~ Consolidated Sales Increased 4.0% to $5.29
Billion ~
~ Diluted Earnings per Share of $0.85,
Includes $0.13 Receivable Impairment Charge Related to the Dollar
Express Divestiture ~
~ Diluted EPS, Excluding the Impairment
Charge, of $0.98 Meets High End of Guidance Range ~
~ Enterprise Same-Store Sales Increased 0.5%
~
~ Same-Store Sales by Segment: Dollar
Tree +2.5%, Family Dollar -1.2% ~
Dollar Tree, Inc. (NASDAQ: DLTR), North America's leading
operator of discount variety stores, today reported results for its
first fiscal quarter ended April 29, 2017.
“I am extremely pleased with the first quarter performance of
our Dollar Tree banner and with the continued progress in
re-building the Family Dollar business,” stated Bob Sasser, Chief
Executive Officer. “Same-store sales were positive and total sales
were near the mid-point of our range of guidance. Gross margin and
operating margin rates improved, SG&A expenses were well
managed across both banners and our adjusted EPS of $0.98 per
diluted share, excluding the impairment charge related to the
divestiture to Dollar Express, met the high end of our range of
guidance. The Dollar Tree banner continues to generate results that
are strong, consistent and growing and we are enthusiastic about
the opportunity to improve the Family Dollar business as we launch
our renovation initiatives in the second quarter."
First Quarter Results
Consolidated net sales increased 4.0% to $5.29 billion from
$5.09 billion in the prior year’s first quarter. Enterprise
same-store sales increased 0.5%. The same-store sales growth was
driven by increases in average ticket and comparable transaction
count. Same-store sales for the Dollar Tree banner increased 2.5%.
Same-store sales for the Family Dollar banner decreased 1.2%.
Gross profit increased 4.7% to $1.63 billion in the quarter
compared to $1.55 billion in the prior year’s first quarter. As a
percent of sales, gross margin increased to 30.8% compared to 30.6%
in the prior year. The improvement was driven primarily by lower
merchandise and freight costs, partially offset by higher
markdowns.
Selling, general and administrative expenses were 23.4% of sales
compared to 22.3% of sales in the prior year's first quarter.
Excluding the receivable impairment charge described below,
selling, general and administrative expenses were 22.5% of sales.
The increase, as a percentage of sales, was driven primarily by
higher payroll expenses and advertising expenses, partially offset
by lower depreciation.
In the first quarter of 2017, the Company evaluated the
collectability of its divestiture-related receivable from Dollar
Express, which acquired the stores that the FTC required the
Company to divest. Dollar Express is in the process of liquidating,
is in default of its obligations to the Company including its
obligation to pay the receivable, and is not cooperating. Based on
a number of factors, the Company determined the outstanding balance
of $50.9 million was not recoverable and recorded an impairment
charge to write down the receivable to zero. The charge is recorded
as “Receivable impairment” in the accompanying condensed
consolidated income statements. The Company plans to take all
appropriate actions, which we expect to include litigation against
Dollar Express and others, to enforce the Company’s rights.
Operating income, including the receivable impairment charge,
decreased 7.1% to $388.8 million, or 7.4% of sales, compared with
$418.7 million, or 8.2% of sales, in the same period last year.
Excluding the receivable impairment charge, adjusted operating
income increased 5.0% to $439.7 million compared with $418.7
million in the same period last year. Adjusted operating income
margin improved to 8.3% in the current quarter from 8.2% in last
year’s quarter.
The Company's effective tax rate for the quarter was 36.1%
compared to 29.8% in the prior year period. The lower effective tax
rate in the prior year’s quarter was primarily attributable to a
one-time benefit related to state tax planning, which contributed
$0.09 to earnings per share last year.
Net income, including the receivable impairment charge, compared
to the prior year's first quarter decreased $32.2 million to $200.5
million and diluted earnings per share was $0.85 compared to $0.98
in the prior year’s quarter. The prior year’s quarter included a
one-time tax rate benefit of $0.09 per share related to state tax
planning. Adjusting for the current quarter’s receivable impairment
charge and the prior year quarter’s one-time tax benefit, diluted
earnings per share improved 10.1% to an adjusted $0.98 compared to
an adjusted $0.89 from the prior year quarter.
