~ Company Reports Record First Quarter
Earnings ~ ~ Diluted Earnings per Share Increased 53.8% to
$1.60 vs. $1.04 ~ ~ Consolidated Net Sales Increased 3.0% to
$6.48 Billion ~ ~ Same-Store Sales: Enterprise +0.8%; Dollar
Tree +4.7%; Family Dollar -2.8% ~ ~ Family Dollar Produced
Its Best Post-Merger Quarterly Operating Profit, $211.4 Million
~
Dollar Tree, Inc. (NASDAQ:DLTR) today reported financial results
for its first quarter ended May 1, 2021.
“Our record first quarter performance reflects the progress we
continue to make on numerous initiatives to provide even greater
value and convenience to our shoppers. Dollar Tree delivered its
strongest quarterly same-store sales since 2017, while improving
its operating margin by 290 basis points. Family Dollar effectively
cycled a 15.5% comp sales increase from the prior year by driving
its best post-merger quarterly operating profit,” stated Michael
Witynski, President and Chief Executive Officer. “Combined, our
enterprise produced positive same-store sales against a tough
comparison, and a 220 basis point improvement in operating margin,
driven by improved gross margins and better expense leverage.”
First Quarter Results
Consolidated net sales increased 3.0% to $6.48 billion from
$6.29 billion in the prior year’s first quarter. Enterprise
same-store sales increased 0.8% on a constant currency basis (or
0.9% when adjusted to include the impact of Canadian currency
fluctuations). Same-store sales for Dollar Tree increased 4.7%.
Family Dollar same-store sales decreased 2.8%, compared to a very
strong 15.5% increase in the prior year’s first quarter. The
banner’s first quarter same-store sales increase, on a two-year
stacked basis, was a strong 12.7% as the Family Dollar brand
continues to gain market share with its great value and compelling
mix of products.
Gross profit increased 9.4% to $1.96 billion in the quarter
compared to the prior year’s first quarter. As a percentage of net
sales, gross margin was 30.3%, compared to 28.5% in the same period
a year ago. The 180 basis point improvement was driven by a
favorable sales mix, improved shrink results and reduced markdowns,
partially offset by higher freight costs.
Selling, general and administrative expenses were 22.3% of total
revenue, compared to 22.7% of total revenue in the prior year's
first quarter. The improvement was driven by lower COVID-19-related
costs, partially offset by higher repairs and maintenance
costs.
Operating income for the quarter improved 42.1% to $519.9
million, compared with $365.9 million in the same period last year
and operating income margin was 8.0%, compared to 5.8% in the prior
year’s quarter. The first quarter of 2021 included total
incremental operating costs of $7.4 million for COVID-19-related
expenses, compared to $73.2 million in the first quarter of
2020.
Net income in the first quarter increased 51.3% to $374.5
million and diluted earnings per share increased 53.8% to $1.60,
compared to $1.04 in the prior year’s quarter.
The Company repurchased 2,150,572 shares during the quarter for
$250 million. As of May 1, the Company had $2.15 billion remaining
on its share repurchase authorization.
During the quarter, the Company opened 106 new stores, expanded
or relocated 36 stores, and closed 19 stores. Additionally, the
Company completed 414 Family Dollar store renovations. Retail
selling square footage at quarter-end was approximately 125.9
million square feet.
Update on Company
Initiatives
“During the initial post-merger years, much of the Company’s
energy and focus was dedicated to integration-related projects,
such as: stabilizing and restructuring the organization, improving
store maintenance, harmonizing technology, designing and testing
store formats such as H2 and Combo Stores, optimizing our real
estate portfolio, refining our assortments to provide greater value
to customers, rolling out banner-store operational guidelines and
training, and ultimately consolidating our store support centers.
These priorities were critical as we prepared the combined business
for long-term profitable growth,” added Witynski. “In the past
eighteen months, we have transitioned to an aggressive approach
under one aligned leadership team, dedicating our major efforts
toward customer-facing initiatives with clarity, focus and speed.
