Dollar Tree released a complicated set of fourth-quarter results, including better comps but lower income from continuing operations, stirred up by the company’s decision to sell its Family Dollar business.
On March 25, after a strategic review, Dollar Tree announced it entered into a definitive agreement to sell the Family Dollar business to Brigade Capital Management and Macellum Capital Management for $1.01 billion, subject to adjustments. Dollar Tree expects net proceeds to total $804 million and tax benefits from losses on the sale to be $350 million.
In the fourth quarter of 2024, Dollar Tree determined Family Dollar business assets met the criteria for classification as held for sale. As such, the results of Family Dollar are presented in Dollar Tree’s financial results as discontinued operations, so amounts and disclosures, except where indicated, reflect only continuing operations.
Income from continuing operations was $400.2 million, or $1.86 per diluted share, versus $532.4 million, or $2.44 per diluted share, in the year-earlier quarter, the company reported. Adjusted net income from continuing operations was $454.8 million, or $2.11 per diluted share, versus $543.7 million, or $2.49 per diluted share, in the year-prior period. Overall adjusted income, including a contribution from Family Dollar, was $2.29 per diluted share for the quarter.
A Zacks Investment Research note on Dollar Tree fourth-quarter financials, in looking at adjusted diluted earnings per share, defined the metric based on continuing operations, missing its analyst consensus estimate of $2.18. However, other observers focused on the number including Family Dollar contribution and considered Dollar Tree’s $2.29 figure as beating Zacks’ and other earnings estimates of up to $2.20.
Comparable sales from continuing operations were up 2%, driven by a 0.7% increase in traffic and a 1.3% increase in average ticket, Dollar Tree stated. Total revenues from continuing operations were $5 billion versus $4.96 billion in the year-before quarter. Family Dollar revenues in the quarter were $3.27 billion. Operating income was $533.6 million versus $725.6 million in the year-previous quarter while adjusted operating income was $627.8 million versus $740.7 million.
For the full fiscal year, income from continuing operations was $1.04 billion, or $4.83 per diluted share, versus $1.27 billion, or $5.76 per diluted share, in the year earlier, the company indicated. Adjusted for one-time events, income from continuing operations was $1.1 billion, or $5.10 per diluted share, versus $1.28 billion, or $5.81 per diluted share, in the year prior. Overall adjusted income, including a contribution from Family Dollar, was $1.19 billion, or $5.51 per diluted share, for the fiscal year.
Total revenues were $17.58 billion versus $16.78 billion in the year before. Operating income was $1.46 billion versus $1.77 billion in the year previous, while adjusted operating income was $1.56 billion versus $1.79 billion.
“In the fourth quarter, our team was focused on successfully closing out the year, bringing the strategic review to a favorable conclusion, and setting Dollar Tree on a path to realize its full potential to create long-term value for our associates, customers and shareholders,” said Mike Creedon, Dollar Tree CEO, in announcing the company financial results and Family Dollar sale. “We finished 2024 on a high note with strong execution at Dollar Tree as growing customer acceptance of our expanded assortment drove sales momentum. With the sale of Family Dollar set to close later this year, we will be able to fully dedicate ourselves to Dollar Tree’s long-term growth, profitability and returns on capital.”
The Family Dollar business will remain headquartered in Chesapeake, VA. The Dollar Tree banner finished the fourth quarter with 8,881 stores while the Family Dollar banner finished the period with 7,622 stores.
