If you look at their competition you'd see that mnty's headed in the opposite direction. Companies like FDO have been around for a long time because they have smart management. They have a large number of stores, but each store is relatively small (8,000 sq ft). MNTY on the other hand goes after 15,000 - 20,000 sq ft stores. It's the wrong idea. You wind up with inventory (money doing nothing) for long periods of time which eventually has to be liquidated at a loss. If you cut back on inventory, then the store looks half empty and customers stop going because of the perception it gives. Also having smaller stores allows companies to cost average across them and be able to shift supplies since not all stores have the same money making items. Of course a larger store also requires higher utility, employee and maintenance costs.
It's not rocket science just Business 101.
On FDO, it's at $20 down from $34 a year ago. Their margins are being erroded by the higher cost of fuel and slow economy which effect the price of consumer goods. But they'll weather it by concentrating on their high volume: consumables (paper, bathroom supplies, hygiene products, off-brand food)
glty
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