- Same-Store Net Sales: Dollar Tree +5.4%; Family Dollar
+2.0%; Enterprise +3.9%
- Comparable Transaction Count: Dollar Tree +7.0%; Family
Dollar +1.4%
- Diluted Earnings per Share (EPS) $0.97, Including $0.05 of
Costs Related to a Voluntary Retail-Level Product Recall in the
Family Dollar Segment
- Fiscal 2023 Net Sales Outlook Range to $30.5 Billion to
$30.7 Billion
- Fiscal 2023 Diluted EPS Outlook Range to $5.81 to $6.01,
Including $0.12 per Share Legal Reserve from Q1 2023
Dollar Tree, Inc. (NASDAQ: DLTR) today reported financial
results for its third quarter ended October 28, 2023.
“Our third-quarter results were within our expectations thanks
to continued execution across all aspects of our business
transformation,” said Rick Dreiling, Chairman and Chief Executive
Officer. “In a challenging environment, our performance was among
the best in retail as we continue to grow traffic, unit, and sales
per square foot.”
“We are pleased with our top-line performance in the third
quarter. Overall, we generated five percent more gross profit
dollars than last year as consumers continue to respond positively
to our growth initiatives,” stated Jeff Davis, Chief Financial
Officer.
Additional Business
Highlights
- Opened 197 new stores
- Expanded multi-price Plus offering to 870 additional Dollar
Tree stores
- Added $3, $4, and $5 frozen and refrigerated items to 920
additional Dollar Tree stores
- Net cash provided by operating activities increased $292.3
million compared to Q3 2022
- Increased free cash flow by $142.1 million compared to Q3
2022
Third
Quarter 2023 Key Operating Results
(Compared to same period fiscal 2022)
Q3
Fiscal 2023
Change
YTD
Fiscal 2023
Change
Consolidated Net Sales
$7.31B
5.4%
$21.9B
6.5%
Same-Store Net Sales Growth:
Dollar Tree Segment
5.4%
5.6%
Family Dollar Segment
2.0%
4.8%
Enterprise
3.9%
5.2%
Operating Income
$301.7M
(20.9%)
$1.01B
(37.6%)
Diluted EPS
$0.97
(19.2%)
$3.23
(37.5%)
Adjusted Operating Income1
-
-
$1.04B
(35.8%)
Adjusted Diluted EPS1
-
-
$3.35
(35.2%)
1Adjustment is due to a $30
million accrual in Q1 FY 2023 related to previously disclosed legal
proceedings associated with our West Memphis, Arkansas distribution
center. See “Use of Non-GAAP Financial Measures” below.
Third Quarter Results
Unless otherwise noted, all comparisons are between the 13 weeks
ended October 28, 2023, and the 13 weeks ended October 29,
2022.
Consolidated net sales increased 5.4% to $7.31 billion.
Enterprise same-store net sales increased 3.9%, driven by a 4.7%
increase in traffic, partially offset by a 0.8% decline in average
ticket. Dollar Tree same-store net sales increased 5.4%, driven by
a 7.0% increase in traffic, partially offset by a 1.5% decline in
average ticket. Family Dollar’s 2.0% same-store net sales increase
was comprised of a 1.4% increase in traffic and a 0.7% increase in
average ticket.
Gross profit increased 4.9% to $2.17 billion and gross margin
declined 20 basis points to 29.7%. The gross margin decline was
driven by unfavorable sales mix, elevated shrink, product cost
inflation, the product recall, and wage investments in distribution
center payroll, partially offset by lower freight.
Selling, general and administrative expenses were 25.7% of total
revenue, compared to 24.4%. The increase was primarily due to labor
investments in store and field payroll, higher information
technology system costs, investments in repairs and maintenance,
higher utility costs, and depreciation and amortization, partially
offset by sales leverage.
Operating income was $301.7 million and operating margin was
4.1%.
The Company’s effective tax rate was 21.8%, compared to
23.4%.
Net income was $212.0 million and diluted EPS was $0.97.
The Company repurchased 2,176,886 shares for $252.3 million,
including applicable excise tax.
Year-to-Date Results
Unless otherwise noted, all comparisons are between the 39 weeks
ended October 28, 2023, and the 39 weeks ended October 29,
2022.
Consolidated net sales increased 6.5% to $21.9 billion.
Enterprise same-store net sales increased 5.2%. Dollar Tree
same-store net sales increased 5.6%, driven by a 7.5% increase in
traffic, partially offset by a 1.8% decline in average ticket.
