Family Dollar executives told analysts Friday morning that the discount chain will continue to grow, as customers remain pressured and the economy is still anemic.

"Our core customer is still very stressed, elevated unemployment," CEO Howard Levine said.

The Matthews-based chain of 7,100 discount stores reported that sales in the first fiscal quarter rose 7.6 percent, to $2.1 billion, and profits rose 8.1 percent, to $80.4 million. Both store traffic and the amount of customers' purchases increased. The company's first fiscal quarter ended in November.

Family Dollar opened its first four stores in California last year. Executives said they are doing well, with an assortment of goods geared towards Hispanic consumers. The chain plans to open between 450 and 500 total new stores this year.

Family Dollar has expanded the number of grocery items and other consumable goods. Customers are increasingly turning to the discount chain for basic needs, instead of buying discretionary purchases such as clothes there, executives said. Family Dollar plans to add another 300 food items to all stores and introduce a "Family Wellness" brand of private label, over the counter goods.

"We've seen a dramatic shift from discretionary to consumables," Levine said. In the last five years, consumables have increased from 61 percent to 70 percent of total sales at the stores.

He said the shift is a function both of Family Dollar reducing the number of discretionary goods it carries and customers' calculations in tough times.

"When you're faced with, 'What am I going to have for dinner vs. buying a new shirt, our customer pretty quickly figures out what's important," Levine said.

That's led to pressure on the retailer's gross profit margin - consumable goods have lower profit margins than discretionary goods - and led to a 14.3 percent increase in inventory. Gross profit margin fell from 36 percent a year ago to 35.3 percent this year.

Analysts don't like to see either trend, and several raised questions about the issues. Levine told them the company would continue holding down expenses to help with gross margins, and that the company's inventory increases aren't a bad sign.

"There's plenty of goods in our distribution centers, but nothing is stuck," Levine said.