Family Dollar a drag for Dollar Tree

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Family Dollar a drag for Dollar Tree

By Gina Acosta - 05/31/2018
Same-store sales increased 4% at Dollar Tree during the first quarter ended May 5.

Dollar Tree blamed colder than normal spring weather for lower than estimated sales and revenue in the first quarter.

Same-store sales increased 4% at Dollar Tree during the first quarter ended May 5, but comp sales fell 1.1% at Family Dollar. Overall comps were up 1.4%, below company guidance.

"Our teams worked hard to deliver top-line sales and bottom-line earnings results within our range of guidance, despite headwinds related to increasing freight costs, colder-than-normal spring weather in many parts of the country and an earlier Easter holiday," stated Gary Philbin, President and Chief Executive Officer. "Our Dollar Tree banner demonstrated its continued momentum in sales, delivering a 4% same-store sales increase with growth in both average ticket and customer traffic. Importantly, our Family Dollar banner delivered positive same-store sales in its consumables business. While weather impacted the discretionary side of our business in the first quarter, we have seen an acceleration in sales with warmer weather in May."

Dollar Tree reported fiscal first-quarter earnings of $160.5 million. On a per-share basis, the Chesapeake, Virginia-based company said it had net income of 67 cents. Earnings, adjusted for non-recurring costs, were $1.19 per share.

Gross profit increased 4.5% to $1.70 billion in the quarter compared to $1.63 billion in the prior year's first quarter. As a percent of sales, gross margin decreased to 30.6% compared to 30.8% in the prior year. The 20 basis point decline was driven primarily by higher shrink, distribution and occupancy costs, partially offset by lower markdowns and lower merchandise costs.

The discounter posted revenue of $5.55 billion in the period.

The company expects full-year earnings to be $4.80 to $5.10 per share, with revenue ranging from $22.73 billion to $23.05 billion.

"We are pleased with the acceleration in sales we have seen in the first several weeks of our second quarter. Both our Dollar Tree and Family Dollar banners are focused on meeting customer needs through delivering great values and convenience every day. I believe we are well-positioned to deliver increased value to long-term shareholders by continuing to grow and improve our businesses," Philbin added.

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