Dollar General: We’re still interested in buying Family Dollar

Dollar General on Thursday reported third-quarter profit that trailed analysts’ estimates as it reiterated its commitment to buying Matthews-based Family Dollar Stores.

Net income slipped less than 1 percent to $236.3 million, or 78 cents a share, from $237.4 million, or 74 cents, the Goodlettsville, Tenn.-based discount retailer said. Analysts projected 80 cents, the average of 25 estimates compiled by Bloomberg.

The retailer is working to maintain its place as the largest dollar-store chain after Family Dollar’s board rejected its $80-a-share offer in September because of concerns over antitrust approval, and instead stuck with a lower bid from Dollar Tree Inc. Dollar General then put forth a tender offer to Family Dollar’s shareholders, which also placed the potential deal under review by regulators.

Family Dollar investors are scheduled to vote on being acquired by Dollar Tree for $74.50 a share on Dec. 23. The deal is also under review by the Federal Trade Commission.

Dollar stores have been a bright spot in the brick-and-mortar retail industry, which is suffering amid competition from the Web and reluctance to spend by shoppers as wage gains remain sluggish. It’s one of the few retail categories still opening locations at a brisk pace. Dollar General added about 400 stores in the first half of this year.

Family Dollar’s antitrust concerns center on how many locations the FTC will require Dollar General to divest to get the deal approved. Dollar General has said it’s willing to get rid of as many as 1,500 locations, while Family Dollar has said it may be much more than that. The chain would reconsider a deal if Dollar General would agree to sell off as many stores as regulators want, a person familiar with the situation has said.

Family Dollar has said that a deal with Dollar Tree has less risk of being derailed during a review by the FTC. Dollar Tree sells its products for $1, and caters to more middle-class consumers, thus it would have less of an impact on competition. Meanwhile, Dollar General and Family Dollar have similar business models: Both sell discounted food and electronics at varying prices to low-income shoppers.

Dollar General shares closed Thursday at $67.79, up more than 1 percent.