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Xiaomi Produces Record Smartphone Sales and Gross Margins; FVE Raised to HKD 20.70

The smartphone gross margin of 12.9% was up 480 basis points on the previous corresponding period. Up until third-quarter 2020 Xiaomi’s smartphone gross margins averaged 7.5% and never rose above 9% in any quarter. Fourth quarter last year these margins increased to 10.5% and then jumped to 12.9% in the first quarter. The smartphone performance drove consolidated operating profit (less investment gains) up 161% with an 8% consolidated operating margin, much better than its previous best quarterly operating margin of 6.1% in second-quarter 2019. Huawei’s retreat seems to have lifted margins across the industry with Samsung’s smartphone business and Apple’s consolidated business also reporting their best operating profit margins since 2016. We lift our fair value estimate to HKD 20.70 from HKD 16.30 previously due mainly to increased gross margin forecasts in the smartphone business as well as increased smartphone revenue growth forecasts in 2021, with the lift in the value of Xiaomi’s investment portfolio over the quarter and a slightly stronger CNY also helping. Our no-moat rating is retained as we believe Xiaomi is predominantly an electronics hardware supplier with limited switching costs with its internet services business not yet well enough developed to assign a moat to. On our estimates Xiaomi currently trades on a 2021 price/earnings ratio of 31 times. Despite Xiaomi’s growing Internet of Things and lifestyle services business revenue giving it some differentiation from other consumer electronics peers, we believe this multiple is still above what could be reasonably justified.

Xiaomi’s smartphone segment had another strong quarter with Xiaomi’s total number of smartphones sold globally rising by 69% and smartphone revenue increasing by 70% from the previous year. Smartphone gross profit was up 170% with gross profit margin increasing to 12.9% from 8.1% in first-quarter 2020. Until the third quarter of 2020, the average smartphone gross margin for the previous 15 quarters had been 7.5% with a range of 3.3% to 9%. The margin then jumped to 10.5% in fourth-quarter 2020 and 12.9% in first-quarter 2021. Given Xiaomi generates around two thirds of its revenue from smartphone, its valuation is very sensitive to the smartphone gross margin assumption. If we double the smartphone gross margin assumption from 7.5% to (say) 15%, holding all other assumptions equal, Xiaomi’s valuation nearly doubles. Xiaomi pointed toward the shift in product mix toward higher end smartphones and reduced marketing and promotion spend given tightness in the semiconductor supply chain as the key drivers for the margin increase.

We estimate that reduced competitive intensity from Huawei has probably also helped smartphone industry margins and there may also be some premium attached to 5G phones. In the first-quarter 2021, key competitor, Samsung, reported its highest quarterly smartphone operating margin since the second quarter of 2016. The first quarter also saw Apple reporting its highest quarterly company operating margin since first quarter of 2016.

Xiaomi admitted that gross margin expansion had not been its main focus nor does it expect it to be in the near future as it is quite rightly focused on increasing market share, particularly in the mid-high end phone segment. It expects future growth to come from increased penetration into the offline segment in China as it is currently expanding its store footprint with a target of around 10,000 stores by the end of 2021. We forecast Xiaomi to grow its smartphone revenue by 44% in 2021 and at an average of 18% per year thereafter out to 2025 and assume its smartphone gross profit margin increases from 11.0% in 2021 to 11.4% in 2025 having lifted these assumptions by around 200 basis points following this result.

Revenue from the Internet of Things and lifestyle products segment increased by 41% year over year in the first quarter after growing by 8.6% in 2020. We note that the prior period was negatively impacted by COVID-19. Gross margin increased to 14.5%, which was also a quarterly record. Management had previously indicated that it had proactively reduced the number of stocks keeping units in this division to focus more on those products that interworked with the smartphone ecosystem. The company indicated that global shipments of its smart TVs were down 4% to 2.6 million for the first quarter. Larger television competitor, TCL, reported global TV sales volumes up 33% for the first quarter with TV sales in China up 8.3% and non-China sales up 43%. We forecast that Xiaomi can grow its Internet of Things and lifestyle products revenue by an average of 15.1% per year out to 2025 with gross margins averaging 12.0%.

