Family Dollar 2005 Annual Report Download - page 5

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refrigerated coolers in about 1,000 stores last year. This year
we will expand the ro llout to an additio nal 2,500 stores, and
by the end of 2006, more than half of our chain will have
refrigerated coolers.
In 2005, we launched our Urban Initiative in 1,200
stores to address the unique challenges of operating high-
volume stores in large metro po litan markets. The Urban
Initiative is designed to increase pro fitability in these
markets thro ugh investments in people, process changes
and techno logy, including organizational changes to
support a mo re mobile and flexible workforce. While
stores in the Urban Initiative experienced higher than
average sales gro wth and continued to be pro fitable, the
pro gram did no t achieve our pro fitability go als in 2005.
We will continue to invest in the current Urban Initiative
markets in 2006, but we will not expand the pro gram into
new markets until we have refined processes and
generated expected results.
We experienced one o f o ur strongest holiday seasons
ever in 2005, generating comparable sto re sales increases
of 5% in November and 4% in December. The addition of
exciting Treasure Hunt merchandise drove these results as
our Customers were delighted to find unexpected ho liday
“ treasures” at Family Dollar. We will expand o ur Treasure
Hunt merchandise pro gram in 2006 to include mo re
surprises for our Customers, better in-store presentations
and impro ved merchandise allocations to sto res to drive
higher inventory turns.
In 2005, we continued our aggressive store expansion
pro gram with the opening of 500 new stores, but the
timing of new store o penings was weighted heavily toward
the end of the fiscal year, increasing co sts and o perational
inefficiencies. While we will maintain our co mmitment to
new store gro wth with plans to open about 400 new stores
in 2006, this slo wer rate of growth will allow us to focus o n
building processes to support an even distributio n o f store
openings thro ugho ut the year. Creating a mo re steady flow
of new store openings will enable us to more efficiently
accelerate our growth in the future.
We continue to build our management team with
strong talent to support our gro wth opportunity. Some
excellent new players have joined o ur talented team of
seaso ned veterans, and we have realigned our senior
management structure to better suppo rt o ur cross-
functional strategic agenda. As I assess Family Dollar
today, I believe that we have a stro ng, cohesive team,
and our new management alignment is having a tangible
impact on our results.
In the fourth quarter of 2005, our Board of Directors
authorized the repurchase of $300 million of the
Company’s Common Stock. In September 2005, we too k
advantage of a compelling sto ck price and a favo rable
interest rate environment to repurchase ten million shares
of Family Do llar Common Stock using proceeds of a $250
million private placement of long-term debt. The issuance
of debt when combined with the stock repurchase pro gram
will enhance Shareho lder value while continuing to
maintain a stro ng financial po sitio n.
Fiscal 2005 was a challenging year, but, thanks to the
hard wo rk o f all of our Associates, we made significant
pro gress in building the foundation upo n which we intend
to increase our market share and profitability. I remain
excited about the growth o pportunity that exists for our
Company, and I am confident in our ability to realize this
oppo rtunity and deliver value to our Customers, our
Associates, and you, our Shareho lders.
FAMILY DOLLAR STORES, INC. ANNUAL REPORT 2005
“ We are committed to delivering value to our Shareholders, our Customers
and our Associates as we position Family Dollar for future profitable growth.”
HOWARD R. LEVINE
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
No vember 2005