During the quarter, the Company opened 164 stores, expanded or
relocated 51 stores, and closed 16 stores. Retail selling square
footage at quarter-end was approximately 113.7 million square
feet.
Company Outlook
The Company estimates consolidated net sales for the second
quarter of 2017 to range from $5.18 billion to $5.28 billion, based
on a slightly positive to low single-digit increase in same-store
sales for the combined enterprise. Diluted earnings per share are
estimated to be in the range of $0.80 to $0.88.
Consolidated net sales for full-year fiscal 2017 are now
expected to range from $21.95 billion to $22.25 billion compared to
the Company’s previously expected range of $21.94 billion to $22.33
billion. This estimate is based on a slightly positive to low
single-digit increase in same-store sales and 3.9% square footage
growth. Including the first quarter’s receivable impairment charge
of $0.13 per diluted share, the Company now anticipates net income
per diluted share for full-year fiscal 2017 will range between
$4.17 and $4.43. Excluding the impairment charge, the top end of
the guidance range is consistent with the Company’s prior guidance.
Fiscal 2017 includes a 53rd week. The extra week, in the fourth
quarter, is expected to add $400 million to $430 million to sales
and $0.19 to $0.22 to diluted earnings per share, both of which are
included in the guidance.
Sasser added, "I believe we are squarely positioned in the most
attractive sector of retail. Value and convenience are important to
our shoppers, and that is exactly what our Dollar Tree and Family
Dollar businesses are focused on providing. We have a proven
business model, an experienced leadership team, many years of store
growth ahead of us, and tremendous opportunities to continue
improving our businesses to deliver value to our long-term
shareholders.”
Conference Call
Information
On Thursday, May 25, 2017, the Company will host a conference
call to discuss its earnings results at 9:00 a.m. Eastern Time. The
telephone number for the call is 800-310-1961. A recorded version
of the call will be available until midnight Wednesday, May 31,
2017 and may be accessed by dialing 888-203-1112. The access code
is 2488028. A webcast of the call is accessible through Dollar
Tree's website, and will remain online through Wednesday, May 31,
2017.
Dollar Tree, a Fortune 200 Company, operated 14,482 stores
across 48 states and five Canadian provinces as of April 29, 2017.
Stores operate under the brands of Dollar Tree, Family Dollar, and
Dollar Tree Canada. To learn more about the Company, visit
www.DollarTree.com.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements address future events, developments or results and
typically use words such as believe, anticipate, expect, intend,
plan, forecast, or estimate. For example, our forward-looking
statements include statements regarding second quarter 2017 and
full-year 2017 net sales and same-store sales, second quarter 2017
and full-year 2017 diluted earnings per share, square footage
growth, the benefits, results, and effects of the merger with
Family Dollar, including integration plans and synergies, the
impairment of the receivable from Dollar Express and possible
actions related to the receivable, and future financial and
operating results and shareholder value, the combined company’s
plans, objectives, expectations (financial and otherwise) and
intentions. These statements are subject to risks and
uncertainties, including that we may be unable to successfully
recover any amount from Dollar Express or others. For a discussion
of the risks, uncertainties and assumptions that could affect our
future events, developments or results, you should carefully review
the "Risk Factors," "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections
in our Annual Report on Form 10-K filed March 28, 2017 and other
filings with the Securities and Exchange Commission. We are not
obligated to release publicly any revisions to any forward-looking
statements contained in this press release to reflect events or
circumstances occurring after the date of this report and you
should not expect us to do so.
DOLLAR TREE, INC. Condensed
Consolidated Income Statements (In millions, except per
share data) (Unaudited) 13 Weeks
Ended April 29, 2017 April 30, 2016
Net sales $ 5,287.1 $ 5,085.8 Cost of sales 3,660.0
3,531.2 Gross profit 1,627.1 1,554.6 30.8 % 30.6 %
Selling, general & administrative
expenses, excluding Receivable impairment
1,187.4 1,135.9 22.5 % 22.3 % Receivable impairment 50.9 -
1.0 % 0.0 % Selling, general & administrative expenses
1,238.3 1,135.9 23.4 % 22.3 % Operating income 388.8 418.7
7.4 % 8.2 % Interest expense, net 74.7 87.3 Other (income)
expense, net 0.3 (0.2 ) Income before income taxes 313.8
331.6 5.9 % 6.5 % Income tax expense 113.3 98.9 Income tax
rate 36.1 % 29.8 % Net income (1) $ 200.5 $ 232.7 3.8 % 4.6
% Net earnings per share: Basic $ 0.85 $ 0.99 Weighted
average number of shares 236.3 235.3 Diluted (1) $ 0.85 $
0.98 Weighted average number of shares 237.3 236.4
(1) Excluding the $50.9 million receivable impairment in the 13
weeks ended April 29, 2017, Net income and Diluted earnings per
share for the 13 weeks ended April 29, 2017 were $232.1 million and
$0.98, respectively.