Revenue from internet services was below expectations, increasing by 11.4% year over year in the first quarter after growing at 20% in 2020. Monthly active users, or MAUs, of its Mi User Interface increased to 425 million at the end of March from 396 million at the end of December 2020 and were up 29% year on year. However, average revenue per user was down 13% to CNY 5.3 per month. Advertising revenue was strong growing by 20% to CNY 3.6 billion and making up 58% of total internet services revenue. This is mainly driven by smartphone sales with the improved mix of higher end smartphones helping Xiaomi to grow the preinstalled app revenue. The high percentage of advertising revenue and improved margins from the fintech business drove internet services gross margin to 68.4% for the quarter. We believe the dominance of advertising in this revenue stream speaks to the difficulties Xiaomi has faced in building non-hardware-related internet revenue streams. We forecast internet services revenue growth of 20% per year to 2025 noting that growth in first-quarter 2021, internet services revenue was slower because of the very high gaming revenue in first-quarter 2020 due to the pandemic.

Source: Morningstar

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Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Dividend Stocks

QBE Insurance – Investment outlook

Management has made good progress improving operational efficiency and strengthening the balance sheet, consolidating the group into a more focused and profitable business after a multidecade acquisition binge. Geographic diversification does little to help margins and returns when large insured events occur without warning and are largely out of management’s control. We expect higher interest rates to benefit in the medium-term, but the competitive landscape mean some of this upside is eroded through competition via premium rates.

  • QBE has failed to demonstrate the underwriting discipline and cost advantages needed to warrant an economic moat.
  • Leveraging scale, brand, and geographic reach, QBE enjoys solid market positions in the U.S., Europe, Australia, and New Zealand. Brand recognition and confidence claims will be paid are helpful in acquiring and retaining customers, but competitors have shown these are not insurmountable barriers.
  • We expect further recovery and an exit from poor performing regions or product lines to benefit the bottom line, but do not believe QBE is gaining the scale necessary to improve its competitive position.
  • Rising competition should erode market share from incumbents, such as QBE, regardless of the impact on short term profits and returns.
  • A higher incidence of large claims events from major catastrophes could reduce profitability such that
  • dividend cuts and potentially dilutive capital raisings are needed.
  • Changes to capital requirements or/and poor profitability could weaken the balance sheet, requiring dilutive capital raisings.
  • Lower investment returns due to very low interest rates may continue for longer than we expect.

 (Source: Morningstar)

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks

Pendal Group – Investment outlook

We forecast FUM to grow 10% per year to about AUD 146 billion by fiscal 2025–exceeding management’s “50% growth by fiscal 2025” target–mainly driven by market returns of 7.5% per year. A key highlight was the persistence of Pendal’s improved performance since the COVID-19 selloff, which should help attract stronger inflows over the near term. With 71% of FUM in funds that have outperformed their benchmarks over a 3-year period (above the 3-year average of 66%), 52% of funds are now in the first and second quartiles (over a 1-year period).

Performance will be the primary driver of fund flows. While we also expect new money into Pendal’s new offerings– such as its Regnan ESG products–we don’t expect them to add meaningfully to FUM in the near term. Amid the proliferation of ESG funds and ETFs, we question if these new products will materially add to flow in the foreseeable future. Magellan’s Global Sustainable strategy has amassed just AUD 151 million in FUM after four years, while Trillium, Perpetual’s ESG manager, has circa AUD 6 billion in FUM after operating for 38 years.

Pendal could suffer further outflows, notably from the U.K./ European equities and Westpac mandates, but we see risk declining. We understand clients who withdrew their funds due to Brexit uncertainties tended to be non-U.K clients, and they currently make up less than 20% of Pendal’s U.K./ European equity mandates.

Elsewhere, the guided 8%-10% growth in fiscal 2021 fixed costs and a one-off spend of AUD 15-18 million from fiscal 2021-24 are largely strategic (focused on new products, marketing and technology), and in our view, are necessary to help Pendal grow FUM and revenue amid an increasingly competitive investment landscape. We assume Pendal will spend at the higher end of guidance, and forecast the costto- income ratio to average 64%–above the 3-year average of 60%–over the next three years and trend downwards thereafter.

