~ Diluted Earnings per Share Increased 28.7% to
~ Consolidated Net Sales Increased 7.5% to
~ Same-Store Sales: Enterprise +5.1%; Family
~ Dollar Tree Segment Operating Margin Improved 50 bps to 12.7% ~
~ Expanding Dollar Tree Plus! Offering to Approximately 500 Stores Beginning Spring 2021 ~
“I am incredibly proud of our team’s efforts to continue serving customers effectively, while driving operational improvements in both banners through this dynamic retail environment,” stated
Third Quarter Results
Consolidated net sales increased 7.5% to
Gross profit increased 12.9% to
Selling, general and administrative expenses were 23.7% of net sales, compared to 23.5% of net sales in the prior year's third quarter. The increase was driven by COVID-19 costs of
Operating income for the quarter improved 29.9% to
Net income was
The Company repurchased 2,154,304 shares during the quarter for
The Company opened 143 new stores, expanded or relocated 34 stores, and closed 16 stores. Additionally, the Company completed 371 renovations to the Family Dollar H2 format. Retail selling square footage at quarter end was approximately 124.3 million square feet.
First Nine Months Results
Consolidated net sales increased 8.4% to
Gross profit for the first nine months increased 10.9% to
Selling, general and administrative expenses were 23.7% of net sales, compared to 23.5% of net sales in the first nine months of 2019. The current year includes
Operating income for the period improved 19.1% to
Net income compared to the prior year period improved 19.2% to
Leveraging the Power of Both Brands
The combination of
In recent years, the Company has made significant progress in optimizing its portfolio of stores through new store openings, renovations, re-banners and closings. The H2 renovation program at Family Dollar continues to be a key component of the momentum in the turnaround. The H2 stores, on average, continue to comp at a 10%+ lift vs. non-renovated stores in their first year. Customers are responding favorably to the new categories and new price points. Sell through on seasonal items has been exceptional. There is continued opportunity to renovate older Family Dollar stores. As of
Additionally, for more than a year,
Since acquiring Family Dollar, the Company has produced strong cash flow from operations, paid down debt aggressively, repurchased
“The team has accomplished a great deal to get us to this stage. With one consolidated store support center; a strong balance sheet; an aligned, energized and focused leadership team; and a full staff of talented retailers, we believe we have the ability to better serve customers across North America,” Witynski added. “We have a unique and transformational opportunity to leverage the power of our two brands, through flexible store formats designed to drive improved operational performance.”
Update on Company Outlook, Initiatives and Liquidity
Due to continued volatility and uncertainty related to the COVID-19 pandemic, as well as a lack of visibility into government stimulus initiatives, the Company is not providing updated guidance at this time.
The Company now expects the completion of approximately 480 new store openings and 750 Family Dollar H2 store renovations in fiscal 2020.
Capital expenditures for fiscal 2020 are expected to be approximately
The Company ended the quarter with
“It’s an exciting time at
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 our expectations regarding new store openings and capital expenditures for fiscal 2020; our plans and expectations concerning various store format initiatives, including Family Dollar H2 renovations; the expansion of our
DLTR-E
Condensed Consolidated Income Statements | ||||||||||
(In millions, except per share data) | ||||||||||
