FDO Guides Down Next Quarter and Year. Expect Negative Current Trends On Their Call at 10

FDO, as we expected to clients, had weak news on their earnings today. Even though they beat the street’s $.84 by 4 cents, approximately 3 cents came from a one-time benefit. More importantly, FDO gave guidance below the street for Q1 and their next fiscal year, which starts next quarter. FDO expects Q1 to be $.65-.75 which is below the street’s current expectation of $.76. FDO expects the F2014 year to be between $3.80-$4.15, which compares to the street’s $4.14. Therefore street numbers will need to come down. The conference call is at 10 AM EDT and we expect, based on their guidance that their current comp store sales is tracking negative, which would be a slowdown. The obvious reason we say that is that their earnings release expects negative comps for Q1, which means that the pace has likely slowed from the 0% this quarter and slowed even further from that 12 month average of 3%. We had expected weakness from FDO given tough comps to come and that many other retailers were reporting weak results in the low end sector.