Family Dollar Stores Inc. (FDO), the operator of self-service retail discount store chains, recently boosted its quarterly dividend by 14.8%. The Board approved an increase in annual dividend to 62 cents (or 15.5 cents quarterly) from 54 cents a share (or 13.5 cents quarterly).
 
The higher dividend will be paid on April 15, 2010, to shareholders of record at the close of business as of March 15, 2010. Family Dollar’s strong liquidity position provides financial flexibility to drive future growth and reward shareholders.
 
Despite a challenging macro environment, Family Dollar’s strategic initiatives to improve the merchandising, marketing, and store operations have resulted in sustained growth in the top and bottom lines. The effective price management, cost containment, tighter inventory control, private label offering, global sourcing efforts, and recent merchandise initiatives within the consumables category should drive sales and margin trends.
 
The turbulent economy triggered a shift in demand to consumable categories from discretionary categories, which resulted in an adverse sales mix, as sales of lower-margin consumable merchandise are expected to weigh down on gross margin rate.
 
Family Dollar operates in the highly competitive discount retail merchandise sector. The company faces stiff competition from Wal-Mart Stores Inc. (WMT) and Dollar General Corp. (DG), which will likely continue to weigh on its results.
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