icr x change conference

®

January 13, 2014

Orlando, FL

®

Certain statements contained in this presentation which are not historical

facts are forward-looking statements made pursuant to the safe harbor

provisions of the Private Securities Litigation Reform Act of 1995. These

forward-looking statements address the Company’s plans, activities or

events which the Company expects will or may occur in the future.

A number of important factors could cause actual results to differ materially

from those expressed in any forward-looking statements. Such factors,

risks and uncertainties are set forth under the heading “Cautionary

Statement Regarding Forward-Looking Statements“ or “Risk Factors” in

"Management’s Discussion and Analysis of Financial Condition and Results

of Operation" in the Company’s annual report on Form 10-K and quarterly

report on Form 10-Q filed or to be filed, respectively, and which are

expressly incorporated herein by reference.

You are cautioned not to place undue reliance on these forward-looking

statements, which speak only as of January 13, 2014. The Company does

not undertake to update or revise its forward-looking statements even if

experience or future changes make it clear that projected results expressed

or implied in such statements will not be realized, except as may be required

by law.

®

• Founder: Leon Levine

• First stored opened in

November 1959 in

Charlotte, NC

• Self-service

• Value and

convenience

®

New Jersey – 113

Denotes distribution center

Store counts as of November 30, 2013

250

144

121

169

113 155

138

579

391

36

68

41

212

51 211

284

307

61

413

76

117

158

412

18

25

32

112

1,018

43

335

475

132 225

253

29

247

Connecticut – 58

Washington DC – 3

Delaware – 23 Maryland – 102

New Hampshire – 35

Vermont – 15

Rhode Island – 28

Massachusetts – 112

98

1

8,000+ Locations in 46 States

®

Consumables Discretionary

®

68% Regularly use

coupons

31% Have kids under 18

56% Earn less than

$40K a year

50% Rely on government

assistance

44% Have a

smartphone

Source: WSL/Strategic Retail, How America Shops® MegaTrends 2012, National

Internet Survey and internal FDO data

46% Older than 55

®

Value

• Consumables and

discretionary items

• Nationally recognized

brands

• Quality, private label

merchandise

• Most items priced at

$10 or less

Convenience

• Small, easy-to-shop

stores

• Quick, fill-in trip

• Average basket

around $10

Offer Customers Great Values and a

Convenient Shopping Experience

®

$0

$100

$200

$300

$400

$500

$600

$700

$800

FY73 FY75 FY77 FY79 FY81 FY83 FY85 FY87 FY89 FY91 FY93 FY95 FY97 FY99 FY01 FY03 FY05 FY07 FY09 FY11 FY13

(mill

ion

s)

Earnings Before Income Taxes*

OPEC Iran

Manufacturing

9/11 Housing /

Subprime

*FY06 excludes litigation charge of $45 million or $0.18 per share

*FY12 excludes litigation charge of $11.5 million or $0.06 per share

*FY13 is a 53-week year

Recessionary periods

®

• Economic pressures

facing our customers

• More promotional

environment

• Digesting significant

business changes

®

• Elevated

unemployment levels

• Higher taxes

• Reductions to key

government

assistance programs

• Healthcare

uncertainties

10

184

173

170

175

180

185

Trips per FDO Shopper

in Total Market

Source: Nielsen Homescan Data, 52 weeks ending

®

8%

-13%

12% 10% 9%

4%

19%

-4%

Drug Food Department

Stores

Mass

Circular Growth

2012 vs. 2013 November and December Combined

Pages InsertsSource: MarketTrack: Circular Volume Report

®

• 1,000 new Food

and HBA SKUs

• Tobacco

• Significant fixture

and layout

changes

• Capturing more trips

• Greater share of

wallet

• Margin pressure

• Store manager

turnover

• Shrink

• Inventory

productivity

12

®

332 362

491

364

171

105

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Mix Shift of Consumables

(basis points)

-17

-113

-145

-114

88

14

4Q12 1Q13 2Q13 3Q13 4Q13* 1Q14

Gross Margin Trends

(basis points)

*4Q13 excludes a one-time $5.0 million favorable adjustment related to a change in accounting for certain vendor allowances

