(By Balachander) Family Dollar Stores Inc. (NYSE:FDO) posted double-digit growth in earnings for the third quarter as rise in customer traffic drove sales growth, while the operator of self-service retail discount stores continues to forecast gross margin pressure for 2012.
Earnings per share (EPS) increased to 17.6 percent to $1.07, coming in-line with Wall Street expectations.
Sales rose 9.6 percent to $2.36 billion, shy of consensus estimate of a growth of 10.2 percent. Comparable store sales gained 5.0 percent.
Gross margin contracted to 35.8 percent from 36.2 percent in the same period of last year.
Looking ahead for the fourth quarter, Matthews, North Carolina-based Family Dollar forecasts EPS between 71 cents and 81 cents, on comparable store sales growth in the range of 5 percent to 7 percent. Analysts expect EPS of 77 cents on revenue of $2.37 billion.
For the full year, the company now expects earnings per share in the range of $3.60 to $3.70 from prior expectations of $3.55 to $3.75. Sales growth is still projected 9 percent and 10 percent. Analysts expect EPS of $3.67 per share on sales growth of 9.30 percent.
The company currently projects comparable store sales growth of about 5 percent, versus prior view of gain of 5 percent to 6 percent.
For the second quarter, the company earned $1.15 per share on sales of $2.46 billion.
The stock, which has been trading between $44.42 and $74.73 over the past year, closed Wednesday's regular trading at $69.13.