- Q4 Same-Store Sales: Dollar Tree +8.7%; Family Dollar +5.8%;
Enterprise +7.4%
- Q4 Diluted Earnings per Share (EPS) $2.04
- Company is Accelerating its Transformation Initiatives and
Pulling-Forward Investments to Deliver on its Full
Potential
- Fiscal 2023 EPS Outlook of $6.30 to $6.80 includes:
- An Estimated $0.29 per Share Benefit from 53rd Week
- Approximately $1.45 per Share Operating Expense
Investment
- Outlook Includes Only Minimal Benefit from
Investments
- Investments Will Yield Attractive Returns by 2024 and
Beyond
- $1.00 per Share of Reduced Freight Expenses with Additional
Benefit of Approximately $1.00 Expected in 2024 and Beyond, Based
on Current Market Conditions
- Fiscal 2023 Same-Store Sales Outlook by Segment:
- Dollar Tree Low Single-Digit Increase; Family Dollar
Mid-Single-Digit Increase
Dollar Tree, Inc. (NASDAQ: DLTR) today reported financial
results for its fourth quarter and fiscal year ended January 28,
2023.
“Our sales performance shows that our third quarter sales
momentum continued into the fourth quarter. The same-store sales
growth of 8.7% at Dollar Tree and 5.8% at Family Dollar represented
comp sales accelerations on a one-, two- and three-year stacked
basis, and are evidence that the early transformation actions taken
since last summer are already beginning to have a positive impact,”
stated Rick Dreiling, Chairman and Chief Executive Officer. “We are
committed to driving further store productivity as we focus on
developing our people, tools and technology to fuel our accelerated
growth, while simplifying our operations, improving our supply
chain and innovating our merchandising strategy to better support
our associates and to better serve our shoppers.”
Fiscal 2022 Key Operating
Results
(compared to same periods fiscal
2021)
Fiscal Q4 2022
Fiscal 2022
$
% Change
$
% Change
Consolidated Net Sales
$7.72B
9.0%
$28.32B
7.6%
Same-Store Sales:
Dollar Tree Segment
8.7%
9.0%
Family Dollar Segment
5.8%
2.4%
Enterprise
7.4%
5.9%
Operating Income
$618.1M
6.8%
$2.24B
23.5%
Diluted EPS
$2.04
1.5%
$7.21
24.3%
Other Business
Highlights
Fourth Quarter Fiscal 2022
- Opened 123 new stores, relocated 38 stores, and closed 77
stores
- Expanded multi-price Plus offering to an additional 119 Dollar
Tree stores
- Completed 112 Family Dollar store renovations
Fiscal 2022
- Opened 464 new stores, relocated 120 stores, and closed 205
stores
- Expanded multi-price Plus offering to an additional 1,805
Dollar Tree stores
- Completed 796 Family Dollar store renovations
- Retail selling square footage at year-end increased 2.5% to
approximately 132.1 million square feet
Fourth Quarter Results
Unless noted, all comparisons are to the prior year’s fourth
quarter, ended January 29, 2022.
Consolidated net sales increased 9.0% to $7.72 billion.
Enterprise same-store sales increased 7.4%. Dollar Tree same-store
sales increased 8.7%, driven by a 10.0% increase in average ticket,
partially offset by a 1.1% decline in traffic. Dollar Tree stores
that fully lapped the rollout of Break-the-Dollar produced a 3.0%
same-store sales increase in the quarter, and sequentially
increased same-store sales in each month throughout the quarter.
Stores which had not lapped the Break-the-Dollar produced an 11.6%
same-store sales increase in the quarter, a significant sequential
improvement for the second consecutive quarter. Traffic improved
410 basis points sequentially compared to the prior quarter and is
now trending positively as the Company has cycled the transition to
a $1.25 price point.
Family Dollar’s 5.8% same-store sales increase comprised a 5.3%
increase in average ticket and a 0.5% increase in traffic as the
Company continues to drive strong trends in performance following
its price investment and initial accelerated investments in labor
and store conditions. The same-store sales improvement in the back
half of fiscal 2022 was achieved while investing several percentage
points in price relative to the market, which was more than
recovered through volume, with the Company taking market share.
Gross profit increased 11.6% to $2.39 billion and gross margin
improved 70 basis points to 30.9%. This improvement was driven by
higher initial mark-on and lower freight costs, partially offset by
a product mix shift to lower-margin consumable products, as well as
higher shrink and markdowns.
Selling, general and administrative expenses were 22.9% of total
revenue, compared to 22.1%. The increase was primarily due to a
$23.9 million non-cash store impairment charge, higher costs for
store payroll, higher expenditures related to repairs and
maintenance to improve store standards, partially offset by
comparable store net sales leverage.
