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Family Dollar Stores Q3 Earnings Call Transcript
Author: 123jump.com Staff
123jump.com
Last Update: 12:35 PM ET July 14 2009


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Sure. Neil, first of all on the first part of your question regarding the middle income and who we’re taking share from, obviously those in our channel are doing quite well and I also include Wal-Mart in that and think that the benefits that we all are seeing are coming from the fact that as I said in my comments, we are all offering great value and convenience in a very challenging environment and that’s exactly what customers are looking for today and you heard all the initiatives that we’re talking about to position us well to capture and keep those customers.

So we believe that the short-term investments that we’re making in our business or the investments we’re making in our business in this fourth quarter will position us well to not only keep some of these middle-income customers but also position us very well for our core low-income customer.

We’re taking share from grocery stores, from convenience stores, obviously I don’t think we’re taking share from those within our channels, our entire channel is showing market share growth. Moving on to the second part of your question in terms of real estate opportunities and how this might change, we’ve always been focused on the value conscious consumer. The value conscious consumers’ income ranges from very low numbers to more than $50, $60, $70,000 so we’ve always viewed these types of locations when positioning ourselves for new store growth.

Obviously in this type of economy and the impact that it will have on real estate opportunities, hopefully we’ll see even more of these opportunities but we’re going to stay focused on the value conscious consumer, continue to drive value, and really grow market share with income levels, all income levels.

Neil Currie – UBS

So you’d say that it’s not necessarily a new demographic, you’re just getting more success with the upper end of your target demographic.

Howard R. Levine

Well we’re seeing growth across the middle income area, that growth has continued; it’s actually ramped up over the last few quarters. Some of the data we’re looking at is somewhat delayed there, so we would continue to see that grow, but our core focus is on the value conscious consumer and don’t really see this as a new demographic opportunity.

In fact all the things that we’re doing, things like improving the shopping experience which incorporates concept renewal, improved focus on quality, additional brand names. All the things that we’re doing don’t prejudice one income level. I think all people like clean, shoppable stores. All customers like great value so I think the things that we’re doing keep us focused on that value conscious consumer and will not misdirect any efforts to something that we don’t think is sustainable.

R. James Kelly

Neil, I would comment that in terms of assessing potential sites for new stores, we use various forecasting models which are, which adapt continuously to actual demand patterns. Over the last several years we’ve had a significant change in demand patterns, improved demand patterns, and consumers with household income of $30 to $40,000.

So that in and of itself changes where we can locate stores. Subsequently to that and more recently as Howard pointed out, we’ve seen significant growth in the 40 to 70. We’re going to have to see how that continues to develop but our location of stores will be driven by the customer demand and the attributes of that demand.

So the more customers shop us, the more opportunities for growth we have.

Neil Currie – UBS

Thank you. And just a quick one on the payables being down and offsetting that with better terms, is that going to continue into the fourth quarter and perhaps into the first quarter of next year.

Kenneth T. Smith

No, I mentioned in my comments, we believe that it’s a temporary reduction in the AP leverage number due to the timing and flow of some very highly consumable receipts and it should normalize as we look forward.

Neil Currie – UBS

Okay. Thanks very much.

Operator


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