~ Diluted Earnings per Share Increased 30.1%
to a Second Quarter Company Record of $1.60 ~ ~ Same-Store
Sales: Dollar Tree +7.5%; Family Dollar +2.0%; Enterprise +4.9%
~ ~ Consolidated Net Sales Increased 6.7% to $6.77 Billion
~ ~ Operating Income Margin Improved 120 Basis Points to
7.5% ~ ~ Company Narrows Fiscal 2022 Revenue Outlook to
$27.85 Billion to $28.10 Billion ~ ~ Substantial
Acceleration of Family Dollar Investments Will Enhance
Long-Term Sustainable Growth and Profitability ~ ~
Company Updates Fiscal 2022 Earnings per Share Outlook to $7.10 to
$7.40 ~
Dollar Tree, Inc. (NASDAQ: DLTR) today reported financial
results for its second quarter ended July 30, 2022.
“Our second quarter performance reinforces the relevance of our
brands for millions of households pressured by higher costs for
food, fuel, rent and more. We delivered increases of 6.7% in sales,
14.2% in gross profit, 25.7% in operating profit and 30.1% in EPS
in the face of great macroeconomic uncertainty,” stated Mike
Witynski, President and Chief Executive Officer. “We remain keenly
focused on our associates, our DC network and supply chain, our
value proposition and our technology. We are improving the shopper
experience and positioning the Company to deliver long-term
profitable growth and attractive returns on capital.”
Second Quarter Results
Consolidated net sales increased 6.7% to $6.77 billion from
$6.34 billion in the prior year’s second quarter. Enterprise
same-store sales increased 4.9% on a constant currency basis (or
4.8% when adjusted to include the impact of Canadian currency
fluctuations). Comparable store net sales for Dollar Tree increased
7.5% (or 7.4% when adjusted for currency fluctuations). Family
Dollar same-store sales increased 2.0%.
Gross profit increased 14.2% to $2.12 billion from $1.86 billion
in the prior year’s second quarter. Gross margin improved 200 basis
points to 31.4%, compared to 29.4% in the prior year’s quarter.
This improvement was driven by improved initial mark-on and
leverage on distribution and occupancy costs, partially offset by
higher freight costs, unfavorable product mix related to a material
shift toward lower-margin consumable products, markdowns, and
shrink.
Selling, general and administrative expenses were 24.0% of total
revenue, compared to 23.0% of total revenue in the prior year's
second quarter. The increase was primarily due to higher costs
related to repairs and maintenance, store payroll, stock
compensation expense, general liability insurance, utilities and
other inflationary pressures.
Operating income increased 25.7% to $505.4 million compared with
$402.2 million in the same period last year and operating income
margin improved 120 basis points to 7.5%.
Net income increased 27.4% to $359.9 million and diluted
earnings per share for the quarter increased 30.1% to a second
quarter company record $1.60, compared to $1.23 in the prior year’s
quarter.
The Company repurchased 1,664,717 shares, at an average price of
$141.67, for $235.8 million. As of July 30, the Company had $2.25
billion remaining on its share repurchase authorization.
During the quarter, the Company opened 127 new stores, expanded
or relocated 29 stores, and closed 57 stores. Additionally, the
Company expanded its multi-price Plus offering into an additional
697 Dollar Tree stores and completed 257 Family Dollar store
renovations. Retail selling square footage at quarter-end increased
3.1% from the prior year’s quarter to approximately 130.7 million
square feet.
First Six Months Results
Consolidated net sales increased 6.6% to $13.67 billion from
$12.82 billion in the same period last year. Enterprise same-store
sales increased 4.7% on a constant currency basis (or 4.6% when
adjusted for currency fluctuations). Dollar Tree same-store sales
increased 9.4% on a constant currency basis (or 9.3% when adjusted
for currency fluctuations). Same-store sales for Family Dollar
decreased 0.4%.
Gross profit increased 16.7% to $4.46 billion. Gross margin
improved 290 basis points to 32.7%, compared to 29.8% in the prior
year period.
Selling, general and administrative expenses were 23.7% of total
revenue compared to 22.7% in the first six months of 2021.
Operating income improved 34.1% to $1.24 billion. Operating
income margin increased 180 basis points to 9.0% in the current
year period from 7.2% in the prior year.
Net income compared to the prior year period improved 36.4% to
$896.3 million and diluted earnings per share increased 40.3% to
$3.97 compared to $2.83 in the prior year period.
The Company repurchased 1,754,496 shares in the first six months
of fiscal 2022 for $250 million.
Company Outlook
“Competitive pricing at Family Dollar will over the long term
enhance our sales productivity and profitability, and ultimately
our opportunity to accelerate store growth. We are therefore making
an investment in pricing at Family Dollar. Combined with
improvements in merchandising and store standards, we believe we
are putting our best foot forward at a time when customers are
coming to us to help them navigate difficult times. We expect the
combination of this pricing investment at Family Dollar and the
shoppers’ heightened focus on needs-based consumable products will
pressure gross margins in the back half of the year. We have
therefore reduced our EPS outlook accordingly. Following our price
investment strategies at Family Dollar, our pricing gap with key
competitors has closed and our value proposition is the most
competitive it has been in the past ten years. We are confident
these pricing and other investments will generate very attractive
returns over the long term,” Mr. Witynski concluded. “We continue
to focus our initiatives on what will improve both associate and
shopper experience. Our management team is strategically aligned
and believe our Company is very well-positioned to deliver
long-term profitable growth.”
