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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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Thank you. Good morning, everyone. I have a question on your urban stores and just wondering if you’re seeing any variations between urban store performance and more rural or small market store performance just given the high unemployment rate for African-American consumers and even for Hispanic consumers.

R. James Kelly

I think our urban stores continue to show improvement year over year and solid growth in the sales area. It’s difficult to isolate too much because the urban stores are located throughout the country and obviously in some parts of the country the weather has been particularly challenging. But overall the operating margins and relative profitability of the urban markets continue to be very strong.

Patrick McKeever – MKM Partners LLC

So do you think that the new stimulus package is providing enough offset then to the higher, the climbing unemployment rate in urban markets.

R. James Kelly

I think there is a combination of economic events occurring, some of which are plusses and some of which are minuses. In addition to that we have a lot of internal events. I would suggest when you look back over this year, we have been very successful as value and convenience has become increasingly important in driving our comp sales.

So net-net the environment is leading to increased shopping trips of our core customer as well as those that have slightly more income.

Patrick McKeever – MKM Partners LLC

Okay and then just a quick one. What are you thinking about for the back to school season? Each year it seems like Wal-Mart gets even more aggressive than the prior year with promotional pricing and marketing and that kind of thing. What are you thinking about this year in terms of how you’re positioning yourselves for back to school? Thanks.

Howard R. Levine

Back to school is not what it once was years ago with the timing of school starting sometimes as early as the first or second week of August all the way through mid-September so it’s spread out over a longer period of time. But the way, I think the best way to think about back to school is just as you would some of the past holiday events, whether it’s Easter more recently, or Valentine’s Day or even this past Christmas that we plan events around those things and as we’ve talked about Easter was quite successful this year.

Valentine’s Day was quite good, so we’re looking forward to the season and would expect to continue to grow our market share.

Patrick McKeever – MKM Partners LLC

Okay. Thank you, Howard.

Operator

I think our next question comes from Mike Baker with Deutsche Bank.

Michael Baker – Deutsche Bank

Thanks, guys. So the comps in the discretionary category, if you just sort of weigh them by sales, were as good as they’ve been and I think in about seven quarters which is interesting considering you took space away from those areas. I should say the total sales growth. So can you discuss what is behind that relative improvement in the discretionary categories and then within those categories any specific items doing well that are interested to call out. Thanks.

R. James Kelly


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