets
Current assets:
Cash and cash equivalents                $   123,462             $  120,901
Short-term investment                        26,665                 21,006
securities
Restricted cash and                          57,897                 82,197
investments
Merchandise inventories                      1,474,410              1,387,380
Deferred income taxes                        71,305                 53,212
Income tax refund receivable                 4,294                  -
Prepayments and other                       143,881               44,137
current assets
Total current assets                         1,901,914              1,708,833
                                                                    
Property and equipment, net                  1,832,178              1,420,034
Investment securities                        23,366                 60,888
Other assets                                92,946                83,289
                                                                    
Total assets                             $   3,850,404           $  3,273,044
                                                                    
Liabilities and
Shareholders' Equity
Current liabilities:
Short-term borrowings                    $   219,000             $  -
Current portion of long-term                 16,200                 16,200
debt
Accounts payable                             680,118                695,292
Accrued liabilities                          351,422                300,290
Income taxes                                8,429                 25,285
Total current liabilities                    1,275,169              1,037,067
                                                                    
Long-term debt                               500,237                516,283
Other liabilities                            283,442                259,333
Deferred gain                                214,179                68,768
Deferred income taxes                        56,233                 79,099
Commitments and                              —                      —
contingencies
                                                                    
Shareholders' Equity:
Preferred stock, $1 par;
authorized and unissued                      —                      —
500,000 shares
Common stock, $.10 par;
authorized 600,000,000                       12,000                 11,911
shares
Capital in excess of par                     293,523                256,898
Retained earnings                            1,497,311              1,153,453
Accumulated other                            (1,441)                (3,750)
comprehensive loss
Common stock held in                        (280,249)             (106,018)
treasury, at cost
Total shareholders' equity                  1,521,144             1,312,494
                                                                    
Total liabilities and                    $   3,850,404           $  3,273,044
shareholders' equity
                                                                    
*Certain reclassifications of the amounts for fiscal 2012 have been made to
conform to the presentation for fiscal 2013.

                                                            
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
                                                                  
                                           For the First Three Quarters Ended*
(in thousands)                             June 1, 2013           May 26, 2012
Cash flows from operating
activities:
Net income                                 $  341,362             $ 341,309
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization                 176,895               153,482
Amortization of deferred gain                 (11,037     )         (352     )
Deferred income taxes                         (682        )         3,336
Excess tax benefits from stock-based          (13,360     )         (12,234  )
compensation
Stock-based compensation                      13,015                14,033
Loss on disposition of property and
equipment, including impairment               5,018                 10,331
Changes in operating assets and
liabilities:
Merchandise inventories                       (48,247     )         (232,720 )
Prepayments and other current assets          (96,249     )         27,308
Other assets                                  (1,877      )         (1,242   )
Accounts payable and accrued                  (26,889     )         (72,275  )
liabilities
Income taxes                                  (27,723     )         30,637
Other liabilities                            15,125              (7,766   )
                                             325,351             253,847  
                                                                  
Cash flows from investing
activities:
Purchases of investment securities            (43,475     )         (92,559  )
Sales of investment securities                22,638                217,017
Net change in restricted cash                 63,161                (90,930  )
Capital expenditures                          (599,685    )         (391,418 )
Net proceeds from sale-leaseback              163,520               177,552
Proceeds from dispositions of                2,780               739      
property and equipment
                                             (391,061    )        (179,599 )
                                                                  
Cash flows from financing
activities:
Short-term borrowings                         1,753,000             306,300
Repayment of short-term borrowings            (1,549,000  )         (306,300 )
Repayment of long-term debt                   (16,200     )         (16,200  )
Repurchases of common stock                   (74,954     )         (91,573  )
Changes in cash overdrafts                    31,495                43,016
Proceeds from exercise of employee            17,572                24,620
stock options
Excess tax benefits from stock-based          13,360                12,234
compensation
Payment of dividends                         (78,434     )        (66,849  )
                                             96,839              (94,752  )
                                                                  
Net change in cash and cash                   31,129                (20,504  )
equivalents
Cash and cash equivalents at                 92,333              141,405  
beginning of period
Cash and cash equivalents at end of        $  123,462            $ 120,901  
period
                                                                  
*Certain reclassifications of the amounts for fiscal 2012 have been made to
conform to the presentation for fiscal 2013.

                                                               
FAMILY DOLLAR STORES, INC., AND SUBSIDIARIES
Selected Additional Information
                            
                                                                    
NET SALES BY CATEGORY:
                                For the Third Quarter Ended
                                June 1,           May 26,
(in thousands)                  2013              2012              % Change 
Consumables                     $ 1,866,714       $ 1,626,004       14.8     %
Home products                     264,268           270,015         -2.1     %
Apparel and accessories           206,523           226,783         -8.9     %
Seasonal and electronics         236,001         237,155        -0.5     %
TOTAL                           $ 2,573,506       $ 2,359,957       9.0      %
                                                                    
                                For the First Three Quarters Ended
                                June 1,           May 26,
(in thousands)                  2013              2012              % Change 
Consumables                     $ 5,667,499       $ 4,723,782       20.0     %
Home products                     828,833           842,900         -1.7     %
Apparel and accessories           591,439           618,930         -4.4     %
Seasonal and electronics         801,420         781,268        2.6      %
TOTAL                           $ 7,889,191       $ 6,966,880       13.2     %
                                                                    
                                                                    
STORES IN OPERATION:
                                For the Three Quarters Ended
                                June 1,           May 26,
                                2013              2012
Beginning Store Count             7,442             7,023
New Store Openings                380               287
Store Closings                   (21       )      (43       )
Ending Store Count                7,801             7,267
Total Square Footage              67,016            62,362
(000s)
Total Selling Square              55,994            51,945
Footage (000s)

Contact:

Family Dollar Stores, Inc.
Investor Contact:
Kiley F. Rawlins, CFA, 704-708-2858
krawlins@familydollar.com
or
Media Contact:
Bryn Winburn, 704-708-1653
bwinburn@familydollar.com