Consolidated net sales for the year are now expected to range
from $27.85 billion to $28.10 billion, with slightly higher comps
offset by slightly reduced square footage growth relative to prior
outlook. The Company expects to deliver a mid-single-digit
comparable store sales increase for the year, comprising a high
single-digit increase in the Dollar Tree segment and positive
comparable store sales in the Family Dollar segment. Selling square
footage is expected to grow by approximately 3.5%.
Diluted earnings per share for full-year fiscal 2022 are now
expected to range from $7.10 to $7.40, which at its midpoint
represents a 25.0% year-over-year improvement. The Company’s margin
performance and outlook are being impacted by a number of factors,
including planned pricing investments at Family Dollar (an
estimated 60% of the $0.75 per share adjustment to midpoint from
the previous outlook), a material shift in consumer purchasing from
higher-margin discretionary merchandise to lower-margin consumable
goods (estimated at 20% of the change), inflationary cost pressures
(estimated at 15% of the change), and continued investments in
labor, wages and store conditions (estimated at 5%).
The Company estimates consolidated net sales for the third
quarter of 2022 will range from $6.75 billion to $6.87 billion,
based on a 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 $1.05 to $1.20.
While share repurchases are not included in the outlook, the
Company had $2.25 billion remaining under its share repurchase
authorization as of July 30, 2022.
Conference Call
Information
On Thursday, August 25, 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, August 31,
2022, and may be accessed by dialing 888-203-1112. The access code
is 7733257. A webcast of the call is accessible through Dollar
Tree's website and will remain online through Wednesday, August 31,
2022.
Dollar Tree, a Fortune 200 Company, operated 16,231 stores
across 48 states and five Canadian provinces as of July 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 relating to our
expectations regarding net sales, comparable store sales and
diluted earnings per share for the third fiscal quarter and full
fiscal year 2022; selling square footage growth; our plans and
expectations relating to our pricing and other investments at
Family Dollar; the expected impact of various factors on our gross
margins and outlook in the second half of fiscal 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
26 Weeks Ended
July 30, 2022
July 31, 2021
July 30, 2022
July 31, 2021
Net sales
$
6,765.3
$
6,340.2
$
13,665.4
$
12,817.0
Other revenue
3.2
3.0
5.7
5.9
Total revenue
6,768.5
6,343.2
13,671.1
12,822.9
Cost of sales
4,640.9
4,479.2
9,200.5
8,991.9
Selling, general and administrative expenses
1,622.2
1,461.8
3,233.7
2,908.9
24.0
%
23.0
%
23.7
%
22.7
%
Operating income
505.4
402.2
1,236.9
922.1
7.5
%
6.3
%
9.0
%
7.2
%
Interest expense, net
30.6
33.0
64.6
66.0
Other expense, net
0.1
-
0.1
-
Income before income taxes
474.7
369.2
1,172.2
856.1
7.0
%
5.8
%
8.6
%
6.7
%
Provision for income taxes
114.8
86.8
275.9
199.2
Income tax rate
24.2
%
23.5
%
23.5
%
23.3
%
Net income
$
359.9
$
282.4
$
896.3
$
656.9
5.3
%
4.5
%
6.6
%
5.1
%
Net earnings per share:
Basic
$
1.61
$
1.24
$
3.99
$
2.84
Weighted average number of shares
224.2
228.6
224.7
230.9
Diluted
$
1.60
$
1.23
$
3.97
$
2.83
Weighted average number of shares
225.0
229.5
225.7
232.0
DOLLAR TREE, INC. Segment Information (In
millions, except store count) (Unaudited)
13 Weeks Ended
26 Weeks Ended
July 30, 2022
July 31, 2021
July 30, 2022
July 31, 2021
Net sales:
Dollar Tree
$
3,571.1
$
3,264.3
$
7,352.9
$
6,585.6
Family Dollar
3,194.2
3,075.9
6,312.5
6,231.4
Total net sales
$
6,765.3
$
6,340.2
$
13,665.4
$
12,817.0
Gross profit:
Dollar Tree
$
1,334.9
37.4
%
$
1,057.7
32.4
%
$
2,869.6
39.0
%
$
2,176.0
33.0
%
Family Dollar
789.5
24.7
%
803.3
26.1
%
1,595.3
25.3
%
1,649.1
26.5
%
Total gross profit
$
2,124.4
31.4
%
$
1,861.0
29.4
%
$
4,464.9
32.7
%
$
3,825.1
29.8
%
Operating income (loss):
