~ Sales increased 65.9% to $5.00 Billion and
Same-Store Sales Increased 1.2% ~
~ Diluted Earnings per Share Increased to
$0.72 ~
Dollar Tree, Inc. (NASDAQ: DLTR), North America's leading
operator of discount variety stores, today reported results for its
second fiscal quarter ended July 30, 2016.
Second Quarter Results
Second quarter fiscal 2016 results include nine additional weeks
of operations for the Family Dollar segment when compared to the
second quarter of fiscal 2015, which included four weeks of
operations following the acquisition on July 6, 2015.
Net sales increased 65.9% to $5.00 billion from $3.01 billion in
the prior year’s second quarter. The $1.99 billion increase was the
result of an incremental $1.80 billion in net sales from Family
Dollar stores, sales from new Dollar Tree stores, and a 1.2%
same-store sales increase, on a constant currency basis. Same-store
sales increased 2.7%, on a constant currency basis, in the
prior-year period. Adjusted for the impact of Canadian currency
fluctuations, the same-store sales increase was 1.1%. The positive
same-store sales growth was driven by increases in customer count
and average ticket.
Gross profit increased by $657.2 million, or 76.8%, to $1.51
billion in the second quarter compared to $855.2 million in the
prior year’s second quarter. The increase included an incremental
$588.4 million of gross profit for Family Dollar and a 9.2%
increase in Dollar Tree’s gross profit for the quarter. As a
percent of sales, gross margin increased to 30.3% compared to 28.4%
in the prior year. The prior year’s second quarter included $60.0
million of markdown expense related to product assortment
rationalization and planned liquidations at Family Dollar.
Selling, general and administrative expenses were 23.1% of sales
compared to 24.3% of sales in the prior year's second quarter.
Excluding $17.7 million of acquisition-related costs from the prior
year’s period, selling, general and administrative expenses, as a
percent of sales, improved to 23.1% from 23.7%. This 60 basis point
improvement was the result of lower payroll and operating and
corporate expenses, as a percent of sales, partially offset by
higher store repairs and maintenance expenses and depreciation
expense.
Operating income increased 189.5% to $357.2 million compared
with $123.4 million in the same period last year. Operating income
margin increased to 7.1% in the current quarter from 4.1% in last
year’s quarter. This increase in operating income is the result of
an incremental $189.7 million of operating income in the Family
Dollar segment, and a $44.1 million increase in operating income in
the Dollar Tree segment.
The Company's effective tax rate for the quarter was 36.9%
compared to a benefit of 31.1% in the prior year period. The
increase is primarily attributable to a pre-tax loss in the second
quarter of 2015.
Net income compared to the prior year's second quarter increased
$268.2 million to $170.2 million, and diluted earnings per share
increased to $0.72.
Bob Sasser, Chief Executive Officer, stated, "I am very pleased
with the Company's overall performance in our second quarter.
Through what continues to be a challenging retail sales
environment, we delivered gross margin improvement and managed
expenses effectively to deliver earnings at the top end of our
guidance range. In our Dollar Tree segment, we improved our
operating margin and delivered our 34th consecutive quarter of
positive same-store sales."
Sasser added, "Just over a year ago, we completed our
acquisition of Family Dollar and our integration continues to
progress as planned. The stores are cleaner, the values are greater
and our merchandise assortments are improving. Additionally, we are
taking the necessary steps to develop our shared services support
model, and are continuing our focus on cost-related synergy
capture. As a combined organization, we are well-positioned to
better serve more customers, generate significant cash flows and
deliver long-term value to our shareholders.”
During the quarter, the Company opened 156 stores, expanded or
relocated 52 stores, and closed 17 stores. Additionally, as part of
its re-banner initiative, the Company opened 47 former Family
Dollar store locations as new Dollar Tree stores. The Company also
converted the remaining 32 Deals stores to Dollar Tree stores.
Retail selling square footage at the end of the quarter was
approximately 110.8 million square feet.
First Six Months Results
Consolidated net sales increased 94.3% to $10.08 billion from
$5.19 billion in the first six months of 2015. The $4.89 billion
increase was the result of $4.50 billion in incremental net sales
from Family Dollar stores, sales from new Dollar Tree stores, and a
1.7% same-store sales increase, on a constant currency basis.
