Better-than-expected results
Business performance
In Q3, enterprise same-store sales increased 1.8%, helped by a 1.6% increase in traffic and a 0.2% increase in average ticket. Same-store sales for the Dollar Tree segment grew 1.8%, supported by a 1.5% growth in traffic and a 0.3% increase in average ticket. Same-store sales for the Family Dollar segment rose 1.9%, as traffic increased 1.8% while average ticket remained flat.
Net sales for the Dollar Tree segment increased 8% YoY to $4.33 billion in the third quarter. Gross margin for the division increased to 35.4% from 34.8% last year. The company opened 249 new stores under this banner and closed eight. For the Family Dollar segment, net sales decreased 2% to $3.22 billion while gross margin rose to 24.9% from 23.6% last year. This banner saw six new store openings and 41 store closures.
Updated outlook
Dollar Tree updated its outlook for fiscal year 2024. It now expects consolidated net sales to range between $30.7-30.9 billion versus the previous range of $30.6-30.9 billion. Adjusted EPS is now expected to be $5.31-5.51 versus the prior outlook of $5.20-5.60. The company still expects comparable store sales growth to be in the low-single-digits for the enterprise and both its divisions.
Management change
DLTR announced that Jeff Davis will be stepping down as Chief Financial Officer and that a search for his successor has commenced. This comes after the departure of Chief Executive Officer Rick Dreiling last month due to personal reasons.
Portfolio review
Dollar Tree said its review of strategic alternatives for the Family Dollar business is still ongoing. As part of its portfolio optimization review, the company has identified approx. 970 underperforming Family Dollar stores. It has closed around 670 stores as of November 2 and plans to close another 25 stores during the remainder of FY2024.