Management has revised its dividend payout policy to 80%-95% of underlying profit after tax (which will replace cash NPAT as an underlying profit measure) starting fiscal 2021. We think this is a reasonable range, underpinned by the group’s low capital requirements, strong free cash flow and pristine balance sheet with no debt. We currently assume a payout ratio of 88%, which equates to a midcycle dividend yield of 6.5%.

 (Source: Morningstar)

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Global stocks

Perpetual Ltd– Perpetual to Go Full Steam

While it benefits from Australia’s ageing demographics and the compulsory superannuation contribution levy, its core Australian equity funds are suffering from net outflows, owing to structural issues of industry superfunds managing more Australian equities in-house and investors increasing allocation to cheaper passive investments and global assets as well as poor short-term performance. Recent acquisitions of Barrow Hanley and Trillium improve the earnings outlook in its funds management business, and it should benefit from continued growth in its private and trust segments and improving markets.

Key Investment Consideration

  • Its core investment segment is facing the structural issues of increasing allocations to passive investment styles and global assets, as well as industry superfunds managing more Australian equities in-house.
  • Its earnings are highly sensitive to equity market and macroeconomic conditions such as credit growth, and investor confidence, making it a high-beta stock.
  • Its funds under management and advice provide it with a recurring revenue stream and generate high returns on invested capital and strong free cash flows. It should also benefit from increases in the compulsory superannuation contribution.
  • Perpetual’s large scale of funds under management and advice provide it with recurring revenue streams and allow it to generate high returns on invested capital. Combined with relatively low maintenance capital requirements, it generates strong free cash flows allowing it to maintain a high dividend payout ratio.
  • Perpetual’s private segment is well positioned to take advantage of its heritage brand, as well as Australia’s aging demographic and growth in the high-net-wealth financial advisory sector. It also benefits from less regulatory scrutiny than advisors like the major Australian banks, AMP, and IOOF, which focus more
  • on the mass affluent.
  • Perpetual should benefit from the continuing growth in retirement FUM from the phased-in increase of the compulsory superannuation contribution levy from 9.5% to 12%.
  • Perpetual’s core investments segment is facing the structural issues of investors increasing allocations to passive investment styles and global assets, as well as industry superfunds managing more equities inhouse.
  • Its earnings are highly sensitive to equity market and macroeconomic conditions such as GDP and business and investor confidence, making it a high-beta stock.
  • Perpetual is not well positioned to take advantage of the likely increase in allocation of Australian investors
  • to passive investments.

 (Source: Morningstar)

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

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Dividend Stocks

News Corp – Investment outlook

Against this negative backdrop, the fate of a legacy publisher depends on how it maintains audience in the ultracompetitive digital age, and whether it has the financial, as well as the editorial, resources to prevail in the longer term. With still-healthy free cash generation, a solid balance sheet, and ample journalistic resources, we believe News Corporation is well placed to tackle this monumental challenge. Furthermore, the strong balance sheet furnishes management with the ammunition to diversify away from the legacy publishing industry and explore investment opportunities in more structurally stable fields such as digital media assets. Recent efforts to simplify the group is also positive.

Key Investment Consideration

  • News Corporation is in the middle of transforming its legacy print publishing and pay TV business model to one that must compete in the ultracompetitive digital information environment.
  • News Corporation’s editorial resources and solid balance sheet place the company in good stead to maintain readership and stabilise advertising dollars against proliferating news alternatives for consumers.
  • In the meantime, News Corporation is diversifying into new businesses, such as digital real estate advertising in the U.S., while its online real estate classifieds operation enjoys dominance in Australia.
  • News Corporation’s strong financial position and stillsolid free cash generation separate the company from its struggling peers in the traditional print and publishing space.
  • The solid balance sheet provides management with critical flexibility, as it attempts to navigate the treacherous structural landscape and transition the company into the brave new world of digital media.
  • News Corporation also boasts a number of resilient online property classified assets in Australia and the U.S., ones that add to its cash flow profile and provide a template for the kind of businesses that management wishes to acquire as part of a diversification strategy.
  • The structural headwinds that have decimated the industry during the past decade may accelerate in the future, as technology and innovation provide consumers with even more choice in news and information.
  • Management’s efforts to change the legacy publishing model, charge for content in the digital arena, and convince advertisers of the value of its online audience may be overwhelmed by technological and behavioural forces beyond the company’s control.
  • The balance sheet may not be utilised in accretive fashion, with attractive assets that diversify News Corporation’s earnings likely to demand high valuation multiples.

