~ Diluted Earnings per Share Increased 48.1%
to a First Quarter Company Record of $2.37 ~ ~ Consolidated
Net Sales Increased 6.5% to $6.90 Billion ~ ~ Same-Store
Sales: Enterprise +4.4%; Dollar Tree +11.2%; Family Dollar -2.8%
~ ~ Company Updates Fiscal 2022 Earnings per Share Guidance
Range to $7.80 to $8.20 ~ ~ Company Making Strategic
Investments Designed to Enhance Long-Term, Sustainable Growth
~
Dollar Tree, Inc. (NASDAQ: DLTR) today reported financial
results for its first quarter ended April 30, 2022.
“The team delivered a solid start to the year – with a 6.5%
top-line sales expansion, a 19.2% lift to gross profit, and a 48.1%
increase to earnings per share. During the quarter, the Dollar Tree
team successfully completed its conversion to the $1.25 price
point, contributing to both sales and margin improvements. Shoppers
are responding favorably as the new, greater value products hit our
shelves,” stated Michael Witynski, President and Chief Executive
Officer. “Importantly, other key strategic initiatives, including
the expansion of the $3 and $5 Plus assortment in Dollar Tree
stores, as well as our Combo Stores and H2 Renovations at Family
Dollar are working. Today, we will outline the types of additional
strategic investments we will make over the next several years that
are designed to position the Company for profitable growth with
attractive returns on capital.”
First Quarter Results
Consolidated net sales increased 6.5% to $6.90 billion from
$6.48 billion in the prior year’s first quarter. Enterprise
same-store sales increased 4.4%. Comparable store sales for Dollar
Tree increased 11.2%. Family Dollar same-store sales decreased
2.8%, as it cycled the significant stimulus dollars released in the
prior year’s quarter. For portions of the quarter, approximately
400 Family Dollar stores were temporarily closed due to a
product-related recall, which negatively impacted Family Dollar’s
quarterly comparable store sales by an estimated 200 basis
points.
Gross profit increased 19.2% to $2.34 billion from $1.96 billion
in the prior year’s first quarter. Gross margin improved 360 basis
points to 33.9%, compared to 30.3% in the prior year’s quarter.
This improvement was driven by improved initial mark-on, favorable
product mix in the Dollar Tree segment, and leverage on
distribution and occupancy costs, partially offset by higher
freight costs, unfavorable product mix in the Family Dollar
segment, markdowns, and shrink.
Selling, general and administrative expenses were 23.3% of total
revenue, compared to 22.3% of total revenue in the prior year's
first quarter. The increase was primarily due to costs related to
store payroll, the West Memphis distribution center matter, and the
reconstitution of the Board of Directors.
Operating income for the quarter increased 40.7% to $731.5
million compared with $519.9 million in the same period last year
and operating income margin improved 260 basis points to 10.6%.
Net income increased 43.2% to $536.4 million in the first
quarter and diluted earnings per share for the quarter increased
48.1% to a first quarter company record $2.37, compared to $1.60 in
the prior year’s quarter.
During the quarter, the Company opened 112 new stores, expanded
or relocated 33 stores, and closed 30 stores. Additionally, the
Company expanded its multi-price Plus offering into an additional
790 Dollar Tree stores and completed 118 Family Dollar store
renovations. Retail selling square footage at quarter-end increased
3.1% from the prior year’s quarter to approximately 129.8 million
square feet.
Strategic Investments Designed to
Position Company for Long-Term, Sustainable Growth
“Our initiatives are working and providing increased profits and
cash flow. We believe now is the ideal time to accelerate
investments focused on driving growth through improved associate
and shopper experience, while propelling greater efficiencies,”
added Mr. Witynski. “We anticipate these multi-year investments
will be focused around our associates, our distribution network and
supply chain, our pricing and value proposition, and our
technology.”
The Company’s strategic investments are expected to include:
Investing in Associates: In today’s retail climate, the Company
recognizes the competitive environment for talent. The Company’s
investment in its store and distribution center associates and
field leadership will be focused on competitive wages, improved
store and DC operating standards and enhanced safety. The Company
will take a tailored approach to these investments focusing on
areas where the most investment is needed.
Investing in Distribution Center Network and Supply Chain: The
Company is committed to improving the capabilities and efficiency
of its supply chain to enhance store productivity through better
in-stock positions. The focus will be on delivering improved
safety, conditions and operational standards across its network
through use of data, analytics, process improvements and
automation.
Investing in Product through Pricing and Value Proposition: On
the Family Dollar side of the business, the Company will be
investing to ensure it exceeds customer expectations for value,
with its product offering being clearly and competitively priced
every day. These investments should position Family Dollar for
improved performance and long-term success.
Investing in Technology: The Company has recently begun a
detailed assessment of its vision for systems infrastructure plans
for 2023 and beyond. Among the information technology systems under
review are merchandising, supply chain, data analytics, and store
systems.
A significant portion of these costs are expected to be capital
expenditures over the next few years, and the Company intends to
provide more details in the coming quarters as the Company
finalizes plans along with estimated costs and anticipated
benefits.
