~ Consolidated Net Sales Increased 8.2% to
~ Diluted Earnings per Share of
~ Enterprise Same-Store Sales Increased 7.0% ~
~ Same-Store Sales by Segment: Family
“I am extremely proud of the team’s extraordinary efforts to serve customers through what has been an incredibly tumultuous time,” stated
First Quarter Results
Consolidated net sales increased 8.2% to
Gross profit increased 3.9% to
Selling, general and administrative expenses were 22.7% of net sales compared to 23.1% of net sales in the prior year's first quarter. The improvement was driven primarily by leverage on operating and corporate expenses, occupancy costs, and advertising, partially offset by higher payroll costs related to frontline associate wage premiums and field management sales bonuses.
Operating income for the quarter was
Net income was
The Company opened 99 new stores, expanded or relocated 21 stores, and closed 14 stores. Additionally, the Company completed 220 renovations to the Family Dollar H2 format. Retail selling square footage at quarter end was approximately 122.1 million square feet.
COVID-19 Update
As an essential business, the Company is committed to keeping each of its more than
Store teams are working to provide a clean and safe environment for associates and customers; detailed below are a number of the actions taken in the Company’s stores, distribution centers and the store support center to help protect the safety of associates and customers:
-
Employing enhanced cleaning protocols as recommended by the
Centers for Disease Control and Prevention (CDC ); - Encouraging proper social distancing measures;
- Modifying store hours to provide adequate time for associates to clean and restock shelves;
- Dedicating the stores’ daily first operational hour to at-risk customers;
- Providing personal protective equipment (PPE);
- Implementing associate health screening procedures;
- Installing plexiglass guards at cash registers; and,
- Accommodating contactless payment options at checkout.
Update on Company Outlook, Initiatives and Liquidity
Due to uncertainty related to the COVID-19 pandemic, the Company withdrew its first quarter and fiscal 2020 guidance in its
- Evolution of macroeconomic factors, including the escalation in unemployment rates;
- Variability of vendor supply chains being able to meet product demand on a timely basis;
- Volatility in consumer demand related to the crisis;
- Value and timing of government stimulus;
- Duration, degree, and geographic breadth of varying shelter-in-place mandates;
- Uncertainties related to the economic environment through the remainder of the fiscal year; and,
- Incremental costs related to managing the business through this unprecedented, challenging time.
Additionally, as announced in its March Business Update, the Company had suspended its Family Dollar H2 renovation and its
Capital expenditures for fiscal 2020 are now expected to be approximately
The Company ended the quarter with
As stated in its March Business Update, the Company has temporarily suspended share repurchases. The current share repurchase authorization has
“Following a volatile sales environment in the first quarter, I am extremely pleased with the momentum we are seeing in our business early in the second quarter. At Family Dollar, we are seeing continued sales strength with improvements in our discretionary categories. For
Conference Call Information
On
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 can be identified by the fact that they address future events, developments or results and do not relate strictly to historical facts. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by or including words such as “believe”, “anticipate”, “expect”, “intend”, “plan”, “view”, “target” or “estimate”, “may”, “will”, “should”, “predict”, “possible”, “potential”, “continue”, “strategy”,” and similar expressions. For example, our forward-looking statements include statements regarding the continuing uncertainties and potential impact of the COVID-19 coronavirus on our business and financial results for the second quarter 2020 and fiscal year 2020; our expectations regarding new store openings and capital expenditures for fiscal 2020; our plans and expectations concerning Family Dollar H2 renovations and the number and timing of
