Discount US retailer Family Dollar has warned that rising energy costs and inflationary pressures will dampen its core low-income customers’ spend, despite posting a robust full-year performance.

It reported sales up 6.9 per cent to US$6.83 billion (£3.36 billion) for the year to September 1, compared with US$6.4 billion (£3.15 billion) last year.

Total sales for this financial year are expected to rise by between 4 per cent and 6 per cent. Like-for-likes, which were up 0.9 per cent last year, are forecast to grow by between 1 per cent and 3 per cent.

Chairman and chief executive Howard Levine said: “Despite a challenging economic environment, our team has delivered a solid performance this year. In the face of these challenges, we continue to manage our business with a longer-term perspective, making significant investments.”

The retailer, which has 6,430 stores in the US, will bolster sales by expanding its food offer to encourage shoppers into its stores more frequently. The group is set to increase its food selling space in about 2,800 stores and will install refrigerated coolers in about 575 stores, so it can sell perishable items and stock more ready meals. It will also open another 300 stores in the coming year.

In addition, Family Dollar will install its Store of the Future technology platform in about 1,500 stores to process sales faster and enable stores to accept payment types such as food stamps.

Full-year profits for the year to September 1 rose to US$242.9 million (£119.6 million), up from US$195.1 million (£96 million) last year, which included a one-off charge of US$45 million (£22.1 million). It opened 300 stores in the period.

Fourth-quarter profits jumped 17 per cent to US$37.8 million (£18.6 million) against last year, which included a legal charge of US$10.5 million (£5.2 million).

Fourth-quarter sales grew 3.4 per cent to US$1.63 billion (£802.3 million), compared with US$1.58 billion (£777.7 million) last year, driven by toys, food and some seasonal categories.

Topics