UPDATE 3-Family Dollar sees higher-than-expected FY profit

* Q2 EPS $0.98 vs Wall St estimate $0.97

* Sees FY EPS $3.13-$3.23 vs analysts’ estimate $3.12

* Sees FY sales up 8-10 pct

* Shares up 1.8 pct in premarket trading
(Rewrites, adds third-quarter forecast, updates stock
activity, changes dateline from BANGALORE)

CHICAGO, March 30 (Reuters) – Family Dollar Stores Inc
(FDO.N: Quote, Profile, Research) sees higher-than-expected yearly profit after more
shoppers flocked to its stores for low-priced holiday items and
groceries and spent a little bit more on average.

Family Dollar sells most of its items for $10 or less and
caters to consumers with household income of $40,000 and
below.

The discount chain earned $123.2 million, or 98 cents per
share, in the fiscal second quarter ended on Feb. 26, up from
$112.2 million, or 81 cents per share, a year earlier.

Analysts, on average, were expecting it to earn 97 cents,
according to Thomson Reuters I/B/E/S. Analysts had raised their
expectations from 95 cents per share earlier this month, after
Family Dollar suggested earnings would be 97 cents to 98 cents
per share.

Family Dollar, which has more than 6,880 discount stores in
44 U.S. states, rebuffed a buyout offer from Nelson Peltz’s
Trian Group earlier this month, saying its $55 to $60 per share
offer “substantially” undervalued the company. [ID:nN14156624]

Instead, Family Dollar is continuing to open more stores
and renovate older ones as it tries to capture more of
shoppers’ spending on basic items such as food. It plans to
open about 300 new stores and shut some 80 to 100 doors this
year.

Shares of Family Dollar rose 1.8 percent to $53.36 in
premarket trading on Wednesday.

EXPECTS STRONGER YEAR THAN WALL STREET

Family Dollar forecast fiscal year earnings of $3.13 to
$3.23 a share, while analysts were expecting earnings of $3.12.
It expects sales to rise 8 to 10 percent this year.

For the current third quarter, Family Dollar forecast
earnings of 92 cents to 97 cents per share, while analysts
expect it to earn 94 cents per share.

The company expects sales at stores open at least a year,
or same-store sales, to rise 5 to 7 percent in both the current
quarter and the fiscal year.

On March 14, Family Dollar said that second-quarter sales
rose 8.3 percent to about $2.26 billion, with same-store sales
up 5.1 percent.

More customers visited its stores, based on the number of
transactions, and the average transaction increased modestly,
the company said. Sales of consumables, which include basic
household goods, and seasonal items were strongest.
(Reporting by Nivedita Bhattacharjee in Bangalore and Jessica
Wohl in Chicago; Editing by Saumyadeb Chakrabarty, Dave
Zimmerman)

UPDATE 3-Family Dollar sees higher-than-expected FY profit