Family Dollar 1Q14 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

Difficult environment

“our results continue to be pressured by difficult competitive economic environment. Our core low income customers continue to deal with elevated unemployment levels cuts to government benefits and volatility in energy prices and they are tightly managing their spending as a result.”

Comp sales decline on fewer transactions, lower traffic

“our results continue to be pressured by difficult competitive economic environment. Our core low income customers continue to deal with elevated unemployment levels cuts to government benefits and volatility in energy prices and they are tightly managing their spending as a result.”

June got off to a pretty good start

” the month of June got off to a pretty good start, we were delighted with the July 4th weekend, particularly some of the seasonal sales and some of the apparel sales that we saw there”

The low end consumer may have slipped back some

“The low end consumer has not benefited in this recovery at all in fact I think have slipped further back. Unemployment trends remain high. The government cutbacks continue, there is quite a bit of healthcare uncertainty coming from this unbelievably cold winter, heating prices, heating oil and gas prices are moving upwards. So there is, it’s a tough playing field out there.”

Urban stores doing a little worse than rural

“What I can tell you is our rural stores are doing better than our urban stores. We think a lot of that has to do with some of the challenges that are in these intercity markets and some of these major urban centers. The folks in those markets are having a hard time finding jobs and are struggling and I think it’s impacted our business a little more than it would be in rural area where I think things are little more stable.”

The store traffic data that retailers quote comes from Nielsen

“We’ll get a lot of that information from Nielsen. And so while we see it’s certainly in our own register data, we also get the market perspective from Nielsen and IRI.”

Store occupancy and labor make up 2/3 of SG&A

“two-thirds of our SG&A expense is essentially fixed and it relates to store occupancy and store labor. And so those are the expenses that are basically fixed and they are tied very much to square footage growth. There are probably other expenses as well, but those are the big ones. But you know utilities and things like that would also be tied to square footage growth.”