Table of Contents
CHESAPEAKE, Va. — Dollar Tree Inc. reported that sales increased in the latest quarter but the company posted a loss as it continued to integrate its acquisition of rival Family Dollar Stores.
Dollar Tree Inc. reported that sales increased in the latest quarter but the company posted a loss as it continued to integrate its acquisition of rival Family Dollar Stores.
 |
The company said it lost $98 million in the fiscal second quarter compared to a profit in the same period a year ago.
Dollar Tree noted that earnings, adjusted for costs related to the acquisition, amounted to 25 cents a share. On a per-share basis, it showed a loss of 46 cents. The company posted revenue of $3 billion, a 48% increase from last year’s second quarter. The increase included nearly $812 million in sales from the Family Dollar segment following the acquisition on July 6. Same-store sales in the Dollar Tree segment increased 2.7%. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 2.4%.
Gross profit increased by $161.1 million, or 23.2%, to $855.2 million in the second quarter. The increase was primarily driven by $106 million in gross profit for Family Dollar as well as higher sales at Dollar Tree.
As a percent of sales, gross margin decreased to 28.4% compared to 34.2% in the prior year. The primary contributors to the decrease were $60 million in markdown expense for Family Dollar related to SKU rationalization and planned liquidations, $11.1 million for Family Dollar related to the amortization of the stepped-up inventory basis, and the impact of the overall lower-margin product mix for the Family Dollar business, the company pointed out.
For the current quarter ending in November, Dollar Tree said that it expects revenue in the range of $4.78 billion to $4.87 billion. For the full-year, Dollar Tree forecasts revenue in the range of $15.3 billion to $15.52 billion.
"I am extremely proud of Dollar Tree’s accomplishments in the second quarter," remarked Bob Sasser, chief executive officer of Dollar Tree, "We delivered our 30th consecutive quarter of positive same-store sales, broke ground on our southeast distribution center in South Carolina, successfully completed our acquisition of Family Dollar and quickly initiated our integration plan."
Dollar Tree has been executing its integration plan since the July acquisition of 8,248 Family Dollar stores. "We are now an organization with annual sales exceeding $19 billion, more than 13,800 stores across North America and a network of more than 145,000 associates," Sasser said in a statement. "We remain confident in our ability to deliver $300 million in annual run-rate synergies by the end of the third year post-acquisition. This combination provides us with the unique opportunity to leverage our multiple banners to better serve a broader range of customers, while enhancing our ability to deliver long-term profitable growth for our shareholders."
As part of its rebannering initiative, Dollar Tree closed 18 Family Dollar stores, which since have reopened as Dollar Tree stores.
In the second quarter, Dollar Tree opened 141 stores, expanded or relocated 40 stores, and closed one store. Retail selling space at the end of the quarter was around 108.2 million square feet.
