Dollar Tree announces CFO Jeff Davis will step down

In reporting third quarter results, Mike Creedon, interim CEO of Dollar Tree announced that Jeff Davis, chief financial officer, will step down. 

The company has launched an external search and to ensure a smooth transition, Davis has agreed to remain with the company through the filing of its fiscal 2024 Form 10-K.

[Read more: Dollar Tree makes 3 leadership changes]

“We thank Jeff for his service and appreciate the contributions he made to the business during his time with Dollar Tree and Family Dollar. We remain committed to our business strategy and are focused on driving lasting value for our customers and shareholders,” Creedon added.

Creedon said that Dollar Tree's third quarter sales came in at the high-end of its 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,” Creedon said.

Additional business highlights:

• Opened 249 new Dollar Tree and 6 new Family Dollar stores
• Approximately 2,300 Dollar Tree stores have been converted to in-line multi-price format
• Generated $785.6 million of net cash provided by operating activities
• Generated $359.2 million of free cash flow

Dollar Tree’s consolidated net sales increased 3.5% to $7.56 billion. Enterprise same-store net sales increased 1.8%, driven by a 1.6% increase in traffic and a .2% increase in average ticket, the company said. 

Dollar Tree's same-store net sales increased 1.8%, driven by a 1.5% increase in traffic and a .3% increase in average ticket. Family Dollar’s same-store net sales increased 1.9%, driven by a 1.8% increase in traffic and a flat average ticket. Same-store net sales results for the Family Dollar segment do not include any stores that were closed during the third quarter as part of our previously announced portfolio optimization.

The retailer's gross profit increased 7.6% to $2.34 billion and gross margin expanded 120 basis points to 30.9%. Gross margin expansion was driven primarily by lower freight costs and improved shrink results in relation to accruals, partially offset by increased distribution costs.

The company's operating income increased 10.5% to $333.4 million and operating margin expanded 30 basis points to 4.4%. Adjusted operating income increased 13.8% to $343.2 million and adjusted operating margin expanded 40 basis points to 4.5%.

Net income was $233.3 million and diluted earnings per share was $1.08. Adjusted net income was $240.6 million and adjusted diluted EPS was $1.12.

Year-to-date results:

Dollar Tree's consolidated net sales increased 2.8% to $22.6 billion. Enterprise same-store sales increased 1.2%. Dollar Tree same-store sales increased 1.6%, driven by a 1.9% increase in traffic. The increase was partially offset by a .3% decline in average ticket. Family Dollar’s same-store sales increased .6%, driven by a 1.2% increase in traffic. The increase was partially offset by a .5% decline in average ticket, Dollar Tree said.

[Read more: Dollar Tree CEO Rick Dreiling steps down]

Dollar Tree's gross profit increased 5.5% to $6.9 billion and gross margin expanded 80 basis points to 30.6%.

The company reported that operating income decreased 5.2% to $957.1 million and operating income margin decreased 40 basis points to 4.2%. Adjusted operating income decreased 4.1% to $996.9 million and adjusted operating income margin decreased 30 basis points to 4.4%.

Dollar Tree also reported that net income was $665.8 million and diluted EPS was $3.08. Adjusted net income was $695.5 million and adjusted diluted EPS was $3.22.

The company said it continues to reiterate its commitment to completing its formal review of strategic alternatives for the Family Dollar business segment, which could include among others, a potential sale, spin-off or other disposition of the business. The process is moving forward as planned. There is no set deadline or definitive timeline for the completion of the strategic alternatives review process, and there can be no assurance that this process will result in any transaction or particular outcome, Dollar Tree said.

The company is updating its full-year fiscal 2024 consolidated net sales outlook range to $30.7 billion to $30.9 billion. The company said it still expects to deliver comparable store net sales growth in the low-single-digits for the enterprise and both the Dollar Tree and Family Dollar segments.

Adjusted diluted EPS is expected to range from $5.31 to $5.51.

Fourth- quarter 2024 outlook:

Dollar Tree said it expects consolidated net sales for the fourth quarter will range from $8.1 billion to $8.3 billion, based on comparable store net sales growth in the low-single-digits for the enterprise and both the Dollar Tree and Family Dollar segments.

The company also noted that adjusted diluted EPS for the fourth quarter 2024 is estimated to be in the range of $2.10 to $2.30.