Dollar Tree Q4 profit drops on merger costs; CEO talks rebranding

Chesapeake, Va. -- Dollar Tree reported that its net income dropped 3% to $206.6 million in the fourth quarter of fiscal 2014, down from $213 million in the year ago period. The quarter included $6.7 million in acquisition-related costs associated with the pending merger with Family Dollar Stores Inc.



On the chain’s quarterly earnings call, Dollar Tree CEO Bob Sasser said that Dollar Tree will work to boost Family Dollar's sales per square foot and its inventory performance. He also said some Dollar Tree stores could eventually be rebranded as Family Dollar, and vice versa.



“Over time, we expect many Family Dollar stores may become Dollar Tree stores. And many Dollar Tree stores may become Family Dollar stores," Dollar Tree spokesman Randy Guiller said in a report by the Charlotte Business Journal.



Dollar Tree net sales increased 11% $2.47 billion from $2.23 billion, ahead of Wall Street projections, and consolidated same-store sales rose 5.6%. Increased sales in party supplies helped drive the overall net sales growth.



For the full fiscal year, Dollar Tree reported net income of $599.2 million, up fractionally from $596.7 million. Consolidated net sales increased 10% to $8.6 billion from $7.84 billion, with 4.4% same-store sales growth.



“We exceeded 1 billion transactions in a year for the first time in company history,” said Sasser. “Our business model is strong, our inventories are fresh, our shelves are full of incredible values, and our store teams are ready for the spring selling season."



Dollar Tree is working to obtain final FTC clearance to close its merger with Dollar General, which it hopes to finalize by April 27, 2015. The company estimates consolidated net sales for the first quarter of 2015 to range from $2.15 billion to $2.20 billion, based on a low to mid single-digit increase in same-store sales. Consolidated net sales for the full year are estimated to range from $9.21 billion to $9.45 billion, based on a low to low-mid single-digit increase in same-store sales.



The company opened 90 stores, expanded or relocated six stores, and closed five stores during the quarter. Retail selling square footage increased to 46.5 million sq. ft., a 7.4% increase compared to the prior year.