(Unaudited) | ||||||||||
13 Weeks Ended | 39 Weeks Ended | |||||||||
Net sales |
|
|
|
|
||||||
Cost of sales |
4,252.6 |
4,041.7 |
13,105.9 |
12,215.3 |
||||||
Gross profit |
1,924.4 |
1,704.5 |
5,635.5 |
5,080.2 |
||||||
31.2% |
29.7% |
30.1% |
29.4% |
|||||||
Selling, general and administrative expenses |
1,458.9 |
1,346.1 |
4,429.2 |
4,067.4 |
||||||
23.7% |
23.5% |
23.7% |
23.5% |
|||||||
Operating income |
465.5 |
358.4 |
1,206.3 |
1,012.8 |
||||||
7.5% |
6.2% |
6.4% |
5.9% |
|||||||
Interest expense, net |
38.1 |
41.4 |
113.1 |
122.9 |
||||||
Other expense, net |
0.1 |
0.1 |
0.8 |
0.7 |
||||||
Income before income taxes |
427.3 |
316.9 |
1,092.4 |
889.2 |
||||||
6.9% |
5.5% |
5.8% |
5.1% |
|||||||
Provision for income taxes |
97.3 |
61.1 |
253.3 |
185.2 |
||||||
Income tax rate |
22.8% |
19.3% |
23.2% |
20.8% |
||||||
Net income |
|
|
|
|
||||||
5.3% |
4.5% |
4.5% |
4.1% |
|||||||
Net earnings per share: | ||||||||||
Basic |
|
|
|
|
||||||
Weighted average number of shares |
236.8 |
236.7 |
237.0 |
237.4 |
||||||
Diluted |
|
|
|
|
||||||
Weighted average number of shares |
237.9 |
237.5 |
237.8 |
238.3 |
||||||
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: | ||||||
39 Weeks Ended | ||||||
Net income (GAAP) |
|
|
||||
Accelerated rent expense |
- |
6.7 |
||||
Provision for income taxes on adjustment |
- |
(1.5) |
||||
Adjusted Net income (Non-GAAP) |
|
|
||||
Reconciliation of Adjusted EPS: | ||||||
39 Weeks Ended | ||||||
Diluted earnings per share (GAAP) |
|
|
||||
Adjustment, net of tax |
- |
0.03 |
||||
Adjusted EPS (Non-GAAP) |
|
|
||||
Segment Information | |||||||||||||||||||||||||
(In millions, except store count) | |||||||||||||||||||||||||
(Unaudited) | |||||||||||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||||
Net sales: | |||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||
Family Dollar |
2,873.5 |
2,671.9 |
9,183.5 |
8,304.1 |
|||||||||||||||||||||
Corporate, support and Other (a) |
0.3 |
- |
0.3 |
- |
|||||||||||||||||||||
Total net sales |
|
|
|
|
|||||||||||||||||||||
Gross profit: | |||||||||||||||||||||||||
|
34.9% |
|
34.2% |
|
33.6% |
|
34.2% |
||||||||||||||||||
Family Dollar |
769.9 |
26.8% |
654.0 |
24.5% |
2,428.4 |
26.4% |
2,009.4 |
24.2% |
|||||||||||||||||
Corporate, support and Other (a) |
0.3 |
100.0% |
- |
0.0% |
0.3 |
100.0% |
- |
0.0% |
|||||||||||||||||
Total gross profit |
|
31.2% |
|
29.7% |
|
30.1% |
|
29.4% |
|||||||||||||||||
Operating income (loss): | |||||||||||||||||||||||||
|
12.7% |
|
12.2% |
|
10.5% |
|
12.3% |
||||||||||||||||||
Family Dollar |
131.4 |
4.6% |
55.2 |
2.1% |
472.0 |
5.1% |
163.9 |
2.0% |
|||||||||||||||||
Corporate, support and Other (a) |
(83.8) |
(1.4%) |
(71.4) |
(1.2%) |
(272.2) |
(1.5%) |
(257.0) |
(1.5%) |
|||||||||||||||||
Total operating income |
|
7.5% |
|
6.2% |
|
6.4% |
|
5.9% |
|||||||||||||||||
(a) Corporate, support and Other revenue consists of rental income from our Summit Pointe property. | |||||||||||||||||||||||||
13 Weeks Ended | 39 Weeks Ended | |||||||||||||||||||||||
Tree |
Family Dollar |
Total | Tree |
Family Dollar |
Total | Tree |
Family Dollar |
Total | Tree |
Family Dollar |
Total | |||||||||||||
Store Count: | ||||||||||||||||||||||||
Beginning |
7,652 |
7,827 |
15,479 |
7,306 |
7,809 |
15,115 |
7,505 |
7,783 |
15,288 |
7,001 |
8,236 |
15,237 |
||||||||||||
New stores |
95 |
48 |
143 |
114 |
51 |
165 |
262 |
111 |
373 |
286 |
120 |
406 |
||||||||||||
Re-bannered stores (b) |
- |
- |
- |
39 |
(15) |
24 |
(3) |
4 |
1 |
190 |
(199) |
(9) |
||||||||||||
Closings |
(6) |
(10) |
(16) |
(12) |
(30) |
(42) |
(23) |
(33) |
(56) |
(30) |
(342) |
(372) |
||||||||||||
Ending |
7,741 |
7,865 |
15,606 |
7,447 |
7,815 |
15,262 |
7,741 |
7,865 |
15,606 |
7,447 |
7,815 |
