Citi Comments On Family Dollar Following Release Of Same Store Sales Numbers

Citi is encouraged by Family Dollar's FDO F2Q11 SSS increase of +5.1%, which was consistent with management's 5% to 6% plan. FDO now expects F2Q11 EPS to be in the range of $0.97-$0.98, up from guidance of $0.92-$0.97 previously and vs. consensus of $0.95 per share. Citi is raising its F2Q11 EPS estimate for FDO to $0.98, up from $0.96 previously, to reflect today's announcement.

Citi reiterates its Buy rating and $60 target price for FDO as it has confidence in FDO's fundamental prospects due to its sound strategic initiatives, which includes driving SSS gains, reaccelerating new store growth, and rolling out an aggressive stores renovations program ahead.

Trian Fund Management sent a letter to FDO's Board that expressed that Trian is disappointed that FDO's Board doesn't think the sale of the company is in the best interests of shareholders and that FDO did not contact Trian regarding the proposal; the Board should reconsider its attractive $55-$60/share proposal; FDO should redeem its poison pill.

FDO is trading lower at $50.83