DOLLAR TREE, INC.
Segment Information (In millions, except store count)
(Unaudited) 13 Weeks Ended
April 29, 2017 April 30, 2016
Net sales:
Dollar Tree $ 2,571.7 $ 2,384.5 Family Dollar
2,715.4 2,701.3
Total net sales
$ 5,287.1
$ 5,085.8 Gross
profit: Dollar Tree $ 896.6 34.9 % $ 820.8 34.4 % Family Dollar
730.5 26.9 %
733.8 27.2 %
Total gross profit
$ 1,627.1
30.8 % $
1,554.6 30.6 %
Operating income: Dollar Tree $ 315.4 12.3 % $ 280.7 11.8 %
Family Dollar
73.4 2.7
% 138.0 5.1
% Total operating income
$
388.8 7.4 %
$ 418.7 8.2
% 13 Weeks Ended April 29,
April 30, 2017 2016
Dollar
Tree
Family
Dollar
Total
Dollar
Tree
Family
Dollar
Total Store Count: Beginning 6,360 7,974
14,334 5,954 7,897 13,851 New 89 75 164 112 59 171 Rebanner (a) - -
- (6 ) - (6 ) Closings
(5 )
(11 ) (16 )
(11 ) (8
) (19 ) Ending
6,444 8,038
14,482 6,049
7,948 13,997 Selling Square
Footage (in millions)
55.5
58.2 113.7
52.1 57.5
109.6 Growth Rate (Square Footage)
6.5 % 1.2
% 3.7 % 10.4
% 100.0 %
132.2 % (a) Stores are
included as rebanners when they close or open, respectively.
DOLLAR TREE, INC.
Condensed Consolidated Balance Sheets (In millions)
(Unaudited) April 29, January
28, April 30, 2017 2017 2016
Cash and cash equivalents $ 1,154.9 $ 866.4 $ 929.7
Short-term investments 4.0 4.0 4.0 Merchandise inventories, net
2,878.4 2,865.8 2,929.5 Other current assets 240.8
201.8 308.9 Total current assets 4,278.1 3,938.0 4,172.1
Property, plant and equipment, net 3,093.9 3,115.8 3,153.2
Assets available for sale 10.6 9.0 11.7 Goodwill 5,022.4 5,023.5
5,024.9 Favorable lease rights, net 443.4 468.6 543.9 Tradename
intangible asset 3,100.0 3,100.0 3,100.0 Other intangible assets,
net 5.0 5.1 5.6 Other assets 41.3 41.6 49.5
Total assets $ 15,994.7 $ 15,701.6 $ 16,060.9
Current portion of long-term debt $ 165.9 $ 152.1 $ 120.5 Accounts
payable 1,223.9 1,119.6 1,260.3 Other current liabilities 629.5
744.2 622.1 Income taxes payable 221.3 90.0
46.2 Total current liabilities 2,240.6 2,105.9 2,049.1
Long-term debt, net, excluding current portion 6,131.7 6,169.7
7,209.8 Unfavorable lease rights, net 117.6 124.0 142.9 Deferred
tax liabilities, net 1,433.6 1,458.9 1,566.2 Income taxes payable,
long-term 71.8 71.2 71.1 Other liabilities 390.4
382.4 352.2 Total liabilities 10,385.7
10,312.1 11,391.3 Shareholders' equity 5,609.0
5,389.5 4,669.6 Total liabilities and
shareholders' equity $ 15,994.7 $ 15,701.6 $ 16,060.9
The January 28, 2017 information was derived from the audited
consolidated financial statements as of that date.
