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Family Dollar Cuts Profit Forecast as Shoppers Cut Back

Family Dollar Stores Inc. (FDO), the second-biggest U.S. dollar-store retailer, forecast that profit this year will be less than it previously expected as shoppers curb discretionary spending.

Profit in the current fiscal year will be as much as $3.93 a share, the Matthews, North Carolina-based company said today in a statement. That’s down from a January forecast of as much as $4.20 and less than the $3.96 average estimate of 27 analysts in a Bloomberg survey.

Demand for apparel, home decor and other non-essential items remains less than anticipated, the company said. Sales by stores open more than 13 months rose 2.9 percent in the second quarter, trailing estimates by Citigroup Inc. and Guggenheim Securities.

“We chalk this weakness up to soft discretionary sales,” John Heinbockel, an analyst at Guggenheim in New York, wrote today in a note. He recommends buying Family Dollar shares.

Heinbockel and Citigroup’s Deborah Weinswig had projected comparable-store sales would advance 4.5 percent.

The shares rose 1.1 percent to $60.44 at the close in New York. They have dropped 4.7 percent this year, compared with an 11 percent gain for the Standard & Poor’s 500 Index.

By revenue, Family Dollar trails Dollar General Corp. (DG)

Photographer: Michael Nagle/Bloomberg

Shoppers wait in line at a Family Dollar Stores Inc. store in Belleville, New Jersey. Close

Shoppers wait in line at a Family Dollar Stores Inc. store in Belleville, New Jersey.

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Photographer: Michael Nagle/Bloomberg

Shoppers wait in line at a Family Dollar Stores Inc. store in Belleville, New Jersey.

To contact the reporter on this story: Chris Burritt in Greensboro at cburritt@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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