Dollar Retailing Seeing Good Times
- Jan 08, 2009
The Dow Jones index took something of a dive yesterday, possibly because of ill tidings from the likes of Time Warner and Intel, or the anticipation of bad job market numbers, or maybe because it was time to yo-yo back to roughly where the market started at the beginning of the year. In any case, the Dow was down 245.40 points, or 2.72 percent, while the S&P 500 lost 3 percent exactly and the Nasdaq lost 3.23 percent.Jobless numbers from the federal government will be released tomorrow, but private assessments of the increasing scope of the problem are already out. According to ADP Employer Services, companies cut about 693,000 jobs in December, the highest single monthly total since the company started publishing such estimates, based on payroll data, in 2001. In a stunning show of confidence in the United States Postal Service, accused Ponzi specialist Bernard Madoff supposedly mailed a number of parcels containing more than a million dollars worth of jewelry to various people, including family members. Prosecutors in the case say that it means that Madoff needs to relocate to a jail cell from his swank house arrest. It isn’t just the Wal-Marts of the world that are thriving in the current, post-irrational-exuberance economy. Matthews, N.C.-based Family Dollar Stores Inc. has reported an increase of 14.1 percent in earnings for its first fiscal quarter, which ended Nov. 29–well after consumers started responding to the macroeconomic meltdown in the fall by shopping less. Net income for the chain of dollar stores rose to $59.3 million for the quarter, or 42 cents a share, up from 37 cents a share during the same quarter last year. Perhaps more importantly, same-store sales for the dollar-store retailer increased 2.1 percent during the quarter. Such figures compare sales at stores that have been open more than a year, and are an important retail metric that’s rarely in positive territory these days. No one pretends that stores like Family Dollar purvey luxury goods, which is fortunate for their bottom lines. SpendingPulse reports that sales of luxury goods in December 2008 plunged 27.6 percent, compared with the same month in 2007, and that came on top of a 24.4 percent drop in November 2008 compared with a year previously. According to Family Dollar, much of its increase in sales comes from consumables, especially food, household chemicals and paper products, which increased about 10 percent during the first fiscal quarter, compared with the last year. Both the number of transactions and the dollar value of each transaction grew during the quarter, noted Howard Levine, Family Dollar chairman & CEO, during a conference call on Wednesday. “Customers of all income levels are looking for ways to stretch their budgets,” Levine said. “It’s clear that Family Dollar–and the dollar channel overall–is gaining in this environment. While we continue to increase our share from our core low-income customer, we’re also seeing additional trips from more middle-income customers.” In other words, dollar stores aren’t just for the poor, especially now that most everyone is feeling a lot poorer. The Conference Board’s Consumer Confidence Index, after all, stood at 38.0 in December, down from 44.7 in November — lower than the early ’90s recession, but not quite as low as the early ’80s recession. In a sad final note, real estate executive Steven Good, chairman & CEO of Chicago-based Sheldon Good & Co., died earlier this week in an apparent suicide. Good, 52, ran the major real estate auction company founded by his father, Sheldon Good, in 1965. Besides his father, Good is survived by his wife and three children.