Family Dollar helps Dollar Tree win customers in Q4
Dollar Tree says the integration of Family Dollar stores helped grow sales and profit in the fourth quarter.
For its fourth quarter ended Jan. 30, net sales at Dollar Treewere $5.37 billion, a 116.7% increase from the same period a year ago. The boost in revenue was the result of $2.68 billion in sales from the Family Dollar d. Same store sales increased 1.7%. Profit was $229 million, up by $22.4 million from a year ago.
“I am proud of the company’s performance in the fourth quarter and full year 2015. Through a challenging economic environment, we delivered sales of $5.37 billion, which was the mid-point of our fourth quarter guidance range, and our 32nd consecutive quarter of positive same-store sales," said Bob Sasser, CEO. "This was against a strong 5.6% comp from the prior year’s fourth quarter. Additionally, while not included in our comp calculation, for the second consecutive quarter, our Family Dollar banner delivered positive same-store sales increases each month during the quarter.”
Gross profit increased by $734.5 million, or 80%, to $1.65 billion in the fourth quarter compared to $918.1 million in the prior year’s fourth quarter. The dollar increase was primarily driven by $673.7 million of gross profit for Family Dollar as well as higher sales at Dollar Tree. As a percent of sales, gross margin decreased to 30.8% compared to 37.1% in the prior year. The primary contributors to the decrease were the impact of the overall lower-margin product mix for the Family Dollar business, $15.9 million for Family Dollar related to the amortization of the stepped up inventory basis, and $11.5 million of planned markdowns associated with rebannering Deals stores.
Sasser added: “2015 was a very successful year for Dollar Tree. I would like to thank all of our associates for their commitment and hard work throughout the year. We continued to serve our loyal customer base by providing terrific values every day; we successfully completed the acquisition of Family Dollar; we initiated, and remain on schedule with, the integration of our companies; and we are on track to achieve our stated synergy targets. Looking ahead, we are committed to growing and improving our Dollar Tree and Family Dollar businesses to better serve more customers, while delivering long-term value to our shareholders.”
During the quarter, the company opened 128 stores, expanded or relocated 53 stores, closed 28 stores and divested of 325 Family Dollar stores. Additionally, as part of its re-banner initiative, the company opened 58 former Family Dollar store locations as new Dollar Tree stores during the quarter. The company also converted 52 Deals stores to Dollar Tree stores in January. Retail selling square footage at the end of the quarter was approximately 108.4 million square feet.
Looking ahead, the company estimates consolidated net sales for the first quarter of 2016 to range from $5.05 billion to $5.12 billion, based on a low single-digit increase in same-store sales and year-over-year selling square footage growth of 132%. Diluted earnings per share are expected to range from $0.75 to $0.83.
For fiscal 2016, the company estimates consolidated net sales to range from $20.76 billion to $21.11 billion. This estimate is based on a low single-digit increase in same-store sales, and 4.0% square footage growth. Fiscal year 2016 diluted earnings per share are expected to range from $3.35 to $3.65.