 (Source: Morningstar)

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Best Buy Co Inc

Revenue was $11.6 billion, up from $8.6 billion in 2021’s first quarter and ahead of our $10.4 billion forecast. Comparable sales were up 37.2%, bolstered by the domestic appliance segment (comps up 67%), which the firm attributed to economic stimulus and sustained spending on the home. Best Buy’s 6.6% operating margin was ahead of the 2.7% result in fiscal 2021 and our 3% projection and reflected an improvement over 2020’s first-quarter result of 3.7%. Fiscal 2022 first-quarter EPS came in at $2.32, well above our $0.90 estimate. For comparison, first-quarter 2020 EPS was $0.98.

While these results were impressive, we are skeptical about their sustainability as economic stimulus payments are set to end and other disposable income options are increasing. Management’s second-quarter guidance indicates a deceleration of comps (17%) and a flat gross margin compared with 2021 (22.9%). For the full year, we expect comps around 5% (in line with updated guidance of 3%-6%), flat year-over-year gross margins, and a slight increase in selling, general, and administrative expense. We don’t plan a material change to our $101 fair value estimate and view the shares as overvalued, given the headwinds Best Buy faces.

One notable takeaway in Best Buy’s favor was the efficacy of its e-commerce and omni channel strategy despite the reopening of physical stores. Sixty percent of online orders were fulfilled from a Best Buy store via shipping, delivery, or pickup in store. Additionally, online orders made up 33% of domestic sales, compared with 15% in 2020. The firm is planning to capitalize on this with its new Best Buy Beta loyalty program, which offers perks including same-day delivery and special member pricing. For Best Buy to remain competitive after COVID-19, an evolving e-commerce plan is imperative.

Profile

Best Buy is one of the largest consumer electronics retailers in the U.S., with product and service sales representing more than 9% of the $450 billion-plus in personal consumer electronics and appliances expenditures in 2019 (based on estimates from the U.S. Bureau of Economic Analysis). The company is focused on accelerating online sales growth, improving its multichannel customer experience, developing new in-store and in-home service offerings, optimizing its U.S., Canada, and Mexico retail store square footage, lowering cost of goods sold expenses through supply-chain efficiencies, and reducing selling, general, and administrative costs.

Source:Morningstar

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks

Airbus SE

It benefits immensely from being in a duopoly with Boeing in the commercial aircraft manufacturing business for aircraft 130 seats and up; the pair of companies act as a funnel through which all commercial aircraft demand must flow. This allows both companies to actively manage their order backlogs to reduce cyclicality, despite the intense cyclicality of the customer base.

Airbus’ commercial aircraft segment can broadly be split into two parts: nimble narrow-bodied planes that are ideal for efficiently running high-frequency short-haul routes, and wide-bodied behemoths that are generally reserved for transcontinental flights. Recently, narrow-body volume has increased substantially due to the rise globally of low-cost carriers and improved technology that allows smaller airplanes to operate flight paths that were previously unprofitable. We think that Airbus’ A320 family has taken the advantage in the upper end of this market, with the introduction of the A321neo LR and the forthcoming A321neo XLR, which will have a capacity of 4,700 nautical miles and would enable single-aisle routes from India to Europe. We anticipate that further technology improvements will push low-cost carriers into routes that have been dominated by legacy carriers.

On the wide-body side of the market, we anticipate much slower growth, as we expect improving technology will allow airlines to substitute narrow bodies for wide bodies for an increasing number of routes. Airbus has a competitive wide-body offering, the A350, though backlogs suggest that Boeing’s comparable 777, 777X, and 787 offerings resonate more with customers. Airbus also has segments dedicated to the production of defense-specific products and helicopter manufacturing. These businesses are less material to Airbus as a whole, generating slightly over 10% of our midcycle EBIT. We anticipate modest growth from these segments, largely assuming that defense spending as a proportion of GDP remains constant in the European Union and that helicopter deliveries rebound over the medium term.

