February 26, 2013

Bernstein Liebhard LLP today announced that a class action has been commenced in the United States District Court for the Western District of North Carolina on behalf of a class (the “Class”) of purchasers of Family Dollar Stores, Inc. (“Family Dollar” or the “Company”) (NYSE: FDO) common stock between October 3, 2012 and January 2, 2013 (the “Class Period”).

The complaint charges Family Dollar and certain of its officers and directors with violations of the Securities Exchange Act of 1934.  Family Dollar operates a chain of approximately 7,500 general merchandise retail discount stores in 45 states, which sell consumables, home products, apparel and accessories, and seasonal and electronics products.

The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding Family Dollar’s then-present sales demand, profitability and financial results for the first quarter of 2013, ended November 24, 2012, and for December 2012.  As a result of defendants’ false statements, Family Dollar’s stock traded at artificially inflated prices throughout the Class Period, reaching a high of $71.20 per share by November 30, 2012.  Meanwhile, Family Dollar’s senior executives cashed in, selling their own Family Dollar stock at artificially inflated prices, including its Chief Executive Officer who sold more than $15.6 million worth of his Family Dollar stock during the Class Period.

Then, on January 3, 2013, before the markets opened, Family Dollar issued a press release disclosing that sales in the Company’s first quarter 2013 – which had ended November 24, 2012 – had significantly underperformed, with significant increases in sales of lower margin consumables rather than higher margin discretionary products, that the Company’s soft holiday sales in December had required significant discounting, that the Company’s inventory had become bloated, and that, as a result, defendants were slashing the Company’s 2013 financial guidance.  The price of Family Dollar stock dropped on this news, falling $8.30 per share – or approximately 13% – to close at $55.74 per share on January 3, 2012.

According to the complaint, the true facts, which were known by the defendants but concealed from the investing public during the Class Period, were as follows:  (a) the Company’s intentional efforts to increase sales of lower margin consumables, such as cigarettes, Pepsi drinks, gift cards, magazines and other high-turnover merchandise, in order to increase foot traffic and better compete against chains such as Dollar General Corp and Wal-Mart Stores Inc., had significantly diminished profits in the first quarter of 2013 and in December 2012; (b) significant price cuts undertaken in an attempt to move unsalable inventory had also significantly diminished profits in the first quarter of 2013 and in December 2012; (c) Family Dollar’s sales of more profitable discretionary items such as toys and other household goods had significantly underperformed expectations in the first quarter of 2013 and during December 2012; (d) bloated inventories in Family Dollar’s stores would significantly weigh down 2013 profitability; and (e) based upon the above, defendants lacked a reasonable basis for their positive statements about the Company’s sales and profitability during the Class Period, in particular their first quarter and fiscal 2013 guidance.

Plaintiffs seek to recover damages on behalf of all Class members who invested in Family Dollar common stock during the Class Period.  If you invested in Family Dollar common stock as described above during the Class Period, and either lost money on the transaction or still hold the stock, you may wish to join in this action to serve as lead plaintiff. In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than April 22, 2013.

A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation.  In order to be appointed lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class.  Under certain circumstances, one or more class members may together serve as lead plaintiff.  Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.  You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.

If you are interested in discussing your rights as a Family Dollar shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or seidman@bernlieb.com.

Bernstein Liebhard LLP has pursued hundreds of securities, consumer and shareholder rights cases and recovered over $3 billion for its clients.  It has been named to The National Law Journal’s “Plaintiffs’ Hot List” in each of the last ten years.

You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the Western District of North Carolina.