Condensed Consolidated Income Statements | ||||||||
(In millions, except per share data) | ||||||||
(Unaudited) | ||||||||
13 Weeks Ended | ||||||||
Net sales |
$ |
6,286.8 |
|
$ |
5,808.7 |
|
||
Cost of sales |
|
4,491.9 |
|
|
4,081.5 |
|
||
Gross profit |
|
1,794.9 |
|
|
1,727.2 |
|
||
|
28.5 |
% |
|
29.7 |
% |
|||
Selling, general and administrative expenses |
|
1,429.0 |
|
|
1,341.7 |
|
||
|
22.7 |
% |
|
23.1 |
% |
|||
Operating income |
|
365.9 |
|
|
385.5 |
|
||
|
5.8 |
% |
|
6.6 |
% |
|||
Interest expense, net |
|
40.2 |
|
|
41.4 |
|
||
Other expense, net |
|
0.5 |
|
|
0.2 |
|
||
Income before income taxes |
|
325.2 |
|
|
343.9 |
|
||
|
5.2 |
% |
|
5.9 |
% |
|||
Provision for income taxes |
|
77.6 |
|
|
76.0 |
|
||
Income tax rate |
|
23.9 |
% |
|
22.1 |
% |
||
Net income |
$ |
247.6 |
|
$ |
267.9 |
|
||
|
3.9 |
% |
|
4.6 |
% |
|||
Net earnings per share: | ||||||||
Basic |
$ |
1.05 |
|
$ |
1.13 |
|
||
Weighted average number of shares |
|
236.9 |
|
|
238.0 |
|
||
Diluted |
$ |
1.04 |
|
$ |
1.12 |
|
||
Weighted average number of shares |
|
237.4 |
|
|
239.1 |
|
||
Reconciliation of Non-GAAP Financial Measures | |||||||
(In millions, except per share data) | |||||||
(Unaudited) | |||||||
From time-to-time, the Company's financial results include certain financial measures not derived in accordance with generally accepted accounting principles ("GAAP"). Non-GAAP financial measures should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purposes of analyzing operating performance, financial position or cash flows. However, the Company believes providing additional information in the form of non-GAAP measures that exclude the unusual, non-recurring expenses outlined below is beneficial to the users of its financial statements in evaluating the Company's current operating results in relation to past periods. In addition, the Company's debt covenants exclude the impact of certain unusual, non-recurring expenses. The Company has included a reconciliation of this information to the most comparable GAAP measures in the following tables. | |||||||
On |
|||||||
Reconciliation of Adjusted Net Income: | |||||||
13 Weeks Ended | |||||||
Net income (GAAP) |
$ |
247.6 |
$ |
267.9 |
|
||
Accelerated rent expense |
|
- |
|
6.7 |
|
||
Provision for income taxes on adjustment |
|
- |
|
(1.5 |
) |
||
Adjusted Net income (Non-GAAP) |
$ |
247.6 |
$ |
273.1 |
|
||
Reconciliation of Adjusted EPS: | |||||||
13 Weeks Ended | |||||||
Diluted earnings per share (GAAP) |
$ |
1.04 |
$ |
1.12 |
|
||
Adjustment, net of tax |
|
- |
|
0.02 |
|
||
Adjusted EPS (Non-GAAP) |
$ |
1.04 |
$ |
1.14 |
|
||
Segment Information | ||||||||||||||||||||
(In millions, except store count) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
13 Weeks Ended | ||||||||||||||||||||
Net sales: | ||||||||||||||||||||
$ |
3,077.5 |
|
$ |
2,959.3 |
|
|||||||||||||||
Family Dollar |
|
3,209.3 |
|
|
2,849.4 |
|
||||||||||||||
Total net sales |
$ |
6,286.8 |
|
$ |
5,808.7 |
|
||||||||||||||
Gross profit: | ||||||||||||||||||||
$ |
980.7 |
|
31.9 |
% |
$ |
1,021.2 |
|
34.5 |
% |
|||||||||||
Family Dollar |
|
814.2 |
|
25.4 |
% |
|
706.0 |
|
24.8 |
% |
||||||||||
Total gross profit |
$ |
1,794.9 |
|
28.5 |
% |
$ |
1,727.2 |
|
29.7 |
% |
||||||||||
Operating income (loss): | ||||||||||||||||||||
$ |
282.0 |
|
9.2 |
% |
$ |
394.2 |
|
13.3 |
% |
|||||||||||
Family Dollar |
|
175.5 |
|
5.5 |
% |
|
91.9 |
|
3.2 |
% |
||||||||||
Corporate and support |
|
(91.6 |
) |
(1.5 |
%) |
|
(100.6 |
) |
(1.7 |
%) |
||||||||||
Total operating income |
$ |
365.9 |
|
5.8 |
% |
$ |
385.5 |
|
6.6 |
% |
||||||||||
13 Weeks Ended | ||||||||||||||||||||
Tree |
Family Dollar |
Total | Tree |
Family Dollar |
Total | |||||||||||||||
Store Count: | ||||||||||||||||||||
Beginning |
|
7,505 |
|
7,783 |
|
|
15,288 |
|
7,001 |
|
8,236 |
|
15,237 |
|
||||||
New stores |
|
67 |
|
32 |
|
|
99 |
|
65 |
|
26 |
|
91 |
|
||||||
Re-bannered stores (a) |
|
(3 |
) |
- |
|
|
(3 |
) |
45 |
|
(84 |
) |
(39 |
) |
||||||
Closings |
|
(7 |
) |
(7 |
) |
|
(14 |
) |
(9 |
) |
(16 |
) |
(25 |
) |
||||||
Ending |
|
7,562 |
|
7,808 |
|
|
15,370 |
|
7,102 |
|
8,162 |
|
15,264 |
|
||||||
Selling Square Footage (in millions) |
|
65.2 |
|
56.9 |