Dollar Tree
$
550.8
15.4
%
$
328.4
10.1
%
$
1,315.0
17.9
%
$
728.7
11.1
%
Family Dollar
55.0
1.7
%
156.3
5.1
%
144.5
2.3
%
367.7
5.9
%
Corporate, support and Other
(100.4
)
(1.5
%)
(82.5
)
(1.3
%)
(222.6
)
(1.6
%)
(174.3
)
(1.4
%)
Total operating income
$
505.4
7.5
%
$
402.2
6.3
%
$
1,236.9
9.0
%
$
922.1
7.2
%
13 Weeks Ended
26 Weeks Ended
July 30, 2022
July 31, 2021
July 30, 2022
July 31, 2021
Dollar
Tree
Family
Dollar
Total
Dollar
Tree
Family
Dollar
Total
Dollar
Tree
Family
Dollar
Total
Dollar
Tree
Family
Dollar
Total
Store Count:
Beginning
8,088
8,074
16,162
7,867
7,905
15,772
8,061
8,016
16,077
7,805
7,880
15,685
New stores
32
95
127
87
44
131
74
165
239
152
85
237
Re-bannered stores (a)
(3
)
2
(1
)
-
(1
)
(1
)
(5
)
7
2
-
(1
)
(1
)
Closings
(14
)
(43
)
(57
)
(20
)
(17
)
(37
)
(27
)
(60
)
(87
)
(23
)
(33
)
(56
)
Ending
8,103
8,128
16,231
7,934
7,931
15,865
8,103
8,128
16,231
7,934
7,931
15,865
Selling Square Footage (in millions)
70.2
60.5
130.7
68.5
58.3
126.8
70.2
60.5
130.7
68.5
58.3
126.8
Growth Rate (Square Footage)
2.5
%
3.8
%
3.1
%
3.8
%
2.1
%
3.0
%
2.5
%
3.8
%
3.1
%
3.8
%
2.1
%
3.0
%
(a) Stores are included as re-banners
when they close or open, respectively.
DOLLAR TREE, INC.
Condensed Consolidated Balance Sheets (In millions)
(Unaudited)
July 30, 2022
January 29, 2022
July 31, 2021
Cash and cash equivalents
$
688.9
$
984.9
$
720.8
Merchandise inventories
5,422.2
4,367.3
3,667.7
Other current assets
266.2
257.0
259.6
Total current assets
6,377.3
5,609.2
4,648.1
Property, plant and equipment, net
4,652.9
4,477.3
4,250.2
Restricted cash
53.5
53.4
46.9
Operating lease right-of-use assets
6,433.6
6,425.3
6,341.2
Goodwill
1,984.3
1,984.4
1,985.1
Trade name intangible asset
3,100.0
3,100.0
3,100.0
Deferred tax asset
17.7
20.3
23.9
Other assets
57.0
51.9
49.8
Total assets
$
22,676.3
$
21,721.8
$
20,445.2
Current portion of operating lease liabilities
$
1,428.3
$
1,407.8
$
1,368.6
Accounts payable
2,011.3
1,884.2
1,559.6
Income taxes payable
27.4
82.6
11.7
Other current liabilities
913.5
802.0
782.8
Total current liabilities
4,380.5
4,176.6
3,722.7
Long-term debt, net
3,419.3
3,417.0
3,229.5
Operating lease liabilities, long-term
5,139.5
5,145.5
5,078.7
Deferred income taxes, net
1,063.6
987.2
1,030.9
Income taxes payable, long-term
20.7
20.9
24.0
Other liabilities
256.2
256.1
347.7
Total liabilities
14,279.8
14,003.3
13,433.5
Shareholders' equity
8,396.5
7,718.5
7,011.7
Total liabilities and shareholders' equity
$
22,676.3
$
21,721.8
$
20,445.2
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)
26 Weeks Ended
July 30, 2022
July 31, 2021
Cash flows from operating activities:
Net income
$
896.3
$
656.9
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
382.4
348.8
Provision for deferred income taxes
78.8
17.3
Stock-based compensation expense
66.1
49.6
Amortization of debt discount and debt-issuance costs
2.3
3.3
Other non-cash adjustments to net income
18.8
6.0
Changes in operating assets and liabilities
(924.1
)
(345.8
)
Total adjustments
(375.7
)
79.2
Net cash provided by operating activities
520.6
736.1
Cash flows from investing activities:
Capital expenditures
(529.6
)
(454.0
)
Proceeds from governmental grant
-
2.3
Proceeds from (payments for) fixed asset disposition
(3.8
)
0.2
Net cash used in investing activities
(533.4
)
(451.5
)
Cash flows from financing activities:
Proceeds from stock issued pursuant to stock-based compensation
plans
4.8
6.6
Cash paid for taxes on exercises/vesting of stock-based
compensation
(38.1
)
(39.9
)
Payments for repurchase of stock
(250.0
)
(947.5
)
Net cash used in financing activities
(283.3
)
(980.8
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
0.2
0.3
Net decrease in cash, cash equivalents and restricted cash
(295.9
)
(695.9
)
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
$
742.4
$
767.7
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220824005721/en/
Dollar Tree, Inc. Randy Guiler, 757-321-5284 Vice President,
Investor Relations www.DollarTree.com DLTR-E
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