Family Dollar Stores Inc (FDO) First Quarter 2015 Earnings Call Transcript

Paul Trussell, Deutsche Bank
Thank you for that color. Then just circling back to the comments around price perception, just wondering if you are able to give any more detailed color? Where is that perception at this point? I know you mentioned that you took action to closely match some of your peer group. Is there still a gap between where you are pricing and what the perception is? To what extent, you have mentioned it has improved, if you can maybe quantify to what extent that perception has improved? Just how should we think about Family Dollar’s price points across the store versus a basket at WalMart, at Dollar General, and grocery stores?

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
Yeah. The best way to start, Paul, is it is much improved over where it was last year. Going back a couple of years, we had taken some price increases where we thought we had some inelastic items that we could get away with, did not work. We have reduced those prices and we measure this every quarter. As I said earlier, we are about where we want to be in terms of our pricing goals. As I said before, it is always changing. It is an iterative process that we are going to continue to valuate and not loose track of it.

I think, one key metric that is one that motivates us is the December traffic trends. As I said before, that is the strongest traffic trend we have had in nearly two years and we love to see that momentum continue. But as I also said back when we took those price adjustments back in April, it takes some times for that to sink into our customers. We are starting to see that and hopefully, that continues as we go through the year.

Paul Trussell, Deutsche Bank
Just lastly on that Howard, you have mentioned that units were up mid single-digits on those 1000 SKUs? What is the total sales then, so we can understand the pricing impact?

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
Yeah. As I talked about, from a margin standpoint, we still are behind back. Sales have caught up somewhat there, but we are looking forward to reversing that come here in April and get most of that behind us.

Paul Trussell, Deutsche Bank
Thank you.

Operator
We will move on to Anthony Chukumba with BB&T Capital Markets.

Anthony Chukumba, BB&T Capital Markets
Thanks for taking my question. Howard, you mentioned that December traffic was up 2%, the comp was 1.2%, so that would imply that average ticket was down by 0.8%? I guess, I was just wondering, what do you attribute that decline to? I mean, is it just simply the price investments that you made or was there anything else notable in terms of sales mix or some other factors? Thanks.

Mary Winston, Chief Financial Officer, Family Dollar Stores Inc
Hi, Anthony. This is Mary. I know you asked the question of Howard, but let me jump in and then if he wants to add, that will be great. You are right. Our total sales were up 2.3% and our comp was slightly negative. Some of the factors affecting that are the lowest square footage growth, the lower opening price point as a result of our EDLP investment and then the impact of the stores that we have closed.

Anthony Chukumba, BB&T Capital Markets
Okay. Sorry, I was talking about comp store sales in December. I think that…

Mary Winston, Chief Financial Officer, Family Dollar Stores Inc
In December, okay. I thought you were talking about comp sales in the quarter. I am sorry.

Anthony Chukumba, BB&T Capital Markets
That is okay.

Mary Winston, Chief Financial Officer, Family Dollar Stores Inc
So…

Anthony Chukumba, BB&T Capital Markets
Yeah. Like I was saying, I was just wondering because I guess, it implies that average ticket was down 0.8% and I guess I was just trying to figure out what drove that decline in average ticket?

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
Yeah.

Mary Winston, Chief Financial Officer, Family Dollar Stores Inc
Yeah.