Operating income increased 6.8% to $618.1 million and operating
income margin declined 20 basis points to 8.0%.
The Company’s effective tax rate was 23.4%, compared to 9.0%
last year which included a deferred tax benefit related to the
Company’s state entity restructuring.
Net income was $452.2 million and diluted EPS increased 1.5% to
$2.04.
Full Year Fiscal 2022
Results
Unless otherwise noted, all comparisons are to the prior fiscal
year ended January 29, 2022.
Consolidated net sales increased 7.6% to $28.32 billion.
Enterprise same-store sales increased 5.9%. Dollar Tree same-store
sales increased 9.0%, driven by a double-digit increase in average
ticket, partially offset by a decline in traffic. Family Dollar
same-store sales increased 2.4%, driven by an increase in average
ticket partially offset by a decline in traffic.
Gross profit increased 15.5% to $8.92 billion and gross margin
improved 210 basis points to 31.5%.
Selling, general and administrative expenses were 23.6% of total
revenue, compared to 22.5%.
Operating income improved 23.5% to $2.24 billion and operating
income margin increased 100 basis points to 7.9%.
The Company’s effective tax rate was 23.5%, compared to
18.6%.
Net income improved 21.7% to $1.62 billion and diluted EPS
increased 24.3% to $7.21.
The Company repurchased 4,613,696 shares for $647.5 million.
Fiscal 2023 Outlook
“We are on an accelerating journey of change, and I am
incredibly proud of our 207,000 associates for their contributions
and commitment to our Company. We have undergone a significant
amount of change in less than one year, and believe we have the
team in place to capture the opportunity ahead of us,” Dreiling
added. “We are confident that the accelerated investments outlined
will transform our Company, will enable and propel us through years
of accelerated growth and margin improvement, and will enhance the
Company’s ability to achieve substantially higher long-term
earnings power. We remain committed to empowering associates,
serving customers and creating long-term value for all of our
stakeholders. I am eager to share more details regarding the
Company’s vision in the months ahead. Dollar Tree has a bright
future and I am energized to be a part of this transformational
journey.”
Consolidated net sales for full-year fiscal 2023 are expected to
range from $29.9 billion to $30.5 billion. The Company believes its
actions and investments, beginning in the second half of fiscal
2022, are already contributing to top-line momentum. The Company
expects to deliver a low- to mid-single-digit comparable store
sales increase for the year, comprised a low single-digit increase
in the Dollar Tree segment and a mid-single-digit increase in the
Family Dollar segment. Selling square footage is expected to grow
by 3.0% to 3.5% for the year, with new store growth back-end
weighted. Diluted EPS is expected to range from $6.30 to $6.80,
including the contribution from the 53rd week.
The Company’s fiscal 2023 outlook includes the following
considerations:
- Given the amount of transformational activity, initiative
interdependencies, and the volatility of the economic environment,
it is difficult to precisely estimate the quarterly timing and
related magnitude of investment returns. Our fiscal 2023 outlook
assumes only minimal benefit from our investments. The Company is
confident that they will yield attractive returns in 2024 and
beyond.
- Fiscal 2023 is a 53-week year, with the extra week expected to
benefit the fourth quarter by approximately $500 million in sales
and $0.29 in diluted EPS.
- The Company is cycling the outsized margin benefit related to
Dollar Tree’s initial transition to a primary price of $1.25. For
the first half of 2022, Dollar Tree produced a 39.0% gross margin,
higher than its normalized gross margin as it was evolving its
assortment for the new price point.
- Includes an estimated benefit of approximately $1.00 per share
from reduced freight expenses, with nearly all of this benefit
realized in the second half. Approximately half of the Company’s
fiscal 2023 import container volume will remain on existing
long-term contracts or charters at elevated rates. The Company
anticipates meaningfully lower rates for renegotiated contracts and
spot volumes, which are expected to impact the other half of its
container volume for the year. These factors limit the impact of
lower freight rates on operating profit within the year. If current
market conditions persist, the Company would anticipate an
additional freight cost relief approximately $1.00 in fiscal 2024
and 2025, with the majority realized in fiscal 2024.
- Reflects approximately $1.45 per share investment in operating
expense across labor and wages, store maintenance, information
technology and corporate. This investment, combined with general
cost inflation and new store expenses is expected to drive a
low-teens percentage dollar increase in total SG&A
expense.
The Company expects gross and operating margins will decline in
the first half of fiscal 2023, followed by expansion for the second
half. The Company estimates diluted EPS will be comprised
approximately 40% in the first half and 60% in the second half,
which includes the extra week.