Bulls say

  • Airbus’ A320 family continues to have a substantial lead in the valuable narrow-body market, and the A321neo XLR has the potential to open new long range routes to low-cost carriers.
  • Airbus is well positioned to benefit from emerging market growth in revenue passenger kilometers and a robust developed-market replacement cycle.
  • We expect that commercial airframe manufacturing for aircraft 130 seats and up will remain a duopoly over the foreseeable future. We think customers will not have many options other than continuing to rely on incumbents.

Bears Say

  • Aerospace remains a highly regulated space, and regulatory burden could increase globally subsequent to the grounding of the Boeing 737 MAX.
  • It could take years for airlines to recover from the economic carnage caused by COVID-19, and the virus could lead to changed consumer behavior that would be unfavorable for the industry (for example, video conferences replace business trips).
  • Aircraft development is susceptible to development delays and cost overruns.

Profile

Airbus is a major aerospace and defense firm. The company designs, develops, and manufactures commercial and military aircraft, as well as space launch vehicles and satellites. The company operates its business through three divisions: commercial, defense and space, and helicopters. Commercial offers a full range of aircraft ranging from the narrow-body (130-200 seats) A320 series to the much larger A350-1000 wide body. The defense and space segment supplies governments with military hardware, including transport aircraft, aerial tankers, and fighter aircraft (Euro fighter). The helicopter division manufactures turbine helicopters for the civil and para public markets.

Source:Morningstar

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks

Burlington Stores Inc

As economic stimulus was likely the primary contributor to Burlington’s 20% comparable growth relative to prepandemic first-quarter fiscal 2019 levels, we still call for normalized mid-single-digit revenue growth and low double-digit adjusted operating margins long term. We have a favorable view of the chain’s improvement initiatives but believe the shares’ trading price assumes a best-case scenario.

Burlington’s $2.2 billion in first-quarter sales sailed past our $1.6 billion estimate (which was in line with the chain’s fiscal 2019 performance; we had been more cautious about the cadence of the pandemic-related recovery). Cost leverage led to a 10.8% adjusted EBIT margin, up nearly 370 basis points from the same period in fiscal 2019. Management did not offer guidance, but indicated it plans full-year sales to be around 20% higher than fiscal 2019’s $7.3 billion, and our prior $8.0 billion target should rise toward $8.7 billion, accelerating a recovery we had expected to extend into fiscal 2022. Leadership models a full-year adjusted EBIT margin decline of 20-30 basis points from fiscal 2019’s 9.2%, and our prior 8.7% mark should rise accordingly.

Although we caution against reading too much into a quarter borne of exceptional circumstances (easy comparisons due to 2020 store closures, stimulus, and pent-up demand), we believe the performance highlights Burlington’s greater agility as it executes management’s plans for more opportunistic inventory purchases. The chain was not spared the effects of global freight supply challenges, but we believe its work to use its reserve inventory and large roster of vendors protected its ability to flow product. We do not anticipate the freight issues will linger, with normalization as supply and demand dynamics stabilize alongside the economy.

Profile

The third-largest American off-price apparel and home fashion retail firm, with 761 stores as of the end of fiscal 2020, Burlington Stores offers an assortment of products from over 5,000 brands through an everyday low price approach that undercuts conventional retailers’ regular prices by up to 60%. The company focuses on providing a treasure hunt experience, with a quickly changing array of merchandise in a relatively low-frills shopping environment. In fiscal 2020, 21% of sales came from women’s ready-to-wear apparel, 21% from accessories and footwear, 19% from menswear, 19% from home décor, 15% from youth apparel and baby, and 5% from coats. All sales come from the United States.

Source:Morningstar

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Shares Technology Stocks

Change Healthcare Inc

UnitedHealth still plans to purchase Change for $25.75 per share, which is our fair value estimate. However, in March, U.S. antitrust regulators announced an extension of that merger’s review period, and if the deal doesn’t close because of regulatory concerns, we would reduce the value of Change to our stand-alone fair value estimate of $16.50.

