Dollar Tree earnings slipped in its second quarter, but it still beat a Wall Street estimate with help from a gain in comparable sales.
The company also pointed out that it continues opening new stores including its Dollar Tree Plus format that stocks higher priced goods.
Net income was $200.4 million, or 91 cents per diluted share, versus $359.9 million, or $1.60 per diluted share, in the year-previous period, Dollar Tree reported.
Dollar Tree beat an Yahoo Finance-published analyst consensus estimate on earnings, which was for 87 cents per diluted share, and revenues, which was for $7.18 billion.
Year over year, company comparable sales advanced 6.9% while those for Dollar Tree stores increased 7.8% and those for Family Dollar gained 5.8%. Net sales were $7.32 billion versus $6.77 billion in the 2022 quarter. Operating income was $287.8 million versus $505.4 million in the year-earlier period, the company stated.
Among the business highlights in the quarter, Dollar Tree pointed out it opened 118 new stores, expanded multi-price Plus offering to 715 additional Dollar Tree stores and completed 276 Family Dollar store renovation projects.
In a conference call, the company noted the shift in purchasing to more food and consumables at its stores, and product cost inflation and shrink have been pressuring margins.
Rick Dreiling, Dollar Tree chairman and CEO, said, “At our June investor conference, we shared the details of our strategy to transform the company and unlock the true value of our business, and our second quarter results show us making solid progress against these objectives. Both the Dollar Tree and Family Dollar segments reported strong same-store sales trends, driven by increased traffic and accelerated market share gains.
Jeff Davis, Dollar Tree CFO, added, “In the second quarter, we continued to generate strong top-line results across both segments. While factors like sales mix and elevated shrink continue to pressure margins, we generated a year-over-year increase in gross profit dollars. We are pleased with the progress of our transformation to date and remain confident in our ability to deliver our growth objective of $10 or more of diluted EPS by 2026.”
