Chesapeake, Virginia – The third-quarter gains at Dollar Tree and Family Dollar Stores, which both comped favorably, were mostly driven by traffic.
Mike Creedon, interim CEO of parent firm Dollar Tree Inc., stated, “Our third quarter sales came in at the high end of our expected range, and our Dollar Tree and Family Dollar merchandising efforts produced tangible results.”
Total net sales increased 3.5% to $7.56 billion for the quarter that ended on November 2. A 1.6% rise in traffic and a 0.2% increase in average ticket price drove a 1.8% gain in consolidated same-store net sales.
A 1.5% rise in traffic and a 0.3% increase in average ticket price drove a 1.8% gain in same-store net sales for the Dollar Tree chain. A 1.8% rise in traffic and a flat average ticket drove a 1.9% gain in Family Dollar’s same-store net sales.
The business pointed out that stores that were shut down in the third quarter as part of the previously disclosed plan to close about 970 underperforming Family Dollar locations are not included in the same-store net sales figures for the Family Dollar segment.
About 670 locations had been closed by the end of Q3, and the business anticipates closing an additional 25 during Q4.
Nevertheless, Dollar Tree Inc. continues to expand its business, adding 6 new Family Dollar shops and 249 new Dollar Tree sites in the third quarter. About 2,300 Dollar Tree locations have been changed to the company’s multi-price model thus far.
The gross margin grew 120 basis points to 30.9%, while the gross profit climbed 7.6% to $2.34 billion. Although these were somewhat offset by higher distribution expenses, the company attributes better shrink outcomes and lower freight costs to accruals.
Analysts were pleasantly surprised by quarterly earnings, as net income increased by over 10% to $233 million, or $1.09 per diluted share.
“As an organization, our top priorities continue to be unlocking value for Dollar Tree shareholders, completing the Family Dollar strategic review process, and accelerating the growth of the Dollar Tree segment,” Creedon stated.
Dollar Tree Inc. increased its forecast range for full-year fiscal 2024 consolidated net sales to $30.7 billion to $30.9 billion today. The range used to be between $30.6 billion and $30.9 billion.
The business still anticipates low-single-digit growth in store net sales for the overall as well as the Dollar Tree and Family Dollar segments.
Previously predicted to be between $5.20 and $5.60, adjusted diluted EPS is now anticipated to be between $5.31 and $5.51.
