Dollar Tree revenue increased 9.4% in the second quarter ended Aug. 1, reaching $6.28 billion, the retailer said Thursday.
The chain’s enterprise same-store sales increased by 7.2%. Same-store sales for Family Dollar increased 11.6%, while Dollar Tree same-store sales increased 3.1%.
Gross profit, meanwhile, increased 16.2% to $1.92 billion in the quarter compared to the prior year’s second quarter. As a percentage of net sales, gross margin increased 180 basis points to 30.5%, compared to 28.7% in the prior year’s quarter.
The increase in gross margin was driven by improved merchandise costs including freight, leverage on occupancy costs from stronger same-store sales, reduced markdowns and improved shrink results, partially offset by higher distribution costs, which included $11.4 million in COVID-19-related payroll costs, and incremental tariffs of approximately $10.8 million.
Additionally, during the second quarter of 2020, the retailer experienced store damage, lost inventory, and other costs of $16.8 million related to civil unrest in certain communities, comprised of $11.7 million at Family Dollar and $5.1 million at Dollar Tree. Together, expenses related to COVID-19 and civil unrest for the quarter were $151.7 million, or $0.49 per diluted share.
“Our store and distribution center teams have done a remarkable job of serving customers through an incredibly dynamic time in retail. Their continual efforts to ensure we are providing a clean, safe shopping experience, along with the great value and convenience our stores offer, contributed to our solid operating performance for the quarter,” said CEO and President Mike Witynski.
For the first six months of the year, the retailer reported that consolidated net sales increased 8.8% to $12.56 billion. Enterprise same-store sales increased by 7.1%. Same-store sales for Family Dollar increased by 13.6%. Dollar Tree same-store sales increased by 1.1%.
Gross profit for the first six months increased by 9.9% to $3.71 billion. As a percentage of net sales, gross margin improved 30 basis points to 29.5%, compared to 29.2% in the prior-year period. Net income compared to the prior-year period improved 13.6% to $509.1 million and diluted earnings per share increased 13.8% to $2.14 compared to $1.88 in the prior-year period.
The retailer continues to expect the completion of 500 new store openings (consisting of 325 Dollar Tree and 175 Family Dollar) and 750 Family Dollar H2 store renovations in fiscal 2020.