NEW YORK (AP) — A Citi analyst on Friday cut her rating for Family Dollar to "Neutral" from "Buy," saying it's going to be increasingly tough for the company to post better-than-expected profits, especially in the second half of this year.
Deborah Weinswig, who also cut her price target by $4 to $65, said Family Dollar will experience increased profitability pressure in the second half of fiscal 2013, along with continued weak discretionary spending.
Weinswig added that the company's single store format could put it at a disadvantage compared with Dollar General Corp., which offers a variety of store formats. As a result of those factors combined, it will be increasingly harder for the company to top Wall Street expectations, she said.
The analyst added that she continues to like the dollar store sector overall and Family Dollar's efforts to expand its sales of consumables, such as groceries.
Shares of Family Dollar Stores Inc. rose 40 cents to $60.25 in premarket trading.