Dollar Tree’s total same-store sales rose 4.9% during the second quarter.
Dollar Tree reported second-quarter profit and sales gains, but cut its full-year outlook amid price cuts at its Family Dollar stores.
In a statement, president and CEO Mike Witynski said that, following its price investment strategies, Family Dollar has closed the gap with key competitors and that its value proposition “is the most competitive it has been in the past ten years.”
Witynski said the company’s investments to offer more competitive pricing will over the long term enhance its sales productivity and profitability, and ultimately its opportunity to accelerate store growth, but will pressure gross margins in the back half of the year.
In separate news, the discounter named Jeffrey A. Davis as its next CFO. He succeeds Kevin Wampler, who will remain with the company as an advisor until April 2023. Davis joins Dollar Tree from Qurate Retail Group Inc., parent company of QVC and other brands, where he has served as CFO since 2018.
Prior to Qurate, Davis served in a number of financial leadership roles, including treasurer of Walmart Stores, CFO for Walmart’s U.S. segment, CFO of JCPenney and CFO of Darden Restaurants.
Dollar Tree reported that it earned $1.60 a share on net income of $359.9 million for the quarter ended July 30, compared with earnings of $1.23 a share on net income of $282.4 million in the year-ago quarter
Net sales rose 6.7% to $6.77 billion from $6.34 billion. Same-store sales increased 7.5% at Dollar Tree and 2.0% at Family Dollar.
During the quarter, the company opened 127 new stores, expanded or relocated 29 stores, and closed 57 stores. Additionally, it expanded its multi-price Plus offering into an additional 697 Dollar Tree stores and completed 257 Family Dollar store renovations.
Citing its competitive pricing investment, Dollar Tree narrowed its full-year revenue outlook to $27.85 billion to $28.1 billion. It previous forecast was $27.76 billion to $28.14 billion. The retailer now sees full-year earnings of $7.10 to $7.40 a share compared to its previous estimate of $7.80 to $8.20 per share.
“We are confident these pricing and other investments will generate very attractive returns over the long term,” Witynski said. “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.”
Dollar Tree 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