For the first quarter, Dollar Tree beat Wall Street estimates and, while introducing its financial results, laid out its investment strategy for the future.
An analyst consensus estimate published by MarketBeat called for earnings of $2 per diluted share and sales of $6.77 billion.
Companywide comparable sales advanced 4.4% while those at Dollar Tree stores increased 11.2% and those for Family Dollar stores decreased 2.8%, with the decrease resulting from the bigger impact that suffered from cycling the effect of last year’s United States Federal stimulus checks, the company noted. It added that about 400 Family Dollar stores were temporarily closed for portions of the quarter because of a product-related recall, which negatively impacted its quarterly comps by some 200 basis points.
Net sales were $6.9 billion versus $6.48 billion in the quarter a year prior. Operating income was $731.5 million versus $519.9 million in the year-earlier period, according to Dollar Tree.
In announcing the financial results, Michael Witynski, Dollar Tree president and CEO, said, “The team delivered a solid start to the year with a 6.5% top-line sales expansion, a 19.2% lift to gross profit, and a 48.1% increase to earnings per share. During the quarter, the Dollar Tree team successfully completed its conversion to the $1.25 price point, contributing to both sales and margin improvements. Shoppers are responding favorably as the new, greater-value products hit our shelves. Importantly, other key strategic initiatives, including the expansion of the $3 and $5 Plus assortment in Dollar Tree stores, as well as our Combo Stores and H2 Renovations at Family Dollar are working. Today, we will outline the types of additional strategic investments we will make over the next several years that are designed to position the company for profitable growth with attractive returns on capital.”
They include:
- Investing in Associates. Company investment in stores, distribution center associates and field leadership will focus on competitive wages, improved store and DC operating standards, and enhanced safety.
- Investing in Distribution Center Network and Supply Chain. To improve the capabilities and efficiency of its supply chain and enhance store productivity through better in-stock positions, Dollar Tree will focus on delivering improved safety, conditions and operational standards across its network through the use of data, analytics, process improvements and automation.
- Investing in Product through Pricing and Value Proposition. On the Family Dollar side of the business, the company will invest to ensure it exceeds customer expectations for value, with its product offering clearly and competitively priced every day, positioning Family Dollar for improved performance and long-term success.
- Investing in Technology. In conducting a detailed assessment of systems infrastructure plans for 2023 and beyond, the company is reviewing merchandising, supply chain, data analytics and store systems to determine how it will enhance them in line with its vision of the future.
