The third quarter was a record quarter for discount retailer Family Dollar (NYSE: FDO). The company reported this morning that net income for the third quarter increased 34.8%, coming in at 62 cents per diluted share.
A year ago, FDO earned 46 cents per diluted share. Net income increased 35.5% to $87.7 million, up from $64.7 million a year ago. Not only were the results better than those from a year ago, but the retailer also topped the consensus estimate of 59 cents per share. Looking ahead, FDO expects to earn between 39 and 43 cents per share in the fourth quarter, compared to expectations of 39 cents per share.
Is it a surprise that this retailer had such a strong quarter? Yes and no. Yes, in term of what the experts on Wall Street believed we would see. No, because FDO is a discount retailer and we are in the midst of one heck of an economic downturn.
Perhaps FDO is seeing more customers from demographics they normally do not depend on. Levine suggested so, but did not come straight out and admit that. He noted that "the investments we are making to be more relevant to our customers and to improve the in-store experience position us well to meet our customers' evolving needs." I don't think the needs are evolving as much as FDO's customer -- and the company can thank the economy for that.
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