Dollar Tree posts Q4 results

In reporting results for its fourth quarter, Dollar Tree CEO Mike Creedon commented that its team was focused on "successfully closing out the year, bringing the strategic review to a favorable conclusion, and setting Dollar Tree on a path to realize its full potential to create long-term value for our associates, customers, and shareholders.”

Creedon said, “We finished 2024 on a high note with strong execution at Dollar Tree as growing customer acceptance of our expanded assortment drove sales momentum. With the sale of Family Dollar set to close later this year, we will be able to fully dedicate ourselves to Dollar Tree’s long-term growth, profitability, and returns on capital.”

"After a thorough review of strategic alternatives, on March 25, 2025, the company entered into a definitive agreement to sell the Family Dollar business to Brigade and Macellum for a purchase consideration of $1,007.0 million, subject to a number of adjustments, including with respect to working capital and net indebtedness. The closing of the transaction is subject to satisfaction of customary closing conditions, including receipt of US antitrust approval. Net proceeds are estimated to total approximately $804 million. Additionally, we expect the economic impact of tax benefits from losses on the sale to be approximately $350 million. The deal is expected to close in approximately 90 days with the Family Dollar business remaining headquartered in Chesapeake, Virginia," Creedon said.

[Read more: Dollar Tree makes 3 leadership changes]

The retailer's net sales for the quarter increased .7% to $5 billion. Same-store net sales increased 2%, driven by a .7% increase in traffic and a 1.3% increase in average ticket.

Dollar Tree's gross profit for the quarter declined 2.8% to $1.9 billion and gross margin contracted 130 basis points to 37.6%. The decline in gross margin expansion was driven primarily by the loss of leverage from the extra week of sales in 2023, lower initial mark-on, and higher shrink, distribution and markdown cost. The decline was partially offset by lower freight, the retailer said. Freight costs in the quarter include $25 million in accrual for duties related to an anti-dumping case for product imported in fiscal 2024, the company said.

[Read more: Dollar Tree to divest Family Dollar business to Brigade Capital Management, Macellum Capital Management]

Dollar Tree's operating income for the quarter decreased 26.5% to $533.6 million and operating margin contracted 390 basis points to 10.7%. Adjusted operating income decreased 15.2% to $627.8 million and adjusted operating margin contracted 230 basis points to 12.6%.

For the quarter, the company's income from continuing operations was $400.2 million and diluted earnings per share from continuing operations was $1.86. Adjusted net income was $454.8 million and adjusted diluted EPS was $2.11.

Year-to-Date results:

• Dollar Tree's net sales increased 4.7% to $17.6 billion. Dollar Tree’s same-store sales increased 1.8%, driven by a 1.6% increase in traffic and a 0.1% increase in average ticket.
• The retailer's gross profit increased 4.5% to $6.3 billion and gross margin was flat at 35.8%.
• Dollar Tree's operating income decreased 17.6% to $1.5 billion and operating income margin decreased 230 basis points to 8.3%. Adjusted operating income decreased 12.7% to $1.6 billion and adjusted operating income margin decreased 180 basis points to 8.9%.
• The company said its income from continuing operations was $1 billion and diluted earnings per share from continuing operations was $4.83. Adjusted income from continuing operations was $1.1 billion and adjusted diluted earnings per share from continuing operations was $5.10.

[Read more: Dollar Tree plans to close about 1,000 stores]

Fiscal 2025 outlook:

• Dollar Tree expects its full-year fiscal 2025 net sales from continuing operations to be in the range of $18.5 billion to $19.1 billion, based on comparable store net sales growth in the range of 3% to 5%.
• Dollar Tree expects its adjusted diluted EPS from continuing operations is expected to range from $5.00 to $5.50.

[Read more: Dollar Tree Names Michael C. Creedon, Jr. as CEO]

First quarter 2025 outlook:

• The company expects net sales from continuing operations for the first quarter will range from $4.5 billion to $4.6 billion, based on comparable store net sales growth in the range of 3% to 5%.
• Adjusted diluted EPS for the first quarter 2025 is estimated to be in the range of $1.10 to $1.25, including the full burden of the company’s shared services expense, with no benefit from the Family Dollar TSA, which is expected to commence with the close of the transaction.