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Thursday, January 8, 2015

Increased discounting eats into Family Dollar's profit, (NYSE: FDO)

Family Dollar Stores Inc, the target of a takeover battle between two U.S. rivals, reported lower-than-expected quarterly earnings after it stepped up discounting and booked more sales of lower-margin items such as food and tobacco.The company said on Thursday that it was cutting back on promotional activities and focusing on everyday low-prices to arrest a fall in margins. In 2014, it had spent $50 million to reduce prices in key segments.Gross margins fell to 33.4 percent in the first quarter ended Nov. 29 from 34.3 percent a year earlier.Sales at stores open at least a year fell 0.4 percent. Analysts on average expected a 1.4 percent increase, according to research firm Consensus Metrix.

Family Dollar Stores, Inc. (Family Dollar) operates a chain of more than 7,900 general merchandise retail discount stores in 46 states, providing consumers with a selection of merchandise in neighborhood stores. Shares of FDO fell by 0.63% or $-0.5/share to $78.36. In the past year, the shares have traded as low as $55.64 and as high as $80.97. On average, 1030980 shares of FDO exchange hands on a given day and today's volume is recorded at 1467647.