Family Dollar Stores’ plan to increase inventory up to 20 percent by adding new products and opening up to 500 stores this year will drive business for shippers, particularly those that supply food, health and beauty goods.
The Matthew, N.C.-based company plans to add roughly 1,000 new consumable products, resulting in a 15 to 20 percent increase in inventory, said Howard Levine, executive chairman and chief executive officer. Sales of consumable goods rose in the fiscal second quarter 13 percent, helping to drive profit up 11 percent year-over-year to $136.4 million. Family Dollar revenue rose 9 percent year-over-year to $2.46 billion in the same period, according to Bloomberg.
“As we look to the second half of fiscal  we are beginning to see some signs that the economy is slowly starting to improve,” Levine said. “Yet, consumers still face some headwinds, especially from rising gas prices, which could strain discretionary purchases and impact the pace of recovery.”
He said the company will open between 400 and 500 stores in 2011, adding to the 184 opened last year, according to a Seeking Alpha transcript of the company’s earnings call. Family Dollar is also expanding its refrigerated inventory in existing and new stores, as the retailer offers more frozen breakfast, lunch and dinner meals. Rival Dollar General plans to open 1,425 stores by the end of 2015 and expand its offering of perishable goods.
The retailer will begin selling cigarettes and other tobacco product this year, along with products from brands such as Red Bull, Wise Snacks and Gerber baby foods, said Michael Bloom, president and chief operating officer. Family Dollar will start selling Pepsi product in addition to existing Coca-Cola products.
“We're adding new national brands like Maybelline and L'Oreal and expanding our selections of brands like Schick, Allegra and Oil of Olay to fulfill more of our customers' health, beauty and personal care needs,” Bloom said.
The company, which was the 21st largest U.S. container importer in 2010, said the opening of offices in Hong Kong and Shenzhen a year has strengthened partnerships with suppliers. Bloom said the improved pacts have allowed the company to “significantly” expand direct-to-factory purchases.