DOLLAR TREE, INC. Condensed
Consolidated Statements of Cash Flows (In millions)
(Unaudited) 13 Weeks Ended April
29, April 30, 2017 2016 Cash
flows from operating activities: Net income $ 200.5 $ 232.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 153.9 162.3 Provision for deferred
taxes (23.0 ) (20.4 ) Amortization of debt discount and
debt-issuance costs 3.6 4.7 Receivable impairment 50.9 - Other
non-cash adjustments to net income 32.9 27.7 Changes in operating
assets and liabilities 11.9 (96.0 ) Total
adjustments 230.2 78.3 Net cash
provided by operating activities 430.7 311.0
Cash flows from investing activities: Capital
expenditures (110.3 ) (175.9 ) Purchase of restricted investments -
(36.1 ) Proceeds from sale of restricted investments - 118.1
Proceeds from fixed asset disposition 2.2 1.1
Net cash used in investing activities (108.1 )
(92.8 ) Cash flows from financing activities: Principal
payments for long-term debt (27.8 ) (20.8 ) Proceeds from stock
issued pursuant to stock-based compensation plans 11.8 14.4 Cash
paid for taxes on exercises/vesting of stock-based compensation
(17.6 ) (18.4 ) Net cash used in financing activities
(33.6 ) (24.8 ) Effect of exchange rate changes on
cash and cash equivalents (0.5 ) 0.2 Net
increase in cash and cash equivalents 288.5 193.6 Cash and cash
equivalents at beginning of period 866.4 736.1
Cash and cash equivalents at end of period $ 1,154.9
$ 929.7
DOLLAR TREE, INC.Reconciliation of
Non-GAAP Financial Measures(In millions, except per share
data)(Unaudited)
From time-to-time, the Company's financial
results include certain financial measures not derived in
accordance with generally accepted accounting principles ("GAAP").
Non-GAAP financial measures should not be used as a substitute for
GAAP financial measures, or considered in isolation, for the
purposes of analyzing operating performance, financial position or
cash flows. However, the Company believes providing additional
information in the form of non-GAAP measures that exclude the
unusual, non-recurring expense outlined below is beneficial to the
users of its financial statements in evaluating the Company's
current operating results in relation to past periods. The Company
has included a reconciliation of this information to the most
comparable GAAP measures in the following tables.
In the first quarter of 2017, the Company evaluated the
collectability of its divestiture-related receivable from Dollar
Express, which acquired the stores that the FTC required the
Company to divest. Dollar Express is in the process of liquidating,
is in default of its obligations to the Company, including its
obligation to pay the receivable, and is not cooperating. Based on
a number of factors, the Company determined the outstanding balance
of $50.9 million was not recoverable and recorded an impairment
charge to write down the receivable to zero. The charge is recorded
as “Receivable impairment” in the accompanying condensed
consolidated income statements. The Company plans to take all
appropriate actions, which we expect to include litigation against
Dollar Express and others, to enforce the Company's rights.
Reconciliation of Adjusted Net
Income: 13 Weeks Ended April 29, 2017 Net income
(GAAP) $ 200.5 SG&A adjustment:
Receivable impairment
50.9 Provision for income taxes on adjustment (19.3 )
Adjusted Net income (Non-GAAP) $ 232.1
Reconciliation of Adjusted EPS: 13 Weeks Ended
April 29, 2017 Diluted earnings per share (GAAP) $ 0.85
Adjustment, net of tax 0.13
Adjusted EPS (Non-GAAP)
$ 0.98
Reconciliation of Adjusted Operating
Income: 13 Weeks Ended April 29, 2017 Operating
income (GAAP) $ 388.8 SG&A adjustment: Receivable impairment
50.9 Adjusted Operating income (Non-GAAP) $ 439.7
Reconciliation of Adjusted Operating Income
- Family Dollar segment: 13 Weeks Ended April 29,
2017 Operating income (GAAP) $ 73.4 SG&A adjustment:
Receivable impairment 50.9 Adjusted Operating income
(Non-GAAP) $ 124.3
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170525005495/en/
Dollar Tree, Inc.Randy Guiler, 757-321-5284Vice President,
Investor Relationswww.DollarTree.comDLTR-E
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