Examples include: Dollar Tree Plus!, Combination Stores, developing
omni-channel and e-commerce offerings, FamilyDollar.com as a
selling site, partnering with InstaCart for same-day delivery,
introducing Chesapeake Media Group, and testing fresh produce and
frozen meats. I am excited about the long-term impact of these
actions to drive shopper satisfaction and loyalty, as well as
shareholder value.”
Dollar Tree Plus! – The Company has
incorporated the Dollar Tree Plus! multi-price assortment into an
additional 128 Dollar Tree stores in 2021, bringing the total to
more than 240 store locations. Initial feedback from customers on
the current offering is more positive than prior iterations. The
Company has expanded Dollar Tree Plus! into select stores in
Colorado, as well as states in the southeast, such as Georgia,
Alabama, Louisiana and the Carolinas. The Company is committed to
growing this key program in fiscal 2022, with more details about
the expansion to be provided later this year.
Combination Stores – Last quarter,
the Company introduced the Combination, or Combo, Store concept
focused on delivering small towns and rural locations with Family
Dollar’s great value and assortment with Dollar Tree’s “thrill of
the hunt” and fixed price-point. The Combo Stores are being
extremely well-received in these communities and continue to
deliver greater sales, improved gross margins and better expense
leverage. The Combo Stores are delivering a same-store sales lift
of greater than 20% on average. With an estimated opportunity for
3,000 markets, Combo Stores will be a key component of Family
Dollar’s store growth and the Company will continue to refine both
its H2 and Combo Store formats, which include a very compelling
discretionary product offering. A video, along with photos,
introducing the new Combo Stores can be viewed at:
www.FamilyDollar.com/ComboStores.
Omni-Channel – In the past year,
Family Dollar has launched a selling website at FamilyDollar.com
and has partnered with InstaCart for same-day delivery services
from more than 6,000 stores across the country. These are examples
of the Company’s focus on expanding its reach to customers and
gaining market share. The Company recently launched its new retail
media network, to provide brand partners with the ability to
instantly connect with shoppers, contributing to purchase decisions
in real time. CPG brands will be able to directly reach millions of
families across America through a variety of digital options made
possible through Chesapeake Media Group. While still in the early
stages, the program has been well-received by the Company’s brand
partners.
Other Initiatives – Building on the
success of Crafter’s Square® and the rollout of the offering to all
Dollar Tree stores last year, the Company is expanding the
assortment with even more seasonal and everyday products that
customers love. Additionally, the Company is initiating a
Self-Checkout pilot in a small number of Dollar Tree stores to
enhance labor efficiencies. At the Family Dollar banner, the
Company is in the early phases of testing fresh produce and frozen
meat in select markets.
Company Outlook and
Liquidity
For full-year fiscal 2021, the Company estimates diluted
earnings per share will range between $5.80 and $6.05. This
estimate assumes a consolidated comparable store net sales increase
in the low single digits. Freight costs in the last three quarters
of fiscal 2021 are projected to be $0.70 to $0.80 higher than the
comparable period in fiscal 2020, expressed in terms of the impact
on diluted earnings per share. The current freight cost projection
is significantly higher than it was a quarter ago. However, the
disruption in shipping is not expected to be permanent.
Outstanding debt, as of May 1, was $3.25 billion. The Company
ended the quarter with approximately $1.5 billion in cash and cash
equivalents on its balance sheet and reiterates its expected
capital expenditures for fiscal 2021 will total approximately $1.2
billion. A majority of the excess cash flow generated may be
dedicated to share repurchases under the Company’s current $2.15
billion remaining on its authorization.
For fiscal 2021, the Company reiterates its plan to open 600 new
stores and to renovate 1,250 Family Dollar stores. The new stores
are expected to consist of 400 Dollar Tree stores and 200 Family
Dollar stores. The Family Dollar stores will be comprised of H2 and
Combo Store formats, based upon market locations.
“Looking forward, I am most excited about the growth of Dollar
Tree Plus! and our strategic store formats, which shoppers are
responding to favorably, as evidenced by market share gains and
improved customer satisfaction scores. These offerings, along with
other key sales- and traffic-driving initiatives and a robust
balance sheet, gives us confidence that we have increased the
long-term earnings potential for both banners,” Witynski concluded.
