Q2 Dollar Tree sales rise 5.7% to $5.3 billion

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Q2 Dollar Tree sales rise 5.7% to $5.3 billion

By Michael Johnsen - 08/25/2017

 CHESAPEAKE, Va. — Dollar Tree on Thursday posted consolidated net sales of $5.3 billion, representing an increase of 5.7%, for its second fiscal quarter ended July 29.



"I am extremely pleased with the quarter," stated Bob Sasser, CEO Dollar Tree. "Both Dollar Tree and Family Dollar produced positive same-store sales, our enterprise operating margin improved 80 basis points and earnings per share exceeded the high end of our guidance range. Consumers continue to view Dollar Tree and Family Dollar as stores that provide great value and convenience."



Toward that end, consumers can expect to see more store openings in the immediate future, Sasser said. "While we work to improve the productivity [across] our more than 14,500 existing stores, we continue to grow the store base. This year, we’re opening 650 new stores and we have years of growth ahead," he said. "We have identified an opportunity for 26,000 stores across North America."



Enterprise same-store sales increased 2.4%, driven by increases in comparable transaction count and average ticket. Same-store sales for the Dollar Tree banner increased 3.9%. Same-store sales for the Family Dollar banner increased 1%.



During the second quarter, Dollar Tree completed 111 Family Dollar store renovations, the company reported.



"Elements of the renovation included improved adjacencies and more productive end caps, expanded beverage and snacks, including immediate consumption cores near checkout, expanded assortment of food and coolers and freezers, and updated airfare assortment, expanded adult beverage in some stores; and exciting power alley to promote Dollar well items, and a faster checkout process for our customer," reported Gary Philbin, enterprise president Dollar Tree, told analysts. "We are very pleased with the initial results we are seeing in these stores and especially about the feedback we are receiving from our store teams and customers. We now estimate that we can complete 350 renovations for fiscal 2017," he said.  



"We continue to make progress as planned with elevating our private brand assortment in the stores," Philbin continued. "These private brands are being developed to provide national brand comparable quality and terrific values to support our compare and save component of our smart ways to save program."



"When times are tough, we are a part of the solution to help that customer make ends meet; when times are better, customers appreciate our convenience and our value," Sasser told analysts. "Shoppers today are focused on value and convenience more than ever and that’s exactly what Dollar Tree and Family Dollar stores provide, value and convenience."



Gross profit increased 7.6% to $1.6 billion. As a percent of sales, gross margin increased to 30.8% compared to 30.3% in the prior year. The 50 basis point improvement was driven primarily by lower merchandise and freight costs and lower markdowns in the current quarter, partially offset by higher distribution and occupancy costs.



"Our merchants, store operators, supply chain and support teams have truly embraced this opportunity to improve and grow our combined business," Sasser said. "We have a proven business model, an experienced leadership team, momentum in our business and a transformational opportunity. We are confident that we are well-positioned for the back half of 2017 and look to deliver value to our long-term shareholders in the years ahead."