Adjusted for the impact of Canadian currency fluctuations, the
same-store sales increase was 1.6%.
Gross profit increased $1.46 billion, or 91.2%, to $3.07 billion
from $1.60 billion in the first six months of 2015. As a percent of
sales, gross margin decreased by 50 basis points to 30.4% compared
to the prior year period.
Selling, general and administrative expenses were 22.7% of sales
compared to 24.1% of sales in the first six months of 2015.
Excluding $28.1 million of acquisition-related costs from the first
six months of 2015, selling, general and administrative expenses,
as a percent of sales, improved to 22.7% from 23.5%.
Net income increased $431.3 million compared to the prior year's
first six months, resulting in net income of $1.70 per diluted
share.
Company Outlook
The Company estimates consolidated net sales for the third
quarter of 2016 to range from $5.02 billion to $5.10 billion, based
on a low single-digit increase in same-store sales. Diluted
earnings per share are estimated to be in the range of $0.76 to
$0.82.
Consolidated net sales for full-year 2016 are now expected to
range between $20.69 billion and $20.87 billion compared to the
Company’s previously expected range of $20.79 billion to $21.08
billion. This estimate is based on a low single-digit increase in
same-store sales, and 4.0% square footage growth. The Company now
anticipates net income per diluted share for full-year 2016 will
range between $3.67 and $3.82. This compares to its previous EPS
guidance range of $3.58 to $3.80.
Conference Call
Information
On Thursday, August 25, 2016, the Company will host a conference
call to discuss its earnings results at 9:00 a.m. Eastern Time. The
telephone number for the call is 888-427-9376. A recorded version
of the call will be available until midnight Thursday, September 1,
2016 and may be accessed by dialing 888-203-1112. The access code
is 1772942. A webcast of the call is accessible through Dollar
Tree's website, and will remain online until Thursday, September 1,
2016.
Dollar Tree, a Fortune 200 Company, operated 14,129 stores
across 48 states and five Canadian provinces as of July 30, 2016.
Stores operate under the brands of Dollar Tree, Family Dollar, and
Dollar Tree Canada. To learn more about the Company, visit
www.DollarTree.com.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements address future events, developments or results and
typically use words such as believe, anticipate, expect, intend,
plan, forecast, or estimate. For example, our forward-looking
statements include statements regarding third quarter 2016 and
full-year 2016 net sales and same-store sales, third quarter 2016
and full-year 2016 diluted earnings per share, square footage
growth, the benefits, results, and effects of the merger including
synergies, and future financial and operating results and
shareholder value. For a discussion of the risks, uncertainties and
assumptions that could affect our future events, developments or
results, you should carefully review the "Risk Factors," "Business"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" sections in our Annual Report on Form
10-K filed March 28, 2016 and other filings with the Securities and
Exchange Commission. We are not obligated to release publicly any
revisions to any forward- looking statements contained in this
press release to reflect events or circumstances occurring after
the date of this report and you should not expect us to do so.
DOLLAR TREE, INC. Condensed
Consolidated Statements of Operations (In millions, except
per share data) (Unaudited) 13 Weeks Ended
26 Weeks Ended July 30, 2016 August 1, 2015
(1) July 30, 2016 August 1, 2015 (1) Net
sales $ 4,996.3 $ 3,011.2 $ 10,082.1 $ 5,187.8 Cost of sales
3,483.9 2,156.0 7,015.2 3,583.7 Gross profit 1,512.4 855.2
3,066.9 1,604.1 30.3 % 28.4 % 30.4 % 30.9 % Selling, general
& administrative expenses 1,155.2 731.8 2,291.0 1,247.8 23.1 %
24.3 % 22.7 % 24.1 % Operating income 357.2 123.4 775.9
356.3 7.1 % 4.1 % 7.7 % 6.9 % Interest expense, net 87.3
263.9 174.6 386.2 Other (income) expense, net - 1.7 (0.2 ) (0.9 )
Income (loss) before income taxes 269.9 (142.2 ) 601.5 (29.0
) 5.4 % (4.7 %) 6.0 % (0.6 %) Income tax expense (benefit)
99.7 (44.2 ) 198.7 (0.5 ) Income tax rate 36.9 % 31.1 % 33.0 % 1.7
% Net income (loss) $ 170.2 $ (98.0 ) $ 402.8 $ (28.5 ) 3.4
% (3.3 %) 4.0 % (0.5 %) Net earnings (loss) per share: Basic
$ 0.72 $ (0.46 ) $ 1.71 $ (0.14 ) Weighted average number of shares
235.6 214.3 235.5 210.3 Diluted $ 0.72 $ (0.46 ) $ 1.70 $
(0.14 ) Weighted average number of shares 236.7 214.3 236.6 210.3
(1) For the 13 and 26 weeks ended August 1, 2015, Selling,
general & administrative expenses includes merger expenses of
$17.7 million and $28.1 million, respectively, related to the
acquisition of Family Dollar Stores, Inc. on July 6, 2015, and
Interest expense, net includes incremental costs incurred to the
July 6, 2015 acquisition date in connection with the repayment of
pre-existing debt of $227.6 million and $343.2 million,
respectively. Excluding these acquisition-related expenses, Net
income (loss) and Diluted earnings (loss) per share for the 13 and
26 weeks ended August 1, 2015 were $53.5 million and $0.25, and
$200.8 million and $0.95, respectively.