In the quarter, Change beat consensus on both the top and bottom lines. Revenue grew 1% to $855 million, above FactSet consensus of $846 million. With cost controls likely due to rightsizing before the pending acquisition, Change turned that slight revenue beat into a bigger profit beat. The company turned in adjusted EBITDA of $272 million (above consensus of $254 million) and adjusted EPS of $0.42 (above consensus of $0.36).

On the pending merger with UnitedHealth, both the acquirer and the target look committed to the deal, but regulators have thrown a wrench into the process. Based on recent commentary from UnitedHealth, there appears to be no major financing concerns or red flags from the perspective of the potential acquirer, and Change shareholders voted to approve the merger in April, as well. However, the Department of Justice announced an extended antitrust review on the combination in March after receiving a letter from the American Hospital Association about the combination, citing concerns about sensitive healthcare data shifting hands from Change (a neutral third party) to UnitedHealth’s Optum segment (a subsidiary of the largest U.S. health insurer and a large caregiver, too). The AHA suggested that the shift could give UnitedHealth an unfair advantage in its legacy businesses by seeing competitive claims processed in Change’s clearinghouse business. Concerns like that add uncertainty about whether the deal will close.

Profile

Change Healthcare is a spin-off of various healthcare processing and consulting services acquired by McKesson over numerous years. Recently, these processing assets were contributed to a joint venture and in June 2019 public shares were issued with McKesson retaining the majority interest. As of the end of the March 2020 quarter, McKesson distributed all its interest in the public processor. Core services consist of insurance (healthcare) claim clearinghouse for healthcare payers in addition to administrative and consulting services to assist healthcare providers improve reimbursement coding, billing, and collections.

Source:Morningstar

Disclaimer

General Advice Warning

Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.

Categories
Global stocks Shares

Dollar Tree Inc

Electronic digital interface at a stock exchange or bourse showing the fluctuating prices of stocks and shares on the markets charting their performance

Our planned change is primarily a result of a higher ongoing tax rate assumption (26% statutory rate from 2022 onward, from 21% prior), as a time value of money-related adjustment mostly offsets the impact of a softer near-term outlook amid heightened freight costs. Our long-term targets still call for mid-single-digit annual top line growth and high-single-digit adjusted operating margins. We do not see a buying opportunity at the shares’ current trading price, despite a mid-single-digit percentage pullback after the announcement.

Quarterly comparable sales rose 4.7% at the Dollar Tree banner (with about a 100-basis-point impact from adverse weather in February) and fell 2.8% at Family Dollar (after a 15.5% increase in the same period of fiscal 2020 as consumers stocked up in the early days of the pandemic). We had expected a 5.5% increase and a 4% decline, respectively. Management set full-year guidance of $5.80- $6.05 in adjusted diluted EPS, including a $0.70-$0.80 freight cost headwind on a per share basis. Our prior $6.28 mark (excluding forecast share buybacks) will likely fall toward the new range, considering Dollar Tree’s heightened dependence on spot freight markets in light of capacity constraints.

Management still expects Dollar Tree Plus (a format that includes a section with certain discretionary items that cost more than the traditional $1 Dollar Tree limit) and its combo stores (which combine elements from the Family Dollar and Dollar Tree assortments in rural areas) to drive growth long term. We view the concepts favorably and think they should allow the company to leverage the strengths of each banner and its purchasing power. Still, we do not anticipate the benefits will include the development of an economic moat, considering the intense competitive environment

Profile

Dollar Tree operates discount stores in the U.S. and Canada, including over 7,800 shops under both its namesake and Family Dollar units (nearly 15,700 in total). The eponymous chain features branded and private-label goods, generally at a $1 price (CAD 1.25 in Canada). Nearly 50% of Dollar Tree stores’ fiscal 2020 sales came from consumables (including food, health and beauty, and household paper and cleaning products), just over 45% from variety items (including toys and housewares), and 5% from seasonal goods. Family Dollar features branded and private-label goods at prices generally ranging from $1 to $10, with over 76% of fiscal 2020 sales from consumables, 9% from seasonal/electronic items (including prepaid phones and toys), 9% from home products, and 6% from apparel and accessories.

Source:Morningstar

Disclaimer

General Advice Warning Any advice/ information provided is general in nature only and does not take into account the personal financial situation, objectives or needs of any particular person.