Family Dollar Announces $250 Million Accelerated Share Repurchase

MATTHEWS, N.C., Oct 06, 2010 (BUSINESS WIRE) –

Family Dollar Stores, Inc. (NYSE: FDO) announced today it entered into an accelerated share repurchase agreement with Wells Fargo Bank, N.A. under which the Company will repurchase shares of its common stock. The Company is repurchasing shares under the agreement as part of its previously announced $750 million share repurchase authorization.
Under the accelerated share repurchase agreement, the Company will pay an aggregate of $250 million to the bank on October 7, 2010, for a number of shares that will be determined based on average prices of the Company's common stock during a specified period. The Company is funding the repurchase with cash on hand.
As the repurchase of common stock is expected to be accretive to earnings per share, the Company is updating its earnings guidance. Earnings per diluted share, including the impact of this $250 million share buyback, are now expected to be in the range of $3.04 to $3.24 per diluted share for fiscal 2011.
The Company's outlook for fiscal 2011 is based on the following assumptions, which may or may not prove valid and does not reflect any additional stock repurchases or any incremental borrowings:
• An increase in net sales of between 8% and 10%;
• An increase in comparable store sales of between 5% and 7%;
• Approximately 300 new store openings and 80-100 store closings;
• An increase in the operating margin based on flat gross margin and lower SG&A expenses, all as a percentage of sales;
• An effective income tax rate of approximately 36.5%;
• Weighted average diluted shares of approximately 127 million; and
• Capital expenditures of between $300 million and $350 million.
For the first quarter of fiscal 2011, the Company expects that comparable store sales will increase between 5% and 7% and that earnings per diluted share will be between $0.56 and $0.61 per share.