DOLLAR TREE, INC. Segment
Information (In millions, except store count)
(Unaudited)
13 Weeks Ended
26 Weeks Ended
July 30, 2016
August 1, 2015 (a)
July 30, 2016
August 1, 2015 (a)
Net sales: Dollar Tree $ 2,387.5 $ 2,199.6 $ 4,772.0
$ 4,376.2 Family Dollar
2,608.8
811.6 5,310.1
811.6 Total net sales
$
4,996.3 $ 3,011.2
$ 10,082.1 $
5,187.8 Gross profit: Dollar Tree
$ 818.1 $ 749.3 $ 1,638.8 $ 1,498.2 Family Dollar
694.3 105.9
1,428.1 105.9 Total
gross profit
$ 1,512.4
$ 855.2 $
3,066.9 $ 1,604.1
Operating income (loss): Dollar Tree (b) $
262.5 $ 218.4 $ 543.1 $ 451.3 Family Dollar (b)
94.7 (95.0 )
232.8 (95.0
) Total operating income (b)
$
357.2 $ 123.4
$ 775.9 $
356.3
13 Weeks Ended 26 Weeks Ended
July 30, August 1, July 30, August 1,
2016 2015 2016 2015
DollarTree
FamilyDollar
Total
DollarTree
FamilyDollar
Total
DollarTree
FamilyDollar
Total
DollarTree
FamilyDollar
Total Store Count: Beginning 6,049 7,948
13,997 5,454 8,284 13,738 5,954 7,897 13,851 5,367 8,284 13,651 New
99 57 156 126 15 141 211 116 327 219 15 234 Rebanner (c) 47 (54 )
(7 ) 4 (18 ) (14 ) 41 (54 ) (13 ) 4 (18 ) (14 ) Closings
(11 ) (6
) (17 ) (1
) - (1
) (22 )
(14 ) (36 )
(7 ) -
(7 ) Ending
6,184
7,945 14,129
5,583 8,281
13,864 6,184
7,945 14,129
5,583 8,281
13,864 Selling Square Footage (in millions)
53.3 57.5
110.8 48.3
59.9 108.2
53.3 57.5
110.8 48.3
59.9 108.2 Growth Rate
(Square Footage)
10.4 %
-4.0 % 2.4 %
7.8 % 100.0
% 141.5 % 10.4
% -4.0 %
2.4 % 7.8 %
100.0 % 141.5
%
(a) The results of Family Dollar's operations are included from
the July 6, 2015 acquisition date.(b) For the 13 and 26 weeks ended
August 1, 2015, Selling, general & administrative expenses
includes merger expenses of $16.5 million and $26.9 million,
respectively, for the Dollar Tree segment and $1.2 million for the
Family Dollar segment related to the acquisition of Family Dollar
Stores, Inc. on July 6, 2015. Excluding these acquisition-related
expenses, Operating income (loss) for the 13 and 26 weeks ended
August 1, 2015 was $234.9 million and $478.2 million, respectively,
for the Dollar Tree segment and $(93.8) million for the Family
Dollar segment.(c) Stores are included as rebanners when they close
or open, respectively.