Family Dollar’s 4.8% same-store net sales increase was comprised of
a 3.0% increase in traffic along with a 1.7% increase in average
ticket.
Gross profit was flat at $6.5 billion and gross margin declined
190 basis points to 29.8%.
Selling, general and administrative expenses were 25.2% of total
revenue, compared to 23.9%.
Operating income was $1.0 billion and operating income margin
was 4.6%.
The Company’s effective tax rate was 23.4% compared to
23.5%.
Net income was $711.4 million and diluted EPS was $3.23.
The Company repurchased 3,905,599 shares for $504.3 million,
including applicable excise tax.
Portfolio Optimization
Review
The company has initiated a comprehensive review of its Family
Dollar portfolio to address stores that are not aligned with its
transformative vision for the company.
Updated Fiscal 2023
Outlook
“Our full-year 2023 diluted EPS outlook incorporates our third
quarter results and fourth quarter expectations that are consistent
with those contained in our previous earnings update. Our current
outlook takes into consideration several factors including
continuing strength at the Dollar Tree banner, incremental freight
savings, softer demand from low-income households, and a
continuation of the shrink and sales mix headwinds we have seen
throughout the year. It excludes any potential impact from the
Family Dollar portfolio review,” Davis added.
Fiscal 2023 Outlook
Consolidated net sales for full-year fiscal 2023 are now
expected to range from $30.5 billion to $30.7 billion. The Company
expects to deliver a mid-single-digit comparable store net sales
increase for the year, comprised of a mid-single-digit increase in
the Dollar Tree segment and a low-single-digit increase in the
Family Dollar segment. Selling square footage is expected to grow
by 3.0% to 3.5% for the year. Diluted EPS is expected to range from
$5.81 to $6.01, including the $0.12 charge for the legal reserve
taken in the first quarter and the impact of the 53rd week in
fiscal 2023.
Fourth Quarter 2023 Outlook
The Company expects consolidated net sales for the fourth
quarter will range from $8.6 billion to $8.8 billion, based on a
low-single-digit increase in same-store sales for the enterprise, a
mid-single-digit increase for the Dollar Tree segment, and a
decrease of 1.0% to an increase of 1.0% for the Family Dollar
segment. Diluted EPS for the quarter is estimated to be in the
range of $2.58 to $2.78.
While share repurchases are not included in the outlook, the
Company had $1.35 billion remaining under its share repurchase
authorization as of October 28, 2023.
Conference Call
Information
On Wednesday, November 29, 2023, the Company will host a
conference call to discuss its earnings results at 8:00 a.m.
Eastern Time. The telephone number for the call is 877-407-3943. A
recorded version of the call will be available for seven days after
the call and may be accessed by dialing 877-660-6853. The access
code is 13742521. A webcast of the call is also accessible through
Dollar Tree's website.
Supplemental financial information for the third quarter is
available on the Investor Relations portion of the Company’s
website, at https://corporate.dollartree.com/investors.
Dollar Tree, a Fortune 200 Company, operated 16,622 stores
across 48 states and five Canadian provinces as of October 28,
2023. Stores operate under the brands of Dollar Tree, Family
Dollar, and Dollar Tree Canada. To learn more about the Company,
visit www.DollarTree.com.
Use of Non-GAAP Financial
Measures
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
(“GAAP”). From time-to-time, the Company supplements the reporting
of its financial information determined under GAAP with certain
non-GAAP financial information. The non-GAAP financial measures
included in this press release are adjusted operating income,
adjusted diluted earnings per share (EPS), adjusted net income, and
adjusted operating income (Family Dollar segment), each of which
excludes the impact of a $30 million accrual related to previously
disclosed legal proceedings associated with our West Memphis,
Arkansas distribution center, and free cash flow.
A reconciliation of the non-GAAP financial measures to the
corresponding amounts prepared in accordance with GAAP appears in
the table “Reconciliation of Non-GAAP Financial Measures” below.
The table provides additional information regarding the adjusted
measures.