15,262 |
||||||||||||
Selling Square Footage (in millions) |
66.7 |
57.6 |
124.3 |
64.1 |
56.9 |
121.0 |
66.7 |
57.6 |
124.3 |
64.1 |
56.9 |
121.0 |
||||||||||||
Growth Rate (Square Footage) |
4.1% |
1.2% |
2.7% |
7.6% |
(5.0%) |
1.3% |
4.1% |
1.2% |
2.7% |
7.6% |
(5.0%) |
1.3% |
||||||||||||
(b) 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 |
|
|
|
|||
Merchandise inventories |
3,792.3 |
3,522.0 |
3,882.9 |
|||
Other current assets |
260.4 |
208.2 |
255.7 |
|||
Total current assets |
5,171.0 |
4,269.4 |
4,572.3 |
|||
Property, plant and equipment, net |
4,095.6 |
3,881.8 |
3,810.7 |
|||
Restricted cash |
46.9 |
46.8 |
46.6 |
|||
Operating lease right-of-use assets |
6,185.1 |
6,225.0 |
5,864.6 |
|||
1,983.1 |
1,983.3 |
2,296.5 |
||||
Trade name intangible asset |
3,100.0 |
3,100.0 |
3,100.0 |
|||
Deferred tax asset |
23.3 |
24.4 |
- |
|||
Other assets |
47.2 |
43.9 |
51.4 |
|||
Total assets |
|
|
|
|||
Current portion of long-term debt |
|
|
|
|||
Current portion of operating lease liabilities |
1,296.5 |
1,279.3 |
1,202.6 |
|||
Accounts payable |
1,587.2 |
1,336.5 |
1,473.1 |
|||
Income taxes payable |
- |
62.7 |
- |
|||
Other current liabilities |
858.6 |
618.0 |
754.0 |
|||
Total current liabilities |
4,042.3 |
3,546.5 |
4,179.7 |
|||
Long-term debt, net, excluding current portion |
3,225.3 |
3,522.2 |
3,520.2 |
|||
Operating lease liabilities, long-term |
4,962.1 |
4,979.5 |
4,636.0 |
|||
Deferred income taxes, net |
1,043.1 |
984.7 |
1,001.5 |
|||
Income taxes payable, long-term |
31.0 |
28.9 |
29.7 |
|||
Other liabilities |
387.3 |
258.0 |
253.7 |
|||
Total liabilities |
13,691.1 |
13,319.8 |
13,620.8 |
|||
Shareholders' equity |
6,961.1 |
6,254.8 |
6,121.3 |
|||
Total liabilities and shareholders' equity |
|
|
|
|||
The
Condensed Consolidated Statements of Cash Flows | |||||
(In millions) | |||||
(Unaudited) | |||||
39 Weeks Ended | |||||
2020 |
2019 |
||||
Cash flows from operating activities: | |||||
Net income |
|
|
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||
Depreciation and amortization |
503.7 |
466.3 |
|||
Provision for deferred income taxes |
59.4 |
50.3 |
|||
Stock-based compensation expense |
70.5 |
52.5 |
|||
Amortization of debt discount and debt-issuance costs |
3.1 |
4.9 |
|||
Other non-cash adjustments to net income |
7.4 |
24.2 |
|||
Changes in operating assets and liabilities |
250.5 |
(287.7) |
|||
Total adjustments |
894.6 |
310.5 |
|||
Net cash provided by operating activities |
1,733.7 |
1,014.5 |
|||
Cash flows from investing activities: | |||||
Capital expenditures |
(707.0) |
(782.3) |
|||
Proceeds from governmental grant |
- |
16.5 |
|||
Payments for fixed asset disposition |
(0.5) |
(2.9) |
|||
Net cash used in investing activities |
(707.5) |
(768.7) |
|||
Cash flows from financing activities: | |||||
Principal payments for long-term debt |
(250.0) |
- |
|||
Proceeds from revolving credit facility |
750.0 |
- |
|||
Repayments of revolving credit facility |
(750.0) |
- |
|||
Proceeds from stock issued pursuant to stock-based compensation plans |
14.3 |
12.3 |
|||
Cash paid for taxes on exercises/vesting of stock-based compensation |
(16.8) |
(24.3) |
|||
Payments for repurchase of stock |
(194.2) |
(200.0) |
|||
Net cash used in financing activities |
(446.7) |
(212.0) |
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
(0.3) |
(0.2) |
|||
Net increase in cash, cash equivalents and restricted cash |
579.2 |
33.6 |
|||
Cash, cash equivalents and restricted cash at beginning of period |
586.0 |
446.7 |
|||
Cash, cash equivalents and restricted cash at end of period |
|
|
|||
View source version on businesswire.com: https://www.businesswire.com/news/home/20201124005567/en/
Vice President, Investor Relations
www.DollarTree.com
Source: