Q2 2011 Earnings Call Transcript

Transcript Call Date 03/30/2011

Operator: Good morning. My name is Chandra, and I will be your conference facilitator today. I would like to welcome everyone to the Family Dollar Earnings Conference Call. All lines have been placed on mute to prevent any background noise.

After the Company's prepared remarks, there will be a brief question-and-answer period. The question-and-answer queue will not be available until after the Company has concluded their prepared remarks. So, please wait until after the speakers have finished their remarks before attempting to enter the queue.

I would now like to introduce Ms. Kiley Rawlins, Vice President of Investor Relations and Communications. Ms. Rawlins, you may begin your conference.

Kiley F. Rawlins - VP, IR and Communications: Thank you. Good morning everyone and thank you for joining us today. For those of you who have dialed in, please note that we've posted accompanying slides on the Investor Relations page of our website.

Before we begin, you should know that our comments today will include forward-looking statements regarding various operating initiatives, sales and profitability metrics and capital expenditures, as well as our expectations for future financial performance. While these statements address plans or events, which we expect will or may occur in the future, a number of factors, as set forth in our SEC filings and press releases could cause actual results to differ from our expectation.

We refer you to and specifically incorporate the cautionary and risk statements contained in today's press release and in our SEC filings. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, March 30, 2011. We have no obligation to update or revise our forward-looking statements except as required by law and you should not expect us to do so. With me on the call this morning are Howard Levine, Chairman and CEO, Jim Kelly, President and COO, and Ken Smith, Chief Financial Officer.

We'll begin our discussion this morning with a review of our results for the second quarter and first half of fiscal 2011. Then we'll take a few minutes to discuss our plans and outlook for the rest of the year. Following our prepared remarks, you will have an opportunity to ask questions. In consideration of others on the call, please limit your question to one question and one follow-up question if necessary. Remember that the queue for the question-and-answer session will not be available until after we have finished our prepared remarks.

Now I'd like to turn the call over to Ken Smith. Ken?

Kenneth T. Smith - SVP and CFO: Thanks Kiley. This morning we reported diluted earnings per share increased to 21% to $0.98 compared with $0.81 in the second quarter last year reflecting the effect of our stock repurchase program.

Net income for the quarter was $123.2 million, an increase of 9.8% over last year. While revenue growth was near the low end of our original expectation, improved purchase mark-ups combined with benefits from cost improvement initiatives resulted in modest operating margin expansion during the quarter.

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