The Company expects consolidated net sales for the first quarter
will range from $7.2 billion to $7.4 billion, based on a
mid-single-digit increase in same-store sales for the enterprise,
with a low single-digit comp increase at Dollar Tree and
mid-single-digit comp growth at Family Dollar. Diluted EPS for the
quarter is estimated to be in the range of $1.46 to $1.56.
While share repurchases are not included in the outlook, the
Company had $1.85 billion remaining under its share repurchase
authorization as of January 28, 2023.
Conference Call
Information
On Wednesday, March 1, 2023, 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 866-580-3963. A recorded version
of the call will be available until midnight Tuesday, March 7,
2023, and may be accessed by dialing 866-583-1035. The access code
is 4733898. A webcast of the call is accessible through Dollar
Tree's website and will remain online through Tuesday, March 7,
2023.
Supplemental financial information for the fourth quarter is
available on the Investor Relations portion of the Company’s
website, at www.Corporate.DollarTree.com/Investors.
Dollar Tree, a Fortune 200 Company, operated 16,340 stores
across 48 states and five Canadian provinces as of January 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.
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 first 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 growth; our expectations regarding
the impact of various initiatives and investments 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 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)
13 Weeks Ended
Year Ended
January 28, 2023
January 29, 2022
January 28, 2023
January 29, 2022
(Unaudited)
(Unaudited)
(Unaudited)
Net sales
$
7,716.2
$
7,077.4
$
28,318.2
$
26,309.8
Other revenue
4.5
3.2
13.5
11.4
Total revenue
7,720.7
7,080.6
28,331.7
26,321.2
Cost of sales
5,330.7
4,940.3
19,396.3
18,583.9
Selling, general and administrative expenses
1,771.9
1,561.5
6,699.1
5,925.9
22.9
%
22.1
%
23.6
%
22.5
%
Operating income
618.1
578.8
2,236.3
1,811.4
8.0
%
8.2
%
7.9
%
6.9
%
Interest expense, net
28.0
79.5
125.3
178.9
Other expense, net
0.1
0.1
0.4
0.3
Income before income taxes
590.0
499.2
2,110.6
1,632.2
7.6
%
7.1
%
7.4
%
6.2
%
Provision for income taxes
137.8
45.0
495.2
304.3
Income tax rate
23.4
%
9.0
%
23.5
%
18.6
%
Net income
$
452.2
$
454.2
$
1,615.4
$
1,327.9
5.9
%
6.4
%
5.7
%
5.0
%
Net earnings per share: Basic
$
2.05
$
2.02
$
7.24
$
5.83
Weighted average number of shares
221.1
225.0
223.2
227.9
Diluted
$
2.04
$
2.01
$
7.21
$
5.80
Weighted average number of shares
221.9
226.3
224.1
229.0
The information for the year ended January 29, 2022 was
derived from the audited consolidated financial statements as of
that date.
DOLLAR TREE, INC. Segment Information
(In millions, except store count) 13 Weeks
Ended Year Ended January 28, 2023 January 29,
2022 January 28, 2023 January 29, 2022
(Unaudited) (Unaudited) (Unaudited) (a)
Net
sales: Dollar Tree
$
4,296.7
$
3,919.1
$
15,405.7
$
13,922.1
Family Dollar
3,419.5
3,158.3
12,912.5
12,387.7
Total net sales
$
7,716.2
$
7,077.4
$
28,318.2
$
26,309.8
Gross profit: Dollar Tree
$
1,577.6
36.7
%
$
1,396.5
35.6
%
$
5,775.5
37.5
%
$
4,603.6
33.1
%
Family Dollar
807.9
23.6
%
740.6
23.4
%
3,146.4
24.4
%
3,122.3
25.2
%
Total gross profit
$
2,385.5
30.9
%
$
2,137.1
30.2
%
$
8,921.9
31.5
%
$
7,725.9
29.4
%
Operating income (loss): Dollar Tree
$
721.3
16.8
%
$
587.8
15.0
%
$
2,536.0
16.5
%
$
1,607.0
11.5
%
Family Dollar
1.4
0.0
%
86.8
2.7
%
127.5
1.0
%
543.1
4.4
%
Corporate, support and Other
(104.6
)
(1.4
%)
(95.8
)
(1.4
%)
(427.2
)
(1.5
%)
(338.7
)
(1.3
%)
Total operating income
$
618.1
8.0
%
$
578.8
8.2
%
$
2,236.3
7.9
%
$
1,811.4
6.9
%
13 Weeks Ended
Year Ended
January 28, 2023
January 29, 2022
January 28, 2023
January 29, 2022
Dollar Tree
Family Dollar
Total
Dollar Tree
Family Dollar
Total
Dollar Tree
Family Dollar
Total
Dollar Tree
Family Dollar
Total
Store Count: Beginning
8,114
8,179
16,293
7,984
7,982
15,966
8,061
8,016
16,077
7,805
7,880
15,685
New stores
34
89
123
97
77
174
131
333
464
311
225
536
Re-bannered stores (b)
-
1
1
2
-
2
(5
)
9
4
1
(1
)
-
Closings
(14
)
(63
)
(77
)
(22
)
(43
)
(65
)
(53
)
(152
)
(205
)
(56
)
(88
)
(144
)
Ending
8,134
8,206
16,340
8,061
8,016
16,077
8,134
8,206
16,340
8,061
8,016
16,077
Selling Square Footage (in millions)
70.5
61.6
132.1
69.7
59.2
128.9
70.5
61.6
132.1
69.7
59.2
128.9
Growth Rate (Square Footage)
1.1
%
4.1
%
2.5
%
3.4
%
2.6
%
3.0
%
1.1
%
4.1
%
2.5
%
3.4
%
2.6
%
3.0
%
(a) The information for the year ended January 29,
2022 was derived from the audited consolidated financial statements
as of that date. (b) Stores are included as re-banners when they
close or open, respectively.
