Pressured by freight and other cost increases, Dollar Tree managed to grow its net sales and income, although comps slipped at the company’s Family Dollar banner.
The retailer posted net income of $281.8 million, or $1.18 per diluted share, for the third quarter versus $239.9 million, or $1.01 per diluted share, in the year-before period. Diluted earnings per share topped a MarketBeat-published analyst consensus estimate of $1.15.
The company’s comparable store sales increased 1% in the quarter year over year. Comps for the Dollar Tree banner increased 2.3% on a constant currency basis while comps for the Family Dollar banner slipped by 0.4% versus the previous third quarter.
Consolidated net sales increased 4.2% to $5.54 billion from the prior year’s third quarter. Operating income was $387.8 million versus $425.2 million in year-earlier period.
Higher domestic freight, shrink, markdowns, distribution and occupancy costs, partially offset by lower merchandise costs, impacted third quarter results as did higher payroll costs and support center consolidation expenses, the company said.
“We delivered earnings within the range of our expectations despite continued cost pressures related to domestic freight and our investment in store wages,” said Gary Philbin, Dollar Tree president and CEO. “Dollar Tree delivered its 43rd consecutive quarter of same-store sales growth, with increases in both customer transactions and average ticket. We are pleased with the performance of our newly renovated Family Dollar stores. Additionally, we have begun the important phase of consolidating our store support centers into our Chesapeake campus, which will improve our ability to support Family Dollar stores through enhanced collaboration, communication and teamwork.”