®

®

5.4%

6.6%

2.9% 2.9%

0.0%

-2.8%

4Q12 1Q13 2Q13 3Q13 4Q13 1Q14

Comparable Store Sales

13.6%

2.0%

4.8%

-1.1%

14.7%

-1.9%

4Q12* 1Q13 2Q13* 3Q13 4Q13* 1Q14

EPS Growth

*4Q12 excludes a litigation charge of $11.5M

*2Q13 includes an extra week

*4Q13 excludes a one-time $5.0 million favorable adjustment

related to a change in accounting for certain vendor allowances

®

• Re-accelerate traffic

• Invest in key traffic-driving consumables

• Strengthen our value proposition

• Enhance marketing efforts

• Reduce costs and enhance productivity

• Invest in long-term growth while returning

capital to shareholders

®

19

39

48

115

Source: Nielsen Homescan Panel – FDO Shoppers in FDO Trade Area, 52 weeks ended 11/30/13

Food

Household

Health, Beauty &

Personal Care

Tobacco

®

• Food

• Pepsi

• Grocery & cooler expansion

• McLane partnership

• Health & Beauty Aids

• Beauty

• Over-the-counter

• Personal care

• Tobacco

17 17

®

• Food

• Refresh assortment

• Redeploy space

• Realign adjacencies and product flow

• Household

• Expand space

• Leverage innovation

®

• Getting back to our roots

• Commitment to everyday

low prices and great values

• Select price investments

®

12

22 24

30

33

FY09 FY10 FY11 FY12 FY13

Number of Circulars • Reinforce value

proposition

• Optimize

marketing tools

®








®

70% 68%

15% 11%

11%

8%

4% 13%

FY12 FY15P

Percent of Annual Purchases*

US Domestic Importer Agent Direct

• Accelerate conversion

of replenishment

programs

• Expand international

presence

• Enhance global

logistics capabilities

• Expand into new

businesses

*Purchases at retail

®

22%

25% 25% 25%

14%

17% 17% 18%

FY10 FY11 FY12 FY13

Private Brands as a Percentage of Net Sales

Total PB Penetration

Consumables PB Penetration

• Improved quality

standards

• 20% growth in private

brand consumables

in FY13

• 500 new private

brand consumables

SKUs in FY13

®

• Simplify store operational tasks

• Improve processes

• Stabilize workforce

• Reduce inventory shrinkage

• Leverage supply chain

efficiencies

®








®

1) Re-invest back into

business

• FY14 CapEx plan:

$450-500M

2) Support dividend

program

3) Share repurchases

• FY14 plan: $250M

$155 $212

$345 $243

$399 $73 $79

$83

$91

$108

$71

$332

$671

$192

$75

$617

$748

$821

$890 $941

FY09 FY10 FY11 FY12* FY13**

(millions)

Net CapEx Dividends

Share Buyback EBITDA

Note: Net capex is capital expenditures net of sale leaseback proceeds

*Excludes a litigation charge of $11.5 million in 4Q12

**FY13 was a 53-week year and results are adjusted for a one-time $5.0 million favorable adjustment related to a

change in accounting for certain vendor allowances in 4Q13

®

• New process to ship and

deliver good to our stores

• Improves supply chain

efficiency

• Simplifies unloading and

replenishing for our Team

Members

• Plan to roll-out to four

distribution centers in FY14

®

• Create a more

consistent customer

experience

• Improve our

competitiveness

• Establish a

foundation for future

assortment

expansion

BEFORE

®

0

2,000

4,000

6,000

8,000

10,000

FY10 FY11 FY12 FY13 FY14P FY15P FY16P

Nu

mb

er

of Sto

res

Traditional Concept Renewal Renovated Stores New

®

• Expanding

customer base

• Improving store

productivity

• New markets

7,916

New Store

Opportunities

Total Store

Potential End of

FY13

New Store Opportunities

19,000

®

0%

2%

4%

6%

8%

10%

FY09 FY10 FY11 FY12 FY13 FY14

Gross Store Growth Net Store Growth

• Opened 500 new

stores in fiscal

2013

• Plan to open 525

new stores in fiscal

2014

®

January 13, 2014

Orlando, FL

icr x change conference

Business