Family Dollar Stores Earnings Call Insights: Analyzing the Competitive Landscape and This Product

Tobacco

John Heinbockel – Guggenheim: Couple of things, one on tobacco and then sort of a longer term question. As you look at the experience so far is tobacco accretive to EBIT are you finding that, and then how impactful was tobacco on – maybe order of magnitude in the quarter on both comp and gross?

Michael K. Bloom – President and COO: John, it’s Mike, I’ll start. So, let me just – couple of things; first, as we mentioned it’s in 6,600 stores. I think we’ve got a few hundred stores more to go that we’re going to add tobacco this fiscal year. Ramping up, it’s performing well above our expectations. Our basket remains like we talked about before, 60% of the baskets include another item and in the basket that margin is consistent with the rest of the – with the store-wide margin. It’s clearly driving trips. We don’t believe that cigarettes – the fact that we’re selling cigarettes, people are trading off in other item. We don’t believe there is more smokers. We believe we are capturing that cigarette trip from another retailer that was selling tobacco. So, I think, look, at the end of the day, I’d like to believe that while we’re experiencing some margin pressure, we’re generating margin dollars.

Mary A. Winston – EVP and CFO: I will just add to your comment about the profitability and whether or not it’s accretive. We really don’t get into specific profitability by category, but I view tobacco as obviously a critical component of our overall portfolio of consumable products, and consumable sales are up nicely, tobacco was a big piece of that. As Mike referenced, we’re seeing nice attachment, we’re seeing an increase in trip, so it’s driving traffic as we would expect. So, I think it’s having a positive impact on the business as all of our consumables are…

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