Summary:
- Dollar Tree net sales rose 7.2% to $5 billion
- The top-line was driven by higher ticket
- The company opened 113 new stores in q1
- The chain converted or added 630 stores to the its multi-price format
Chesapeake, Va. – As it expands its fleet of multi-price-point stores and adds to its total store count, Dollar Tree Inc. delivered solid first quarter results.
“We continued advancing our strategic plan – a more relevant assortment, agile cost management, a stronger customer connection, and new store growth coupled with improved store conditions – all driving operating margin expansion and delivering a strong bottom-line performance,” said Mike Creedon, CEO.
For the quarter ended May 2, net sales rose 7.2% to $5.0 billion – hitting the top range of its forecast. Comp store sales increased 3.5% thanks to a 4.5% bump in average ticket, which was partially offset by a 1.0% dip in traffic.
Gross profit margin increased 120 basis points. The improvement in gross margin was primarily driven by higher mark-on, lower freight costs, and lower shrink. These benefits were partially offset by higher tariff costs and higher markdowns.
Operating income increased 23% to $473.3 million and operating margin expanded 120 basis points. Adjusted operating income increased 22% to $473.3 million.
Income from continuing operations was $347.3 million and diluted earnings per share from continuing operations was $1.76. On an adjusted basis, income from continuing operations was $343.4 million and adjusted diluted earnings per share was $1.74 – blowing past Dollar Tree’s forecast for EPS in the range of $1.45 to $1.60.
During the 13-week period, Dollar Tree opened 113 new locations, ending with quarter with more than 9,300 stores across 48 contiguous U.S. states and seven Canadian provinces under the brands Dollar Tree and Dollar Tree Canada.
In addition, the company converted or added roughly 630 stores to the Dollar Tree multi-price format, ending the quarter with approximately 5,900 multi-price stores.
Looking ahead, Dollar Tree boosted its earnings outlook for the fiscal year to a range of $6.70 to $7.10 per diluted share – up from its previous guidance of $6.50 to $6.90 per diluted share.
The company reaffirmed is top-line guidance for the fiscal year, which projects net sales from continuing operations in the range of $20.5 billion to $20.7 billion, based on comparable store net sales growth in the range of 3% to 4%. Dollar Tree expected to open approximately 400 new stores and 75 store closings.
