Personal Investment

If I would have invested $1000 dollars on 9/01/10 when the stock price was $42.96 I would have gotten 23.28 share.  I f I sold them today at market close of $50.20 the stock value would have been $1,168.53. Given that it was left alon and not day traded.

What I learned about Family Dollar.

The biggest thing I learned about family dollar is how well the organization is operated and aggressive about growing.

• They are very proactive in keeping their stock price growing.
• At a pace of 400 stores a year they will be up to 10,000 store in 2-3 years.
• Merchandising efforts are fine tuned to the customers demands.
• The history of the company is very good.  Another American dream come true for the Levine family.

CEO - Howard Levine - following in his fathers foot steps

Levine is the son of Leon Levine the founder of Family Dollar.  Levine  join Family dollar after graduation from college in 1981. He worked in the merchandising department until 1988. From 1988 to 1992 he was President of a womens clothing store. 1992 to 1996 he operated a private investment firms.  He couldn't stay away from the family business though. In 1996 he rejoined the company as Vice President-General Merchandise Manager of Softlines (clothing and food). By August 1998 he was elected as CEO.

Check out his earnings for 2009

Salary $948,654.00
Bonus $0.00
Restricted stock awards $1,871,399.00
All other compensation $122,705.00
Option awards $ $1,111,239.00
Non-equity incentive plan compensation $1,894,615.00
Change in pension value and nonqualified deferred compensation earnings $0.00
Total Compensation $5,948,612.00

CEO Interviews

Levin seems to keep a relatiely low profile and is not centered around any scandals.

CEO Interview Family Dollar

Posted on Jan 07, 2009 in Jim Cramer Mad Money CEO Interviews - Leave a comment

Cramer talked with Family Dollar (FDO) chairman and CEO Howard Levine, to find out if the company’s recent success will continue. Shares of Family Dollar Stores surged 14% Wednesday after the company reported better-than-expected earnings. The company also raised its 2009 guidance, lowered its inventory levels and increased their gross margins. Levine said FDO is doing well with its food programs, which accept food stamps at many of its locations. He also said FDO plans to reap big rewards by accepting credit cards, which will position the firm for the trade-down customer. Levine mentioned the company plans to expand its private label program in 2009 by improving packaging and upgrading merchandise in the health product segment. Lastly, Levine said Family Dollar is taking steps to avoid theft by retaining management and reducing inventory. Cramer said Wall Street is underestimating Family Dollar. He told viewers to buy the stock and he expects many analysts will upgrade the name soon.

Another more recent Family Dollar CEO interview. Levin talks about teh inmportance of focusing on the customer and being adaptable.

Check out the youtube link:
http://www.youtube.com/watch?v=di1M99Y_3V4

Family Dollar Gears up for Thanksgiving, Black Friday and Christmas.

Since the beginning of the month most retailer store are adorned with harvest and Christmas themed merchandise.

What about this newer retail created holiday, Black Friday? There are so many company's ads that are leaked nowadays on websites.  Check out the savings!

www.blackfriday2010.com/

Family Dollar has updated their website with a dedicated Christmass page.

http://www.familydollar.com/Pages/christmas.aspx

Can over-expansion lead to cannibalization of same store sales.

I found an interesting article about FDO aggressive campaign of launching 300+ store a year.

http://www.reuters.com/article/idUSTRE68S1ZY20100929

My concern is where the stores will be in some larger metro area I see Family Dollar stores practically on top of each other.  Can two stroe less than a half mile away from each other really have enough customers to keep the sales dollar per square foot per store above the corporate goal of  $1.51?

External vendors are important part of the value chain.

If you take a close look at the business partner’s link at Family Dollar you will find the following statement:

“For 50 years, Family Dollar has provided our customer with value and convenience in easy to shop neighborhood locations. As we continue to grow and expand our vendors will play an increasingly important role.”

Family Dollar finds value by outsourcing its product sourcing and internal activities by using outside business partners.   Family Dollar uses Thomas Reuters to help do their tax accounting, audits, and share financial because they have less incentive to hide discrepancies or misrepresent facts like internal employees would.  The buying department relies on outside vendor to help them source goods because there are too many products to be experts in all areas or have the purchasing power of a well formed industry supplier. Many times you have National Brands next to private brands to add value to sales of private labels by comparison. By relying on competent external business partner to share the work load the internal people of the organization can use there time to focus on the internal operation and performance of the company as a whole.