Family Dollar Stores, Inc. (FDO)
Q3 2009 Earnings Call Transcript
July 8, 2009 10:00 a.m. ET

Executives

Kiley F. Rawlins - Vice President of Investor Relations and Communications
Howard R. Levine – Chairman & Chief Executive Officer
Kenneth T. Smith – Senior Vice President & Chief Financial Officer
R. James Kelly – President & Chief Operating Officer

Analysts

Charles Grom - JPMorgan
Neil Currie - UBS
Mark Miller – William Blair & Company, L.L.C.
Ivy Jack - Barclays Capital
Joseph Parkhill – Morgan Stanley
Patrick McKeever – MKM Partners LLC
Michael Baker – Deutsche Bank
Bernard Sosnick – Gilford Securities
Laura Champine – Cowen and Company

Presentation

Operator

Good morning. My name is Kim and I will be your conference facilitator today. I would like to welcome everyone to the Family Dollar earnings conference call. All lines have been placed on mute to prevent any background noise. After the company’s prepared remarks, there will be a brief question-and-answer period. The question-and-answer queue will not be available until after the company has concluded their prepared remarks. So, please wait until after the speakers have finished their remarks before attempting to enter the queue. Today’s call is being recorded. If anyone has any objections, you may disconnect at this time.

I would now like to introduce Ms. Kiley Rawlins, Vice President of Investor Relations and Communications. Ms. Rawlins, you may begin your conference.

Kiley F. Rawlins

Thank you, Kim. Good morning everyone and thank you for joining us today. Before we begin, you should know that our comments today will include forward-looking statements regarding various operating initiatives; sales and profitability; capital expenditures; as well as our expectations for future financial performance. While these statements address plans or events which we expect will or may occur in the future, a number of factors as set forth in our SEC filings and press releases could cause actual results to differ from our expectations. We refer you to and specifically incorporate the cautionary and risk statements contained in today’s press release and in our SEC filings.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, July 8, 2009. We have no obligation to publicly update or revise our forward-looking statements except as required by law, and you should not expect us to do so.

With me on the call this morning are Howard Levine, Chairman and CEO; Jim Kelly, President and COO; and Ken Smith, Chief Financial Officer. We’ll begin our discussion today with some comments from Howard, then Ken will discuss our financial results. Following our prepared remarks you will have an opportunity to ask questions.

Please remember that the queue for the question-and-answer session will not be available until after we have finished our prepared remarks. So that we may accommodate as many people as possible, please limit your questions to one question with no more than one follow-up question during the Q&A session.

Before I turn the call over to Howard, I’d like to announce that we plan to host an Analyst Meeting here in Charlotte, on November 3rd. We’ll provide more details later this summer, but I hope that you’ll be able to join our management team for what I’m sure will be an informative day.

Now I’d like to turn the call over to Howard Levine. Howard.

Howard R. Levine

Thank you Kiley and good morning everyone and thanks for joining us today. This morning we reported record results for the third quarter. Earnings per share increased 35%, operating margin expanded 160 basis points, and inventory turns and GMROI continued to improve.

These results reflect the hard work and commitment of all of our Family Dollar team members and I want to recognize their efforts. I’m especially proud of how well our management team is working together to increase our relevancy to the customer, manage risk, and drive profitability.

In today’s environment there is a renewed focus on value and thriftiness among higher income consumers, but our core low-income customer has always understood the importance of value. Living paycheck to paycheck, she knows how to stretch her income and satisfy her family needs.