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 relating to our
business and financial outlook for fiscal 2023, including without
limitation our expectations regarding net sales, comparable store
sales and diluted earnings per share for the fourth fiscal quarter
and full fiscal year 2023, and various factors that are expected to
impact our quarterly and annual results of operations for fiscal
2023; our selling square footage for fiscal 2023; our plans and
expectations regarding our business, including the impact of
various initiatives, investments, and reviews on the company’s
performance and prospects for long-term growth; 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 10, 2023, 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. In addition, we can
provide no assurances that we will not be required to accrue
additional amounts in future periods with respect to legal
proceedings related to our West Memphis, Arkansas distribution
center. 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
39 Weeks Ended
October 28,2023 October 29,2022 October
28,2023 October 29,2022 Revenues Net sales
$
7,309.1
$
6,936.6
$
21,948.7
$
20,602.0
Other revenue
5.7
3.3
15.2
9.0
Total revenue
7,314.8
6,939.9
21,963.9
20,611.0
Expenses Cost of sales
5,136.1
4,865.1
15,410.6
14,065.6
Selling, general and administrative expenses
1,877.0
1,693.5
5,544.1
4,927.2
Operating income
301.7
381.3
1,009.2
1,618.2
Interest expense, net
30.4
32.7
80.5
97.3
Other expense, net
0.2
0.2
0.2
0.3
Income before income taxes
271.1
348.4
928.5
1,520.6
Provision for income taxes
59.1
81.5
217.1
357.4
Net income
$
212.0
$
266.9
$
711.4
$
1,163.2
Net earnings per share: Basic
$
0.97
$
1.20
$
3.23
$
5.20
Weighted average number of shares
218.9
222.2
220.0
223.9
Diluted
$
0.97
$
1.20
$
3.23
$
5.17
Weighted average number of shares
219.2
223.0
220.5
224.8
SG&A expenses as percentage of total revenue
25.7
%
24.4
%
25.2
%
23.9
%
Operating income margin
4.1
%
5.5
%
4.6
%
7.9
%
Income before income taxes as percentage of total revenue
3.7
%
5.0
%
4.2
%
7.4
%
Effective tax rate
21.8
%
23.4
%
23.4
%
23.5
%
Net income margin
2.9
%
3.8
%
3.2
%
5.6
%
DOLLAR TREE, INC. Segment Information (In
millions, except store count) (Unaudited) 13
Weeks Ended 39 Weeks Ended October 28, 2023
October 29, 2022 October 28, 2023 October 29,
2022 Net sales: Dollar Tree
$
4,003.8
$
3,756.1
$
11,808.9
$
11,109.0
Family Dollar
3,305.3
3,180.5
10,139.8
9,493.0
Total net sales
$
7,309.1
$
6,936.6
$
21,948.7
$
20,602.0
Gross profit: Dollar Tree
$
1,393.8
34.8
%
$
1,328.3
35.4
%
$
4,075.7
34.5
%
$
4,197.9
37.8
%
Family Dollar
779.2
23.6
%
743.2
23.4
%
2,462.4
24.3
%
2,338.5
24.6
%
Total gross profit
$
2,173.0
29.7
%
$
2,071.5
29.9
%
$
6,538.1
29.8
%
$
6,536.4
31.7
%
Operating income (loss): Dollar Tree
$
482.7
12.1
%
$
499.7
13.3
%
$
1,416.2
12.0
%
$
1,814.7
16.3
%
Family Dollar
(66.3
)
(2.0
%)
(18.4
)
(0.6
%)
(45.7
)
(0.5
%)
126.1
1.3
%
Corporate, support and other
(114.7
)
(1.6
%)
(100.0
)
(1.4
%)
(361.3
)
(1.6
%)
(322.6
)
(1.6
%)
Total operating income
$
301.7
4.1
%
$
381.3
5.5
%
$
1,009.2
4.6
%
$
1,618.2
7.9
%
DOLLAR TREE, INC. Condensed Consolidated Balance
Sheets (In millions) (Unaudited)
October 28, 2023 January 28, 2023 October 29,
2022 ASSETS Current Assets: Cash and cash equivalents
$
444.6
$
642.8
$
439.0
Merchandise inventories
5,515.1
5,449.3
5,657.7
Other current assets
342.4
275.0
349.9
Total current assets
6,302.1
6,367.1
6,446.6
Restricted cash
71.0
68.5
67.9
Property, plant and equipment, net
5,714.6
4,972.2
4,823.9
Operating lease right-of-use assets
6,767.9
6,458.0
6,413.3
Goodwill
1,981.9
1,983.1
1,982.4
Trade name intangible asset
3,100.0
3,100.0
3,100.0
Deferred tax asset
11.1
15.0
15.7
Other assets
82.6
58.2
59.7
Total assets
$
24,031.2
$
