Family Dollar on Thursday said that it had dismissed its president and COO, Michael Bloom, amid disappointing financial results.
The Matthews, N.C.-based discounter said comparable sales declined by 2.8% in the first quarter, which ended Nov. 30, and by 3% during the month of December — trends officials said they expect would continue.
Although quarterly earnings were in line with previous guidance, the company revised its fiscal 2014 forecast, saying stressed customers and a highly competitive environment would require additional investment in price that would affect profitability in the current quarter and fiscal year.
Howard K. Levine, chairman and CEO, in a conference call Thursday said Family Dollar “strayed from its core strategy of serving the value conscious consumer” amid an aggressive new-store building program and expansion of consumable items in recent years.
“While we are convinced that we are making the right long-term investments, we are not happy with our recent financial results,” he said. “We’ve undertaken a lot of change over the last few years. At the same time, our customers have continued to be challenged by strong economic headwinds and competition has increased.”
A decline in the number of transactions led to the quarterly comp decline, while total sales increased 3.2% to $2.5 billion. Quarterly net income of $78 million declined by 2.8% from the same period last year. The company said earnings-per-share for the fiscal year are now expected to be in the range of $3.25 to $3.55. It previously said earnings would be between $3.80 and $4.15 per share.
Bloom had joined Family Dollar in 2011 from CVS Caremark.
Read more: Family Dollar Posts Flat Comps in Q4
“Ultimately, Mike and I were not aligned on our merchandising strategy and we decided to make the change,” Levine said. The company would begin a search for a new president, Levine added, with an eye on an executive who could also succeed him as CEO.
Also on Thursday the company said Jason Reiser, who joined Family Dollar as SVP of merchandising from Walmart last year, has been promoted to chief merchandising officer.
Levine said Family Dollar would reemphasize its traditional EDLP strategy and rely less on circulars to drive sales and a price message. “We’re not eliminating our use of circulars, but we plan to reduce the frequency and utilize them when our customers are most responsive,” he said. “Our goal is to create more excitement in our stores about the values we offer every day, while also improving the returns of our marketing investments.”
He also said stores would refine food assortment, expanding categories where customer demands has been very strong and reduce space and categories where the response has not met expectations.
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