Company Outlook
In March, the Company provided its initial outlook for fiscal
2022 diluted earnings per share at a range of $7.60 to $8.00. The
following costs, totaling an estimated $0.43 per share, were not
included in the Company’s original outlook:
- In the first quarter, $0.13 per share for asset impairment and
a product recall related to its West Memphis distribution
center;
- For the second quarter, an estimated $0.22 per share for lost
sales, freight, merchandise disposal, payroll and legal costs in
response to the West Memphis distribution center matter; and
- For 2022, a total of $0.08 per share for stock compensation
expense related to an option grant.
Diluted earnings per share for full-year fiscal 2022 are now
expected to range from $7.80 to $8.20. Consolidated net sales for
the year are now expected to range from $27.76 billion to $28.14
billion compared to the Company’s previously expected range of
$27.22 billion to $27.85 billion. The Company expects to deliver a
mid-single-digit comparable store sales increase for the year,
comprised of a high single-digit increase in the Dollar Tree
segment and more or less flat comparable store sales in the Family
Dollar segment. Selling square footage is expected to grow by
approximately 3.9%.
The Company estimates consolidated net sales for the second
quarter of 2022 will range from $6.65 billion to $6.78 billion,
based on a low-to-mid single-digit increase in same-store sales for
the enterprise. Diluted earnings per share for the quarter are
estimated to be in the range of $1.45 to $1.55. This estimate
includes approximately $0.24 per share for costs associated with
the West Memphis distribution center and stock compensation
expense.
While share repurchases are not included in the outlook, the
Company had $2.5 billion remaining under its board repurchase
authorization as of April 30, 2022.
“We are taking the necessary actions now to position ourselves
for accelerated growth in what I view as the most attractive sector
in retail, especially in the current economic environment. We will
be investing to improve associate and shopper experience, while
enhancing operational efficiencies,” Mr. Witynski concluded. “Value
and convenience are more important than ever to our shoppers and
the communities we serve. We have a robust balance sheet and expect
to continue generating a significant amount of cash flow in our
business. Our management team and Board are strategically aligned
and believe our Company is very well-positioned to deliver
long-term, profitable growth.”
Conference Call
Information
On Thursday, May 26, 2022, 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 800-289-0720. A recorded version
of the call will be available until midnight Wednesday, June 1,
2022, and may be accessed by dialing 888-203-1112. The access code
is 9882039. A webcast of the call is accessible through Dollar
Tree's website and will remain online through Wednesday, June 1,
2022.
Dollar Tree, a Fortune 200 Company, operated 16,162 stores
across 48 states and five Canadian provinces as of April 30, 2022.
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 can be identified by the fact that they address future
events, developments or results and do not relate strictly to
historical facts. Any statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements include,
without limitation, statements preceded by, followed by or
including words such as: “believe”, “anticipate”, “expect”,
“intend”, “plan”, “view”, “target” or “estimate”, “may”, “will”,
“should”, “predict”, “possible”, “potential”, “continue”,
“strategy”, and similar expressions. For example, our
forward-looking statements include statements regarding our
expectations concerning the impact to our business of the $1.25
price point conversion; expansion of the Dollar Tree Plus and other
store format initiatives; newly announced strategic investments in
associates, supply chain, product assortment and pricing, and
technology systems; other key initiatives; the anticipated customer
response and the projected impact on operating performance in our
Dollar Tree and Family Dollar chains and our enterprise operations,
including supply chain; and the impacts associated with our product
recall and closure of a distribution center and stock compensations
expenses. Forward-looking statements also include our plans
relating to new store openings, renovations and square footage
growth; our expectations regarding capital expenditures and share
repurchases for fiscal 2022; our plans and expectations regarding
traffic, store productivity, product assortment, operating
performance, return on capital, net sales, same-store sales, cash
flow, and diluted earnings per share for the second fiscal quarter
and full fiscal year 2022; and our other plans, objectives,
expectations (financial and otherwise) and intentions. These
