Family Dollar Details 2012 Expansion Plans

CHARLOTTE, N.C. -- Family Dollar plans to open as many as 500 new store locations over the next 12 months, thanks to sales and profits that are up over last year, according to a Charlotte Observer report. The company also expects sales to increase 8 to 10 percent as customers seek to tighten their belts in a shaky economy, resulting in more frequent visits to its stores and higher average purchases.

"In today's uncertain economic environment, value continues to resonate," said Family Dollar CEO Howard Levine. "Our strategy ... continues to attract not only our core low-income customer, but also middle-income customers with increased frequency."

The company’s sales increased by 9.1 percent to $2.1 billion for the fourth quarter that ended Aug. 27. For the full fiscal 2011 year, they rose 8.7 percent vs. one year ago to total $8.5 billion. Sales at stores open for a year or longer rose 5.5 percent. Profit rose 4.5 percent to $388 million for the year, exceeding analysts' forecast, according to the newspaper.

Over the last year, Family Dollar expanded the food assortment in all its stores by approximately 20 percent.

The chain began gearing up for expansion throughout fiscal 2011 as it spent approximately $345 million on capital investments, $133 million more than in fiscal 2010. The main cause was the renovation of nearly 1,000 stores and the opening of 300 new stores, 100 more than last year.

Family Dollar doesn't intend to slow down in 2012; it will boost its capital spending to between $550 and $600 million in fiscal 2012 to finance more store renovations and a large number of new store openings. The company reported that its board has authorized it to repurchase another $250 million worth of stock from shareholders. This comes in addition to the $670 million spent on share buybacks in fiscal 2011, much of it funded by debt, according to the report.

The company plans to open between 450 and 500 new stores and close 80 to 100 locations, leaving it with approximately 7,400 locations in operation.

Company executives predicted that the "tenuous environment" many customers continue to face will allow Family Dollar's strategy to succeed. "Economic conditions have not improved, as some expected, and in fact have worsened for many families," stated Levine.