23,022.1
$
22,909.5
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Short-term borrowings
$
229.6
$
-
$
350.0
Current portion of operating lease liabilities
1,493.7
1,449.6
1,426.7
Accounts payable
1,857.0
1,899.8
1,864.2
Income taxes payable
-
58.1
-
Other current liabilities
1,067.6
817.7
1,042.2
Total current liabilities
4,647.9
4,225.2
4,683.1
Long-term debt, net
3,425.1
3,421.6
3,420.4
Operating lease liabilities, long-term
5,539.9
5,255.3
5,155.9
Deferred income taxes, net
1,165.3
1,105.7
1,101.1
Income taxes payable, long-term
19.7
17.4
22.0
Other liabilities
235.1
245.4
251.7
Total liabilities
15,033.0
14,270.6
14,634.2
Shareholders' equity
8,998.2
8,751.5
8,275.3
Total liabilities and shareholders' equity
$
24,031.2
$
23,022.1
$
22,909.5
The January 28, 2023 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) 39 Weeks
Ended October 28, 2023 October 29, 2022 Cash
flows from operating activities: Net income
$
711.4
$
1,163.2
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
614.8
571.4
Provision for deferred income taxes
63.1
117.4
Stock-based compensation expense
76.4
90.8
Amortization of debt discount and debt-issuance costs
4.0
3.4
Other non-cash adjustments to net income
43.1
26.4
Changes in operating assets and liabilities
(83.2
)
(1,238.5
)
Total adjustments
718.2
(429.1
)
Net cash provided by operating activities
1,429.6
734.1
Cash flows from investing activities: Capital expenditures
(1,317.2
)
(920.8
)
Payments for fixed asset disposition
(5.1
)
(5.1
)
Net cash used in investing activities
(1,322.3
)
(925.9
)
Cash flows from financing activities: Proceeds from
revolving credit facility
-
440.0
Repayments of revolving credit facility
-
(90.0
)
Net proceeds from commercial paper notes
229.1
-
Proceeds from stock issued pursuant to stock-based compensation
plans
7.6
7.1
Cash paid for taxes on exercises/vesting of stock-based
compensation
(38.6
)
(47.4
)
Payments for repurchase of stock
(500.0
)
(647.5
)
Net cash used in financing activities
(301.9
)
(337.8
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(1.1
)
(1.8
)
Net decrease in cash, cash equivalents and restricted cash
(195.7
)
(531.4
)
Cash, cash equivalents and restricted cash at beginning of period
711.3
1,038.3
Cash, cash equivalents and restricted cash at end of period
$
515.6
$
506.9
DOLLAR TREE, INC. Segment Information (In
millions, except store count) (Unaudited) 13
Weeks Ended October 28, 2023 October 29, 2022
Dollar Family Dollar Family Tree
Dollar Total Tree Dollar Total
Store Count: Beginning
8,177
8,299
16,476
8,103
8,128
16,231
New stores
107
90
197
23
79
102
Re-bannered stores (a)
1
(9
)
(8
)
-
1
1
Closings
(13
)
(30
)
(43
)
(12
)
(29
)
(41
)
Ending
8,272
8,350
16,622
8,114
8,179
16,293
Selling Square Footage (in millions)
71.9
63.4
135.3
70.3
61.1
131.4
Growth Rate (Square Footage)
2.3
%
3.8
%
3.0
%
1.7
%
3.9
%
2.7
%
39 Weeks Ended October 28, 2023
October 29, 2022 Dollar Family Dollar
Family Tree Dollar Total Tree
Dollar Total Store Count: Beginning
8,134
8,206
16,340
8,061
8,016
16,077
New stores
187
235
422
97
244
341
Re-bannered stores (a)
5
(10
)
(5
)
(5
)
8
3
Closings
(54
)
(81
)
(135
)
(39
)
(89
)
(128
)
Ending
8,272
8,350
16,622
8,114
8,179
16,293
Selling Square Footage (in millions)
71.9
63.4
135.3
70.3
61.1
131.4
Growth Rate (Square Footage)
2.3
%
3.8
%
3.0
%
1.7
%
3.9
%
2.7
%
(a) Stores are included as re-banners when they close or open,
respectively.
52 Weeks Ended October 28, 2023
October 29, 2022 Dollar Family Dollar
Family Tree Dollar Total Tree
Dollar Total Sales per Square Foot (b)
$227
$218
$222
$216
$211
$213
(b) Sales per square foot is calculated based on total net sales
for the reporting period divided by the average selling square
footage during the period.
DOLLAR TREE, INC.