statements are subject to risks and uncertainties. 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 15, 2022, our Form
10-Q for the most recently ended fiscal quarter and other filings
we make from time to time 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 30, 2022
May 1, 2021 Net sales
$
6,900.1
$
6,476.8
Other revenue
2.5
2.9
Total revenue
6,902.6
6,479.7
Cost of sales
4,559.6
4,512.7
Selling, general and administrative expenses
1,611.5
1,447.1
23.3
%
22.3
%
Operating income
731.5
519.9
10.6
%
8.0
%
Interest expense, net
34.0
33.0
Income before income taxes
697.5
486.9
10.1
%
7.5
%
Provision for income taxes
161.1
112.4
Income tax rate
23.1
%
23.1
%
Net income
$
536.4
$
374.5
7.8
%
5.8
%
Net earnings per share: Basic
$
2.38
$
1.61
Weighted average number of shares
225.3
233.2
Diluted
$
2.37
$
1.60
Weighted average number of shares
226.4
234.4
DOLLAR TREE, INC. Segment Information (In
millions, except store count) (Unaudited) 13
Weeks Ended April 30, 2022 May 1, 2021
Net sales: Dollar Tree
$
3,781.8
$
3,321.3
Family Dollar
3,118.3
3,155.5
Total net sales
$
6,900.1
$
6,476.8
Gross profit: Dollar Tree
$
1,534.7
40.6
%
$
1,118.3
33.7
%
Family Dollar
805.8
25.8
%
845.8
26.8
%
Total gross profit
$
2,340.5
33.9
%
$
1,964.1
30.3
%
Operating income (loss): Dollar Tree
$
764.2
20.2
%
$
400.3
12.1
%
Family Dollar
89.5
2.9
%
211.4
6.7
%
Corporate, support and Other
(122.2
)
(1.8
%)
(91.8
)
(1.4
%)
Total operating income
$
731.5
10.6
%
$
519.9
8.0
%
13 Weeks Ended April 30, 2022 May 1,
2021 DollarTree FamilyDollar Total
DollarTree FamilyDollar Total Store
Count: Beginning
8,061
8,016
16,077
7,805
7,880
15,685
New stores
42
70
112
65
41
106
Re-bannered stores (a)
(2
)
5
3
-
-
-
Closings
(13
)
(17
)
(30
)
(3
)
(16
)
(19
)
Ending
8,088
8,074
16,162
7,867
7,905
15,772
Selling Square Footage (in millions)
70.0
59.8
129.8
67.9
58.0
125.9
Growth Rate (Square Footage)
3.1
%
3.1
%
3.1
%
4.1
%
1.9
%
3.1
%
(a) Stores are included as re-banners when they close or
open, respectively.
DOLLAR TREE, INC. Condensed
Consolidated Balance Sheets (In millions)
(Unaudited) April 30, 2022 January 29,
2022 May 1, 2021 Cash and cash equivalents
$
1,218.5
$
984.9
$
1,473.9
Merchandise inventories
4,801.1
4,367.3
3,604.6
Other current assets
262.7
257.0
226.4
Total current assets
6,282.3
5,609.2
5,304.9
Property, plant and equipment, net
4,514.0
4,477.3
4,182.4
Restricted cash
53.4
53.4
46.9
Operating lease right-of-use assets
6,364.9
6,425.3
6,356.5
Goodwill
1,984.3
1,984.4
1,985.6
Trade name intangible asset
3,100.0
3,100.0
3,100.0
Deferred tax asset
19.3
20.3
24.4
Other assets
54.1
51.9
50.0
Total assets
$
22,372.3
$
21,721.8
$
21,050.7
Current portion of operating lease liabilities
$
1,406.7
$
1,407.8
$
1,355.6
Accounts payable
1,794.1
1,884.2
1,520.7
Income taxes payable
162.8
82.6
169.5
Other current liabilities
926.3
802.0
856.4
Total current liabilities
4,289.9
4,176.6
3,902.2
Long-term debt, net
3,418.1
3,417.0
3,227.8
Operating lease liabilities, long-term
5,087.9
5,145.5
5,099.2
Deferred income taxes, net
1,060.7
987.2
1,035.7
Income taxes payable, long-term
21.2
20.9
23.7
Other liabilities
253.0
256.1
350.8
Total liabilities
14,130.8
14,003.3
13,639.4
Shareholders' equity
8,241.5
7,718.5
7,411.3
Total liabilities and shareholders' equity
$
22,372.3
$
21,721.8
$
21,050.7
The January 29, 2022 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 30, 2022 May 1, 2021
Cash flows from operating activities: Net income
$
536.4
$
374.5
Adjustments to reconcile net income to net cash provided
byoperating activities: Depreciation and amortization
188.9
172.7
Provision for deferred income taxes
74.3
22.0
Stock-based compensation expense
35.8
31.8
Amortization of debt discount and debt-issuance costs
1.1
1.6
Other non-cash adjustments to net income
15.7
1.2
Changes in operating assets and liabilities
(313.7
)
(47.6
)
Total adjustments
2.1
181.7
Net cash provided by operating activities
538.5
556.2
Cash flows from investing activities: Capital expenditures
(253.4
)
(224.9
)
Proceeds from governmental grant
-
2.3
Payments for fixed asset disposition
(2.9
)
(0.2
)
Net cash used in investing activities
(256.3
)
(222.8
)
Cash flows from financing activities: Proceeds from stock
issued pursuant to stock-based compensation plans
2.9
4.0
Cash paid for taxes on exercises/vesting of stock-based
compensation
(37.8
)
(39.3
)
Payments for repurchase of stock
(14.2
)
(241.3
)
Net cash used in financing activities
(49.1
)
(276.6
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
0.5
0.4
Net increase in cash, cash equivalents and restricted cash
233.6
57.2
Cash, cash equivalents and restricted cash at beginning of period
1,038.3
1,463.6
Cash, cash equivalents and restricted cash at end of period
$
1,271.9
$
1,520.8
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220525005903/en/
Dollar Tree, Inc. Randy Guiler, 757-321-5284 Vice President,
Investor Relations www.DollarTree.com DLTR-E
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