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

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The other thing I had mentioned is the attachment rate on some of these pricing investments and some of the consumable trips we’d like to see picked up. We are selling a lot more units than we have had and we have got to get that velocity up and also see some attachment improve with that. Being thatconsumables is 75% of our business today, we really need to get a stronger comp out of that there and we think that’s doable.

John Heinbockel, Guggenheim Securities
Okay. Thank you.

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

Operator
Our next question comes from Edward Kelly with Credit Suisse.

Edward Kelly, Credit Suisse Group
Hi. Good morning, guys.

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
Good morning, Ed.

Edward Kelly, Credit Suisse Group
You mentioned the store manager turnover improving. I was wondering if you could put some numbers around that. I think not too long ago, maybe a couple of years ago, you’re in the upper 30% range. I’m just curious as to where you are now and then how you are accomplishing that given the uncertainty really on the M&A front?

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
Yes. Let me address the last part of the question first. Obviously, here at corporate, the M&A activity has definitely impacted the stability and the team with all the uncertainties that we have had for the last several months with that transaction. It is impacted corporate here. We have lost some people as a result of that,but I also have to say that I am very proud and pleased how many people have stuck to the business and have tried to help improve it. There is no question that has impacted our overall business with this uncertainty out there, and you know we would like to see that start to come together soon.

In terms of store manager turnover, we are in right around 30%, the high 20s. I think that from a turnover standpoint of the stores, we haven’t felt the impact from the merger in our stores. It’s primarily here at corporate. Hopefully, that answers your question, Ed.

Edward Kelly, Credit Suisse Group
Second question for you. What do you guys do in terms of new stores at this point? Are you actually still out there signing leases on new stores?

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
Yes. What we talked about with slowing new store growth this year, down to 350 to 375 area. We kind of got off to a slow start in the first quarter, but I am not as focused on a number as I am focused on opening good strong profitable stores. We do think we will make up a lot of the slow start that we got off to in the first quarter as we work our way through the year. Yes, we are still signing leases. We are still growing the business and we are continuing to open up stores.

Edward Kelly, Credit Suisse Group
How are those new stores performing, Howard, just last question?

Howard Levine, Chairman and CEO, Family Dollar Stores Inc
The new store performance has been impacted given the overall business challenges and that was one of the reasons why we reduced the new store openings, was to try to slow things down, get the overall business back on track and still see those improvements impact new stores. But new stores historically have been one of our strongest returns on capital and we expect to get that back as the business improves.

Edward Kelly, Credit Suisse Group
Thank you.

Mary Winston, Chief Financial Officer, Family Dollar Stores Inc
Just to add to what Howard said, I would say the maturity curve on new stores continues to be approximately the same. I do think that the performance on stores is reflective of the performance of the business overall.

Edward Kelly, Credit Suisse Group
Okay.

Kiley Rawlins, VP of Investor Relations and Communications, Family Dollar Stores Inc
Joshua, could we have the next question please?

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