Reconciliation of Non-GAAP Financial Measures (In
millions, except per share data) (Unaudited) From
time-to-time, the Company discloses certain financial measures not
derived in accordance with GAAP. These 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, liquidity, or cash flows. The
non-GAAP financial measures we have disclosed include adjusted net
income, adjusted diluted earnings per share, adjusted operating
income, adjusted operating income – Family Dollar, and free cash
flow. The Company believes providing additional information in the
form of adjusted net income, adjusted diluted earnings per share,
adjusted operating income, adjusted operating income – Family
Dollar that exclude the unusual expenses described below is
beneficial to the users of its financial statements in evaluating
the Company's current operating results in relation to past
periods. In addition, the Company's debt covenants exclude the
impact of certain unusual expenses. The Company has included a
reconciliation of these non-GAAP financial measures to the most
comparable GAAP measures in the following tables. In the first
quarter of 2023, the Company recorded a $30.0 million charge to its
legal reserve for DC 202-related matters. In addition, the Company
discloses free cash flow, a non-GAAP financial measure that we
calculate as net cash provided by operating activities less capital
expenditures. The Company believes free cash flow is an important
indicator of our liquidity as it measures the amount of cash we
generate from our business operations. Free cash flow may not
represent the amount of cash flow available for general
discretionary use, because it excludes non-discretionary
expenditures, such as mandatory debt repayments and required
settlements of recorded and/or contingent liabilities not reflected
in cash flow from operations. The Company has included a
reconciliation of free cash flow to the most comparable GAAP
measures in the following tables.
Reconciliation of
Adjusted Net Income and Adjusted Diluted Earnings per Share
(EPS) 13 Weeks Ended 39 Weeks Ended October
28,2023 October 29,2022 October 28,2023
October 29,2022 Net income (GAAP)
$
212.0
$
266.9
$
711.4
$
1,163.2
SG&A adjustments: Legal reserve
-
-
30.0
-
Total adjustments
-
-
30.0
-
Provision for income taxes on adjustments
-
-
(3.9
)
-
Adjusted net income (Non-GAAP)
$
212.0
$
266.9
$
737.5
$
1,163.2
Diluted earnings per share (GAAP)
$
0.97
$
1.20
$
3.23
$
5.17
Adjustments, net of tax
-
-
0.12
-
Adjusted diluted EPS (Non-GAAP)
$
0.97
$
1.20
$
3.35
$
5.17
Reconciliation of Adjusted Operating Income 13
Weeks Ended 39 Weeks Ended October 28,2023
October 29,2022 October 28,2023 October
29,2022 Operating income (GAAP)
$
301.7
$
381.3
$
1,009.2
$
1,618.2
SG&A adjustments: Legal reserve
-
-
30.0
-
Total adjustments
-
-
30.0
-
Adjusted operating income (Non-GAAP)
$
301.7
$
381.3
$
1,039.2
$
1,618.2
Reconciliation of Adjusted Operating Income - Family
Dollar Segment 13 Weeks Ended 39 Weeks Ended
October 28,2023 October 29,2022 October
28,2023 October 29,2022 Operating income (GAAP)
$
(66.3
)
$
(18.4
)
$
(45.7
)
$
126.1
SG&A adjustments: Legal reserve
-
-
30.0
-
Total adjustments
-
-
30.0
-
Adjusted operating income (Non-GAAP)
$
(66.3
)
$
(18.4
)
$
(15.7
)
$
126.1
Reconciliation of Net Cash Provided by Operating
Activities to Free Cash Flow 13 Weeks Ended 39 Weeks
Ended October 28,2023 October 29,2022 October
28,2023 October 29,2022 Net cash provided by operating
activities (GAAP)
$
505.8
$
213.5
$
1,429.6
$
734.1
Deduct: Capital expenditures
(541.4
)
(391.2
)
(1,317.2
)
(920.8
)
Free cash flow (Non-GAAP)
$
(35.6
)
$
(177.7
)
$
112.4
$
(186.7
)
Net cash used in investing activities (GAAP) (c)
$
(541.3
)
$
(392.5
)
$
(1,322.3
)
$
(925.9
)
Net cash used in financing activities (GAAP)
(29.7
)
(54.5
)
(301.9
)
(337.8
)
(c) Net cash used in investing activities includes capital
expenditures, which is included in our computation of free cash
flow.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231129019230/en/
Dollar Tree, Inc. Robert A. LaFleur, 757-991-5645 Senior Vice
President, Investor Relations www.DollarTree.com DLTR-E
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