Net sales

Dollar Tree sees net sales increase 6.5% in ‘strong start to the year’

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Dollar Tree, based in Chesapeake, Va., “had a strong start to the year,” chairman and chief executive Michael Witynski said, after posting a 6.5% increase in consolidated net sales, an increase of 19.2% in gross profit and a 48.1% increase in earnings per share during its first quarter of fiscal 2022.

The quarter, which ended April 30, also includes Dollar Tree’s conversion from a price of $1 to $1.25, which Witynski says helped both improve sales and of the margin. “Buyers are responding favorably as newer, higher value products hit our shelves,” he said.

Consolidated net sales (for the entire company, which includes the Dollar Tree and Family Dollar banners) increased to $6.90 billion from $6.48 billion in the first quarter a year earlier. Meanwhile, the companies’ same-store sales rose 4.4%. By banner, Dollar Tree’s same-store sales increased 11.2%, while Family Dollar saw same-store sales fall 2.8% as “it cycled the significant stimulus dollars released over the of the prior year quarter,” Dollar Tree said in a statement. Another contributing factor: approximately 400 Family Dollar stores were temporarily closed for part of the quarter due to a product-related recall, which negatively impacted quarterly same-store sales by approximately 200 basis points. added Dollar Tree.

Gross profit increased to $2.34 billion from $1.96 billion in the first quarter a year earlier, and gross margin improved 360 basis points to 33.9% from 30.3% in the prior year quarter. This improvement, said Dollar Tree, was “driven by improved initial margin, a favorable product mix in the Dollar Tree segment and leverage on distribution and occupancy costs, partially offset by higher freight, an unfavorable product mix in the Family Dollar segment, markdowns and shrink.

First-quarter net income increased 43.2% to $536.4 million and diluted earnings per share rose 48.1% to a record first-quarter $2.37 from $1.60 dollars in the quarter of the previous year.

During the quarter, the company opened 112 new stores (42 Dollar Trees and 70 Family Dollars), expanded or relocated 33 stores and closed 30 stores (13 Dollar Trees and 17 Family Dollars). The company also expanded its $3 and $5 Plus assortment in an additional 790 Dollar Tree stores and completed the renovation of 118 Family Dollar stores.

“Propelling Greater Efficiency”

Dollar Tree also outlined the multi-year investments it will make around its associates, distribution/supply chain network, price and value proposition, and technology. “We believe now is the perfect time to accelerate growth-oriented investments through better associate and customer experiences, while propelling greater efficiency,” said Witynski.

The company’s strategic investments will include:

Investing in associates: Recognizing the competitive environment for talent, Dollar Tree said it will focus on competitive salaries, improving store and distribution center operating standards and strengthening security.

Invest in its distribution center network and supply chain: The focus here, Dollar Tree said, will be on improving security, conditions and operational standards across its network through the use of data, analytics, process improvements and automation.

Investing in the product through pricing and value proposition: On the Family Dollar side, Dollar Tree said it will invest to ensure it exceeds customer expectations for value, with its product offering priced clear and competitively every day. “These investments should position Family Dollar for better performance and long-term success,” the company said in a statement.

Investing in technology: The company recently began evaluating its vision for systems infrastructure plans for 2023 and beyond. Systems under consideration include merchandising, supply chain, data analytics and store systems.

Look forward

The company revised its outlook for the year, strengthening its guidance for diluted earnings per share and consolidated net revenue.

Dollar Tree has revised its diluted earnings per share for fiscal 2022 from an initial range of $7.60-$8 to $7.80-$8.20. As for consolidated net sales, the company now expects a range of $27.76 billion to $28.14 billion, up from the previously forecast range of $27.22 billion to $27.85 billion. of dollars.

On the same-store sales front, the company expects a mid-single-digit increase for the year, comprised of a high-single-digit increase in the Dollar Tree segment and more-or-less flat same-store sales. in the Family Dollar. segment.

“Value and convenience are more important than ever to our customers and the communities we serve. We have a strong balance sheet and expect to continue to generate a significant amount of cash flow in our business,” said Witynski. “Our management team and Board of Directors are strategically aligned and believe our company is very well positioned to deliver long-term profitable growth.”