“As always, our teams are working hard to adapt and react to
navigate the business based on the current environment. I am
extremely proud of their commitment, dedication and focus to
delivering value and convenience to millions of households across
North America.”
Conference Call
Information
On Thursday, May 27, 2021, 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 800-367-2403. A recorded version
of the call will be available until midnight Wednesday, June 2,
2021, and may be accessed by dialing 888-203-1112. The access code
is 8268002. A webcast of the call is accessible through Dollar
Tree's website and will remain online through Wednesday, June 2,
2021.
Dollar Tree, a Fortune 200 Company, operated 15,772 stores
across 48 states and five Canadian provinces as of May 1, 2021.
Stores operate under the brands of Dollar Tree, Family Dollar, and
Dollar Tree Canada. To learn more about the Company, visit
www.DollarTree.com and www.FamilyDollar.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 plans
and expectations concerning various initiatives, including the
launch of Chesapeake Media Group, the expansion of Dollar Tree
Plus!, the growth potential of Combination Stores and the potential
contribution to sales growth of our InstaCart partnership with
Family Dollar and the new selling website at FamilyDollar.com; our
expectations of continued volatility and uncertainty related to the
COVID-19 pandemic, and other macroeconomic factors; our
expectations of higher freight costs; our estimates and assumptions
for diluted earnings per share and comparable store net sales for
fiscal 2021 and freight costs for the remainder of fiscal 2021; our
expectations concerning shipping disruptions; our expectations
regarding capital expenditures and share repurchases for fiscal
2021; our plans relating to new store openings and store
renovations; 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 16, 2021, 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.
DLTR-E
DOLLAR TREE, INC. Condensed Consolidated Income
Statements (In millions, except per share data)
(Unaudited)
13 Weeks Ended
May 1, 2021
May 2, 2020
Net sales
$
6,476.8
$
6,286.8
Other revenue
2.9
-
Total revenue
6,479.7
6,286.8
Cost of sales
4,512.7
4,491.9
Selling, general and administrative
expenses
1,447.1
1,429.0
22.3
%
22.7
%
Operating income
519.9
365.9
8.0
%
5.8
%
Interest expense, net
33.0
40.2
Other expense, net
-
0.5
Income before income taxes
486.9
325.2
7.5
%
5.2
%
Provision for income taxes
112.4
77.6
Income tax rate
23.1
%
23.9
%
Net income
$
374.5
$
247.6
5.8
%
3.9
%
Net earnings per share: Basic
$
1.61
$
1.05
Weighted average number of shares
233.2
236.9
Diluted
$
1.60
$
1.04
Weighted average number of shares
234.4
237.4
DOLLAR TREE, INC. Segment Information (In
millions, except store count) (Unaudited)
13 Weeks Ended
May 1, 2021
May 2, 2020
Net sales: Dollar
Tree
$
3,321.3
$
3,077.5
Family Dollar
3,155.5
3,209.3
Total net sales
$
6,476.8
$
6,286.8
Gross profit:
Dollar Tree
$
1,118.3
33.7
%
$
980.7
31.9
%
Family Dollar
845.8
26.8
%
814.2
25.4
%
Total gross profit
$
1,964.1
30.3
%
$
1,794.9
28.5
%
Operating income (loss):
Dollar Tree
$
400.3
12.1
%
$
282.0
9.2
%
Family Dollar
211.4
6.7
%
175.5
5.5
%
Corporate, support and Other
(91.8
)
(1.4
%)
(91.6
)
(1.5
%)
Total operating income
$
519.9
8.0
%
$
365.9
5.8
%
13 Weeks Ended
May 1, 2021
May 2, 2020
Dollar Tree
Family Dollar
Total
Dollar Tree
Family Dollar
Total
Store Count:
Beginning
7,805
7,880
15,685
7,505
7,783
15,288
New stores
65
41
106
67
32
99
Re-bannered stores (a)
-
-
-
(3
)
-
(3
)
Closings
(3
)
(16
)
(19
)
(7
)
(7
)
(14
)
Ending
7,867
7,905
15,772
7,562
7,808
15,370
Selling Square Footage (in millions)
67.9
58.0
125.9
65.2
56.9
122.1
Growth Rate (Square Footage)
4.1
%
1.9
%
3.1
%
6.5
%
(3.9
%)
1.4
%
(a) Stores are
included as re-banners when they close or open, respectively.
