Family Dollar Stores Inc share price steady, Q4 earnings drop

Family Dollar Stores Inc reported a fall in fourth-quarter earnings as the takeover battle between two competitors continue.

Net income of the company fell by 66% in the three-month period ended August 30th. The discount retailer reported a profit of $34.5 million, or 30 cents a share, compared to $102.2 million, or 88 cents per share, a year earlier. Excluding restructuring-related items and expenses tied to the Dollar Tree deal, profit was 73 cents per share.

In the fourth fiscal quarter, Family Dollar shut down 375 low-performing stores and had $10.4 million in inventory write-downs, a result of the companys effort to sell merchandise off the stores about to be closed.

“From a financial standpoint, fiscal 2014 was one of the most difficult years in our company’s history,” said Chief Executive Officer Howard Levine after the release of the results.

Family Dollar did not share any expectations for the next fiscal year but admitted that the period will be challenging due to the density of the competition in the discount retail industry.

“Our core customer is struggling … We think it will be a very competitive holiday season,” added Mr. Howard.

In July, Family Dollar agreed to sell off to Dollar Tree Inc, a rival company, whose offer was $8.5 billion cash-and-stock. This action quickly prompted Dollar General, a bigger competitor, into making a $9.1 billion all-cash offer, which was rejected by Family Dollar saying it might not receive regulatory approval.

Dollar General made a second offer, which included selling up to 1 500 stores and paying $500 million as a break-up fee, if the deal was not cleared by the antitrust reviews. After being rejected twice already, the company took a more hostile approach and made an $80-per-share offer directly to Family Dollar shareholders.

Family Dollar Stores Inc. closed at $77.75 per share on Thursday on the NYSE, marking a +0.05% daily and +13.16% yearly change. The company is valued at $8.86 billion. According to the Financial Times, the 18 analysts offering 12 month price targets for Family Dollar Stores Inc have a median target of $72.25, with a high estimate of $82.00 and a low estimate of $53.00. The median estimate represents a -7.07% decrease from the last price of $77.75