DOLLAR TREE, INC. Condensed Consolidated
Balance Sheets (In millions) (Unaudited)
July 30, January 30, August 1,
2016 2016 2015 Cash and
cash equivalents $ 1,093.2 $ 736.1 $ 1,302.5 Short-term investments
4.0 4.0 4.0 Merchandise inventories, net 2,975.1 2,885.5 2,825.1
Current deferred tax assets, net - - 85.5 Other current assets
377.1 310.3 307.6 Total
current assets 4,449.4 3,935.9 4,524.7 Property and
equipment, net 3,174.2 3,125.5 3,151.9 Assets available for sale
13.5 12.1 - Goodwill 5,023.8 5,021.7 4,982.8 Favorable lease
rights, net 518.8 569.4 620.8 Tradename intangible asset 3,100.0
3,100.0 3,100.0 Other intangible assets, net 5.4 5.8 6.3 Other
assets 44.3 130.8 178.6
Total assets $ 16,329.4 $ 15,901.2 $ 16,565.1
Current portion of long-term debt $ 145.5 $
108.0 $ 83.0 Accounts payable 1,351.5 1,251.9 1,152.5 Other current
liabilities 683.0 722.6 837.8 Income taxes payable -
12.9 - Total current liabilities
2,180.0 2,095.4 2,073.3 Long-term debt, net, excluding
current portion 7,155.7 7,238.4 8,265.5 Unfavorable lease rights,
net 136.6 149.3 162.4 Deferred tax liabilities, net 1,556.0 1,586.6
1,655.1 Income taxes payable, long-term 73.6 71.4 34.4 Other
liabilities 370.6 353.2 327.4
Total liabilities 11,472.5
11,494.3 12,518.1 Shareholders' equity
4,856.9 4,406.9 4,047.0
Total liabilities and shareholders' equity $ 16,329.4
$ 15,901.2 $ 16,565.1
The January 30, 2016 information was derived from the audited
consolidated financial statements as of that date.
DOLLAR TREE, INC. Condensed Consolidated
Statements of Cash Flows (In millions)
(Unaudited) 26 Weeks Ended July 30, August
1, 2016 2015
Cash flows from operating activities: Net income (loss) $
402.8 $ (28.5 ) Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization 324.2 137.6 Provision for deferred
taxes (31.1 ) (17.6 ) Amortization of debt discount and
debt-issuance costs 9.5 4.7 Other non-cash adjustments to net
income (loss) 43.1 57.5 Changes in operating assets and liabilities
(68.2 ) (178.1 ) Total adjustments 277.5
4.1 Net cash provided by (used in) operating
activities 680.3 (24.4 ) Cash flows
from investing activities: Capital expenditures (355.9 ) (167.0 )
Increase in restricted cash - (12.0 ) Acquisition of Family Dollar,
net of common stock issued, equity compensation and cash acquired -
(6,525.6 ) Purchase of restricted investments (36.1 ) - Proceeds
from sale of restricted investments 118.1 - Proceeds from (payments
for) fixed asset disposition 1.5 (0.3 ) Net
cash used in investing activities (272.4 ) (6,704.9 )
Cash flows from financing activities: Principal payments for
long-term debt (54.0 ) (935.2 ) Proceeds from long-term debt, net
of discount - 8,200.0 Debt-issuance costs (0.7 ) (88.9 ) Proceeds
from stock issued pursuant to stock-based compensation plans 22.7
3.9 Cash paid for taxes on exercises/vesting of stock-based
compensation (19.9 ) (21.3 ) Tax benefit of exercises/vesting of
stock-based compensation - 10.0 Net
cash provided by (used in) financing activities (51.9 )
7,168.5 Effect of exchange rate changes on cash and
cash equivalents 1.1 (0.8 ) Net increase in
cash and cash equivalents 357.1 438.4 Cash and cash equivalents at
beginning of period 736.1 864.1 Cash
and cash equivalents at end of period $ 1,093.2 $ 1,302.5
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160825005518/en/
Dollar Tree, Inc.Randy Guiler, 757-321-5284Vice President,
Investor Relationswww.DollarTree.comDLTR-E
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