DOLLAR TREE, INC. Condensed Consolidated Balance
Sheets (In millions) (Unaudited)
May 1,
January 30,
May 2,
2021
2021
2020
Cash and
cash equivalents
$
1,473.9
$
1,416.7
$
1,755.1
Merchandise inventories
3,604.6
3,427.0
3,198.5
Other current assets
226.4
207.1
211.8
Total current assets
5,304.9
5,050.8
5,165.4
Property, plant and equipment, net
4,182.4
4,116.3
3,964.8
Restricted cash
46.9
46.9
46.9
Operating lease right-of-use assets
6,356.5
6,324.1
6,147.0
Goodwill
1,985.6
1,984.4
1,981.4
Trade name intangible asset
3,100.0
3,100.0
3,100.0
Deferred tax asset
24.4
23.2
23.3
Other assets
50.0
50.3
43.0
Total assets
$
21,050.7
$
20,696.0
$
20,471.8
Current
portion of long-term debt
$
-
$
-
$
1,050.0
Current portion of operating lease liabilities
1,355.6
1,348.2
1,265.0
Accounts payable
1,520.7
1,480.5
1,336.9
Income taxes payable
169.5
86.3
84.2
Other current liabilities
856.4
815.3
768.1
Total current liabilities
3,902.2
3,730.3
4,504.2
Long-term debt, net, excluding current
portion
3,227.8
3,226.2
3,223.3
Operating lease liabilities, long-term
5,099.2
5,065.5
4,885.2
Deferred income taxes, net
1,035.7
1,013.5
1,037.7
Income taxes payable, long-term
23.7
22.6
30.2
Other liabilities
350.8
352.6
270.6
Total liabilities
13,639.4
13,410.7
13,951.2
Shareholders' equity
7,411.3
7,285.3
6,520.6
Total liabilities and shareholders'
equity
$
21,050.7
$
20,696.0
$
20,471.8
The January 30, 2021 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
May 1,
May 2,
2021
2020
Cash flows from operating
activities: Net income
$
374.5
$
247.6
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
172.7
165.5
Provision for deferred income taxes
22.0
52.7
Stock-based compensation expense
31.8
32.6
Amortization of debt discount and debt-issuance costs
1.6
1.1
Other non-cash adjustments to net income
1.2
2.0
Changes in operating assets and liabilities
(47.6
)
457.5
Total adjustments
181.7
711.4
Net cash provided by operating activities
556.2
959.0
Cash flows from investing activities:
Capital expenditures
(224.9
)
(235.8
)
Proceeds from governmental grant
2.3
-
Payments for fixed asset disposition
(0.2
)
(0.1
)
Net cash used in investing activities
(222.8
)
(235.9
)
Cash flows from financing activities:
Principal payments for long-term debt
-
(250.0
)
Proceeds from revolving credit facility
-
750.0
Proceeds from stock issued pursuant to stock-based compensation
plans
4.0
9.7
Cash paid for taxes on exercises/vesting of stock-based
compensation
(39.3
)
(16.1
)
Payments for repurchase of stock
(241.3
)
-
Net cash provided by (used in) financing activities
(276.6
)
493.6
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
0.4
(0.7
)
Net increase in cash, cash equivalents and restricted cash
57.2
1,216.0
Cash, cash equivalents and restricted cash at beginning of period
1,463.6
586.0
Cash, cash equivalents and restricted cash at end of period
$
1,520.8
$
1,802.0
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210527005201/en/
Dollar Tree, Inc. Randy Guiler, 757-321-5284 Vice President,
Investor Relations www.DollarTree.com
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