Discount variety store operator Dollar Tree Inc. (DLTR:NASDAQ) today announced financial results for its first quarter ended May 2, 2020.
The company's CEO Gary Philbin commented, "I am extremely proud of the team's extraordinary efforts to serve customers through what has been an incredibly tumultuous time...After a relatively normal first month in the quarter, our stores experienced an unprecedented spike in demand for certain products in March. The teams quickly rose to the challenge to make our stores safer for associates and customers by following CDC guidelines, along with enhanced cleaning protocols. We were focused and dedicated to delivering essentials to customers when they needed us most."
Dollar Tree's Enterprise President Mike Witynski remarked, "Family Dollar delivered strong same-store sales with a 15.5% increase and a 230 basis point improvement in operating margin. Dollar Tree same-store sales decreased by 90 basis points, as the seasonal and discretionary business was materially impacted by lower Easter holiday sales. The most negatively impacted categories - party, candy, and Easter - affected Dollar Tree's overall comp for the quarter by approximately 490 basis points."
The company reported that in Q1/20 consolidated net sales increased 8.2% to $6.29 billion, compared to $5.81 billion in Q1/19. The firm advised that Enterprise same-store sales increased 7.0% year-over-year as same-store Family Dollar sales increased 15.5% y-o-y while Dollar Tree same-store sales decreased by 0.9%.
The firm reported net income of $247.6 million in Q1/20 and diluted earnings per share of $1.04, compared to $267.9 million and $1.12 per share respectively in Q1/19.
The company listed that in Q1/20 it opened 99 new stores, expanded or relocated 21 stores, closed 14 stores and completed 220 renovations to the Family Dollar H2 format.
The company pointed out that as it operates an essential business it remains committed to keeping each of its 15,300 plus Dollar Tree and Family Dollar stores open to conveniently serve the needs of customers at affordable prices during the COVID-19 situation. The firm stated that its store teams are working diligently to provide a clean and safe environment for associates and customers.
The company advised it has withdrawn its previously released Q1/20 and FY/20 guidance due to uncertainty related to the COVID-19 pandemic. The firm reiterated that as it announced in its March Business Update, it had suspended its Family Dollar H2 renovation and its Dollar Tree Snack Zone installation initiatives in an effort to minimize travel and further protect its associates. The company noted that it now expects to complete approximately 750 Family Dollar H2 renovations in FY/20 compared to its original estimates of 1,250.
The company indicated that as it stated in its March Business Update, it has temporarily suspended share repurchases and still has an $800 million unexercised balance remaining from the share repurchase authorization.
CEO Philbin added, "Following a volatile sales environment in the first quarter, I am extremely pleased with the momentum we are seeing in our business early in the second quarter. At Family Dollar, we are seeing continued sales strength with improvements in our discretionary categories. For Dollar Tree, we have seen a rebound on the discretionary side of the business following the Easter holiday, especially in crafts, graduation, stationery, Mother's Day seasonal and balloons...We have a resilient business model that has been demonstrated to work in varying economic climates. With more than 38 million Americans filing unemployment claims in the past nine weeks, we believe that Dollar Tree and Family Dollar are part of the solution to help millions of families stretch their budgets to help make ends meet. Our focus is on meeting customer needs, while growing and improving our business to deliver long-term value to shareholders."
Dollar Tree is headquartered in Chesapeake, Va., and is an operator of discount variety stores. The company operates more than 15,000 stores under the Dollar Tree and Family Dollar names in 48 states in the U.S. and five Canadian provinces and employs more than 193,000 associates throughout its organization.
Dollar Tree has a market capitalization of around $20.8 billion with approximately 237.2 million shares outstanding. DLTR shares opened nearly 11% higher today at $96.86 (+$9.33, +10.66%) over yesterday's $87.53 closing price. The stock has traded today between $95.08 and $99.82 per share and is currently trading at $97.24 (+$9.71, +11.09%).
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