Dollar Chains Record Steady Sales Gains -- WSJ
August 30 2019 - 3:02AM
Dow Jones News
By Sarah Nassauer
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (August 30, 2019).
Dollar-store chains Dollar General Corp. and Dollar Tree Inc.
said Thursday sales rose during the most recent quarter and that
executives are working to manage the cost of new tariffs on Chinese
goods.
Comparable sales at Dollar General, which has more than 15,800
stores mostly outside of big cities, rose 4% during the quarter
ended Aug. 2. At Dollar Tree, which owns both the Dollar Tree and
Family Dollar chains, comparable sales rose 2.4% during the quarter
ended Aug. 3.
Executives at both chains said their core low- and middle-income
shoppers continue to spend amid low unemployment and rising
wages.
But Dollar Tree reported lower profits as expenses rose,
flattening its shares as rival Dollar General share's rose over 10%
in morning trading. Some investors also noted Dollar General's
higher sales lift, leading some analysts to say the
more-rural-focused chain is gaining ground on Dollar Tree.
Dollar Tree ended the trading day down about 2% at $97.67, while
Dollar General gained nearly 11% to $156.09.
There are signs "that Dollar Tree is treading water rather than
proactively taking market share in the same way as its rival is
doing," said Neil Saunders, managing director of GlobalData
Retail.
Dollar Tree has worked to turn around its Family Dollar chain
after purchasing the then-struggling dollar retailer for nearly $9
billion in cash-and-stock four years ago. It has closed hundreds of
Family Dollars and invested heavily to improve others. Those
efforts are starting to bear fruit, though they have added to
expenses, Dollar Tree executives said on a call with analysts
Thursday.
Executives blamed a global helium shortage for some sales
weakness at the Dollar Tree chain. Lost balloon sales during
Valentine's Day, Mother's Day and Father's Day, along with
gradations reduced comparable sales by 0.4 percentage point, said
Gary Philbin, chief executive at Dollar Tree, on a call with
analysts.
Dollar Tree reported a profit of $180.3 million, or 76 cents a
share, down from $273.9 million, or $1.15 a share, in the
comparable quarter last year.
Goodlettsville, Tenn.-based Dollar General reported a profit of
$426.6 million, or $1.65 a share, up from $407.2 million, or $1.52
a share, in the comparable quarter last year.
Each chain raised profit estimates for the full year and said
they are working to mitigate Chinese tariff-related cost increases.
Dollar Tree said it expects net income per share to fall between
$4.90 and $5.11 for the full fiscal year, up from a previous
estimate of $4.77 to $5.07. Dollar General said annual earnings per
share will fall in the range of $6.36 to $6.51, up from a previous
estimate of $6.30 to $6.50.
"We've negotiated price concessions, canceled orders, modified
specs, evolved product mix and diversified vendors. We are now
taking actions to mitigate the recently announced tariff increases
and will continue to assess the future impact of these tariffs,"
said Dollar Tree's Mr. Philbin.
Overall, both chains -- which are focused on value and often
sell smaller amounts of products at lower dollar amounts than
big-box competitors -- have fared well as shoppers search out value
and convenience even as more shopping shifts online.
In recent weeks Walmart Inc., Target Corp. and T.J. Maxx parent
TJX Cos. have reported strong sales growth, while Macy's Inc.,
Nordstrom Inc. and other middle-market mall-based retailers
continue to struggle.
Dollar Tree and Family Dollar reached a collective $1.2 million
settlement on Monday with the New York attorney general's office
after undercover investigators found expired over-the-counter drugs
and obsolete motor oil on store shelves in the state. Dollar Tree
settled for $100,000, and Dollar General settled for $1.1
million.
Write to Sarah Nassauer at sarah.nassauer@wsj.com
Corrections & Amplifications Dollar Tree and Family Dollar
reached a collective $1.2 million settlement on Monday with the New
York attorney general's office. Dollar Tree settled for $100,000
and Dollar General for $1.1 million. An earlier version of this
article incorrectly stated the two companies settled for $100,000.
(Aug. 29, 2019)
(END) Dow Jones Newswires
August 30, 2019 02:47 ET (06:47 GMT)
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