Dollar Tree reported comp advances across the business in the third quarter that propelled earnings growth.
Net income was $233.3 million, or $1.08 per diluted share, versus $212 million, or 97 cents per diluted share, in the year-prior quarter, Dollar Tree noted. Adjusted net income was $240.6 million, or $1.12 per diluted share. No adjustment was made to last year’s net income results.
An analyst consensus estimate from Zacks Investment Research called for earnings per share of $1.07 and revenues of $7.45 billion.
Dollar Tree corporate comparable sales increased 1.8% compared to the 2023 quarter, driven by a 1.6% increase in traffic and a 0.2% increase in average ticket, the company indicated. The Dollar Tree unit comps increased 1.8% year over year, driven by a 1.5% increase in traffic and a 0.3% increase in average ticket. Family Dollar’s comps increased 1.9% year over year, driven by a 1.8% increase in traffic and a flat average ticket.
Corporate net sales were $7.56 billion versus $7.31 billion in the year-previous quarter. Operating income was $333.4 million versus $301.7 million in the period a year before, while adjusted operating income was $343.2 million with no adjustment to the metric in the year-past quarter.
Among the other business highlights of the quarter, according to Dollar Tree, the company’s expansion continued as it opened 249 namesake and six Family Dollar stores. At the same time, the company switched about 2,300 Dollar Tree stores to the in-line multi-price format it has developed.
In a conference call, Michael Creedon, Dollar Tree CEO, noted CFO Davis will remain with the company for a transitional period to ensure a smooth executive changeover.
Dollar Tree continues to see evidence of belt-tightening among lower-income customers and, to a lesser extent, middle- and higher-income families with young children, Creedon said. The dynamic remains a discretionary headwind but does create some opportunities across the Dollar Tree and Family Dollar banners in consumables as consumption data shows lower- and middle-income households are increasingly shifting more of their spending toward food at home. Among discretionary categories, children’s apparel, electronics and hardware were best performing.
Creedon added Dollar Tree as a company remains committed to completing the formal review of strategic alternatives for Family Dollar, which could include a potential sale, spinoff or other disposition of the business.
The company, he said, is also considering the impact of potential new tariffs and is prepared to act on multiple fronts if they occur.
Creedon said, “Our Dollar Tree and Family Dollar merchandising efforts produced tangible results, and our third quarter sales came in at the high-end of our expected range. As an organization, our top priorities remain accelerating the growth of the Dollar Tree segment, completing the Family Dollar strategic review process, and unlocking value for Dollar Tree shareholders.”