DOLLAR TREE, INC. Condensed
Consolidated Balance Sheets (In millions)
January 28, 2023
January 29, 2022
(Unaudited)
Cash and cash equivalents
$
642.8
$
984.9
Merchandise inventories
5,449.3
4,367.3
Other current assets
275.0
257.0
Total current assets
6,367.1
5,609.2
Property, plant and equipment, net
4,972.2
4,477.3
Restricted cash
68.5
53.4
Operating lease right-of-use assets
6,458.0
6,425.3
Goodwill
1,983.1
1,984.4
Trade name intangible asset
3,100.0
3,100.0
Deferred tax asset
15.0
20.3
Other assets
58.2
51.9
Total assets
$
23,022.1
$
21,721.8
Current portion of operating lease liabilities
$
1,449.6
$
1,407.8
Accounts payable
1,899.8
1,884.2
Income taxes payable
58.1
82.6
Other current liabilities
817.7
802.0
Total current liabilities
4,225.2
4,176.6
Long-term debt, net
3,421.6
3,417.0
Operating lease liabilities, long-term
5,255.3
5,145.5
Deferred income taxes, net
1,105.7
987.2
Income taxes payable, long-term
17.4
20.9
Other liabilities
245.4
256.1
Total liabilities
14,270.6
14,003.3
Shareholders' equity
8,751.5
7,718.5
Total liabilities and shareholders' equity
$
23,022.1
$
21,721.8
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) Year Ended
January 28, 2023 January 29, 2022 (Unaudited)
Cash flows from operating activities: Net income
$
1,615.4
$
1,327.9
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
767.9
716.0
Provision for deferred income taxes
123.0
(23.2
)
Stock-based compensation expense
110.4
79.9
Amortization of debt discount and debt-issuance costs
4.6
8.9
Other non-cash adjustments to net income
59.1
11.2
Loss on debt extinguishment
-
43.8
Changes in operating assets and liabilities
(1,065.6
)
(733.0
)
Total adjustments
(0.6
)
103.6
Net cash provided by operating activities
1,614.8
1,431.5
Cash flows from investing activities: Capital expenditures
(1,248.8
)
(1,021.2
)
Proceeds from governmental grant
-
2.9
Payments for fixed asset disposition
(5.0
)
(1.6
)
Net cash used in investing activities
(1,253.8
)
(1,019.9
)
Cash flows from financing activities: Proceeds from
long-term debt, net of discount
-
1,197.4
Principal payments for long-term debt
-
(1,000.0
)
Debt-issuance and debt extinguishment costs
-
(59.3
)
Proceeds from revolving credit facility
555.0
-
Repayments of revolving credit facility
(555.0
)
-
Proceeds from stock issued pursuant to stock-based compensation
plans
9.3
17.8
Cash paid for taxes on exercises/vesting of stock-based
compensation
(48.6
)
(42.4
)
Payments for repurchase of stock
(647.5
)
(950.0
)
Net cash used in financing activities
(686.8
)
(836.5
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(1.2
)
(0.4
)
Net decrease in cash, cash equivalents and restricted cash
(327.0
)
(425.3
)
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
$
711.3
$
1,038.3
The January 29, 2022 information was derived from the
audited consolidated financial statements as of that date.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230301005311/en/
Dollar Tree, Inc. Randy Guiler, 757-321-5284 Vice President,
Investor Relations www.DollarTree.com DLTR-E
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