Dollar Tree operated 16,419 stores across 48 states and five Canadian provinces as of April 29, 2023.
Dollar Tree reported a mixed quarter with sales that topped Street estimates and earnings that fell short amid elevated shrink and a shift in consumer buying to consumables.
The extreme-discounter also reported that it opened 107 new stores, relocated 33 stores, and closed 29 stores during the quarter. It also expanded its multi-price Plusoffering to an additional 408 Dollar Tree stores, and completed 252 Family Dollar store renovation projects. (Dollar Tree calls for new store growth of 600 to 650 stores, with 43% of the growth)
Net income totaled $299 million, or $1.35 a share, compared with $536.4 million, or $2.37 a share, for the quarter ended April 29. On an adjusted basis, earnings came in at $1.47 per share, falling below analysts’ expectations of $1.52 a share.
Gross profit decreased 4.7% to $2.23 billion and gross margin declined 340 basis points to 30.5%. The gross margin decline was driven by lower initial mark-on, an unfavorable sales mix and shrink, partially offset by lower freight costs.
Consolidated net sales rose 6.1% to $7.32 billion, ahead of estimates for $7.28 billion. Total same store sales increased 4.8%. By banner, Dollar Tree same-store sales rose 3.4%, and Family Dollar same-store sales rose 6.6%.
“Our initiatives to drive customer traffic and increase store productivity are having the desired impact,” said chairman Rick Dreiling, who added the title of CEO in January. “While we are seeing early results from our initiatives, we are not immune to the external pressures affecting all of retail, notably, the margin impact of elevated shrink and the product mix shift to consumables.”
Dreiling added that while Dollar Tree is maintaining its full-year sales outlook, it is lowering its earnings per share outlook as the company expects “the elevated shrink and unfavorable sales mix to persist through the balance of the year.”
“We still expect earnings to be more back-end loaded this year as the benefits of lower ocean freight rates flow through,” Deiling said.
Dollar Tree lowered its full-year profit outlook to $5.73 to $6.13 per share, down from its prior range of $6.30 to $6.80 per share. It forecast net sales in the tightened range of $30 billion to $30.5 billion. It expects low- to mid-single-digit comparable store sales.
The company operated 16,419 stores across 48 states and five Canadian provinces as of April 29, 2023. Stores operate under the brands of Dollar Tree, Family Dollar, and Dollar Tree Canada.