Family Dollar to Cut Work Force, Close Stores
April 10, 2014,
MATTHEWS, N.C.-Declaring that "we hold ourselves accountable for improving our performance," Family Dollar Chairman and CEO Howard Levine said the retailer will reduce its work force and close about 370 underperforming stores, in the wake of second-quarter results which were below the company's expectations.
Net income in the quarter, which ended on March 1, plummeted by 35.2 percent to $90.9 million. Net sales dropped 6.1 percent to $2.7 billion, including a 3.8 percent decline in same-store sales.
Gross margin was off 21 basis points to 33.2 percent, due to increased sales of lower-margin consumables and higher markdowns. Selling, general and administrative expenses rose 1.6 percent in dollars and 313 basis points as a percentage of sales, to 28.1 percent.
Levine said, "Once complete, our work-force reduction efforts and store closures are expected to result in $40 million to $45 million of annualized operating profit benefit, beginning in the third quarter of fiscal 2014. We are confident that these steps will position Family Dollar to deliver stronger returns for our shareholders."