|
|
122.1 |
|
61.2 |
|
59.2 |
|
120.4 |
|
||||||
Growth Rate (Square Footage) |
|
6.5 |
% |
(3.9 |
%) |
|
1.4 |
% |
5.7 |
% |
(0.8 |
%) |
2.4 |
% |
||||||
(a) Stores are included as re-banners when they close or open, respectively. | ||||||||||||||||||||
Condensed Consolidated Balance Sheets | |||||||||
(In millions) | |||||||||
(Unaudited) | |||||||||
|
|
|
|
|
|||||
2020 |
|
2020 |
|
2019 |
|||||
Cash and cash equivalents |
$ |
1,755.1 |
$ |
539.2 |
$ |
725.8 |
|||
Merchandise inventories |
|
3,198.5 |
|
3,522.0 |
|
3,325.5 |
|||
Other current assets |
|
211.8 |
|
208.2 |
|
194.8 |
|||
Total current assets |
|
5,165.4 |
|
4,269.4 |
|
4,246.1 |
|||
Property, plant and equipment, net |
|
3,964.8 |
|
3,881.8 |
|
3,525.0 |
|||
Restricted cash |
|
46.9 |
|
46.8 |
|
24.7 |
|||
Operating lease right-of-use assets |
|
6,147.0 |
|
6,225.0 |
|
6,111.0 |
|||
|
1,981.4 |
|
1,983.3 |
|
2,295.9 |
||||
Trade name intangible asset |
|
3,100.0 |
|
3,100.0 |
|
3,100.0 |
|||
Deferred tax asset |
|
23.3 |
|
24.4 |
|
- |
|||
Other assets |
|
43.0 |
|
43.9 |
|
51.6 |
|||
Total assets |
$ |
20,471.8 |
$ |
19,574.6 |
$ |
19,354.3 |
|||
Current portion of long-term debt |
$ |
1,050.0 |
$ |
250.0 |
$ |
750.0 |
|||
Current portion of operating lease liabilities |
|
1,265.0 |
|
1,279.3 |
|
1,215.9 |
|||
Accounts payable |
|
1,336.9 |
|
1,336.5 |
|
1,186.5 |
|||
Income taxes payable |
|
84.2 |
|
62.7 |
|
125.2 |
|||
Other current liabilities |
|
768.1 |
|
618.0 |
|
701.7 |
|||
Total current liabilities |
|
4,504.2 |
|
3,546.5 |
|
3,979.3 |
|||
Long-term debt, net, excluding current portion |
|
3,223.3 |
|
3,522.2 |
|
3,516.9 |
|||
Operating lease liabilities, long-term |
|
4,885.2 |
|
4,979.5 |
|
4,849.5 |
|||
Deferred income taxes, net |
|
1,037.7 |
|
984.7 |
|
954.2 |
|||
Income taxes payable, long-term |
|
30.2 |
|
28.9 |
|
35.8 |
|||
Other liabilities |
|
270.6 |
|
258.0 |
|
262.7 |
|||
Total liabilities |
|
13,951.2 |
|
13,319.8 |
|
13,598.4 |
|||
Shareholders' equity |
|
6,520.6 |
|
6,254.8 |
|
5,755.9 |
|||
Total liabilities and shareholders' equity |
$ |
20,471.8 |
$ |
19,574.6 |
$ |
19,354.3 |
|||
The |
|||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In millions) | ||||||||
(Unaudited) | ||||||||
13 Weeks Ended |
||||||||
|
|
|
||||||
2020 |
|
2019 |
||||||
Cash flows from operating activities: | ||||||||
Net income |
$ |
247.6 |
|
$ |
267.9 |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization |
|
165.5 |
|
|
151.2 |
|
||
Provision for deferred income taxes |
|
52.7 |
|
|
3.0 |
|
||
Stock-based compensation expense |
|
32.6 |
|
|
30.5 |
|
||
Amortization of debt discount and debt-issuance costs |
|
1.1 |
|
|
1.6 |
|
||
Other non-cash adjustments to net income |
|
2.0 |
|
|
2.9 |
|
||
Changes in operating assets and liabilities |
|
457.5 |
|
|
157.0 |
|
||
Total adjustments |
|
711.4 |
|
|
346.2 |
|
||
Net cash provided by operating activities |
|
959.0 |
|
|
614.1 |
|
||
Cash flows from investing activities: | ||||||||
Capital expenditures |
|
(235.8 |
) |
|
(209.2 |
) |
||
Proceeds from governmental grant |
|
- |
|
|
16.5 |
|
||
Proceeds from (payments for) fixed asset disposition |
|
(0.1 |
) |
|
0.3 |
|
||
Net cash used in investing activities |
|
(235.9 |
) |
|
(192.4 |
) |
||
Cash flows from financing activities: | ||||||||
Principal payments for long-term debt |
|
(250.0 |
) |
|
- |
|
||
Proceeds from revolving credit facility |
|
750.0 |
|
|
- |
|
||
Proceeds from stock issued pursuant to stock-based compensation plans |
|
9.7 |
|
|
5.8 |
|
||
Cash paid for taxes on exercises/vesting of stock-based compensation |
|
(16.1 |
) |
|
(23.3 |
) |
||
Payments for repurchase of stock |
|
- |
|
|
(100.0 |
) |
||
Net cash provided by (used in) financing activities |
|
493.6 |
|
|
(117.5 |
) |
||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(0.7 |
) |
|
(0.4 |
) |
||
Net increase in cash, cash equivalents and restricted cash |
|
1,216.0 |
|
|
303.8 |
|
||
Cash, cash equivalents and restricted cash at beginning of period |
|
586.0 |
|
|
446.7 |
|
||
Cash, cash equivalents and restricted cash at end of period |
$ |
1,802.0 |
|
$ |
750.5 |
|
||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200528005240/en/
Vice President, Investor Relations
www.DollarTree.com
DLTR-E
Source: