Citi Comments On Family Dollar Following Upbeat Management Meetings

Citi hosted very upbeat meetings with Family Dollar FDO management in the Midwest. Management believes that FDO has reached a crucial “inflection point,” as the investments in capabilities, technology, and infrastructure over the last 3-5 years position the company well for growth going forward. Customer and associate response to FDO's new and renovated stores has been very positive, and management is pleased with initial results, which supports Citi's confidence that FDO can deliver SSS growth in the 5 to 7% range this year. Additionally, mgmt. believes that FDO can close its operating margin gap with the competition over time. Despite the challenging macroeconomic environment, mgmt. believes FDO's proposition of value and convenience is unique and should resonate well with existing customers, as well as help the company to continue to attract middle income customers. Additionally, FDO believes it will have great appeal with Baby Boomers and is taking steps to tap into this opportunity. Citi has a $60 PT and Buy rating on FDO FDO closed Wednesday at $51.93