Family Dollar’s (FDO) strategic initiatives to improve merchandising and store operations have helped grow the top and bottom lines. The company’s point-of-sale technology and store realignment initiatives are helping to drive traffic.
There is tremendous opportunity to increase gross margins by a renewed effort on its store brand portfolio. These initiatives helped the company post better-than-expected second-quarter 2010 sales results, and prompted management to raise its earnings guidance.
Although the intense competition and shift in demand to lower-margin consumable merchandise categories triggered by the recent economic downturn remains a concern, we have an Outperform recommendation on the stock.Zacks Investment Research