Family Dollar 2011 Annual Report Download - page 3

Dear Fellow Shareholder,
For more than 52 years, we have relentlessly pursued our mission to be a more compelling place to shop, work
and invest, and fiscal 2011 was no exception. Despite a difficult operating environment, we enhanced the
shopping experience for our customers, expanded our efforts to provide our Team Members with an engaging
and rewarding work environment, and delivered greater returns for our shareholders.
In fiscal 2011, we continued to focus our efforts to serve our customer better. We expanded our assortment of
key consumables, strengthened our quality and value perception, and expanded our selection of private brands to
provide our customers with even greater value. Most importantly, we launched a multi-year renovation effort
intended to re-energize the Family Dollar brand. Simply put, this renovation effort represents our expectation for
the future of Family Dollar.
• We have created a warmer, more inviting shopping environment that includes a refresh of the building
façade and exterior signage.
• We have expanded key consumable categories and created more intuitive merchandise adjacencies.
• We have improved the navigational signage and leveraged new fixtures that increase capacity and simplify
restocking and recovery processes.
• And most importantly, we have raised our customer service standards and strengthened our Team Member
engagement with enhanced training and more consistent Team Member branding.
The response from our customers and our teams to these improvements has been overwhelmingly positive.
Encouraged by improved customer satisfaction scores and strong sales results, we exceeded our initial plans and
renovated almost 1,000 stores in fiscal 2011. I remain confident that as we refresh the entire franchise, these
improvements will provide our chain with a platform for future growth.
We also made great progress in our efforts to be a more compelling place to work. With more than 50,000 Team
Members serving customers in nearly 7,100 stores, we must encourage and sustain a culture that empowers our
Team Members to make good decisions for our customers.
Our Company’s culture is unique. While merchandise, promotions and operational processes can be copied, our
culture is the one competitive advantage that cannot be replicated. In fiscal 2011, we continued to invest to build
stronger, more diverse teams. We expanded our leadership development efforts throughout the organization,
improved our rate of internal promotions to almost 80%, increased Team Member engagement and strengthened
our performance-management processes.
Finally, our efforts to be a more compelling place to shop and work delivered strong results for our shareholders.
• As a result of our efforts to improve the shopping experience in our stores, comparable store sales increased
5.5%. This performance, combined with the addition of 300 new stores, resulted in an acceleration of
revenue growth to 8.7% for the year.
• We expanded operating margin and grew earnings per diluted share for the year by 19.1% to $3.12 per share.
• We completed an initial public debt offering of $300 million in 10-year notes and secured an investment-
grade rating from both Standard & Poor’s and Moody’s Investors Service.
• We repurchased approximately $670 million of the Company’s common stock and distributed
approximately $83 million in dividends.
Family Dollar has a long history of delivering strong financial returns to shareholders. Specifically, over the last
five fiscal years, we have distributed more than $368 million in dividends and repurchased more than $1.4 billion
dollars of our common stock, all while delivering a compound average annual growth rate in diluted earnings per
share of approximately 20% and increasing our return on average equity from 20% to approximately 31%. Over
the same period, Family Dollar stock has appreciated by approximately 100%.