Dollar Tree delivered a solid performance in the first quarter, as the retailer grew sales and income while continuing to improve results for its Family Dollar stores. The company has also been testing multi-pricepoint products in select test stores.
Consolidated net sales increased 4.6% to $5.81 billion from $5.55 billion in the prior year’s first quarter. Enterprise same-store sales increased 2.2%. Same-store sales for the Dollar Tree banner increased 2.5%. Same-store sales for the Family Dollar banner increased 1.9%.
Net income compared to the prior year’s quarter increased to $267.9 million and diluted earnings per share increased to $1.12 compared to $0.67 in the prior year’s quarter. The prior year’s quarter included $0.52 per diluted share of debt refinancing costs.
Gary Philbin, president and CEO, Dollar Tree, said, “Dollar Tree delivered a solid 2.5% increase in same-store sales while cycling its toughest quarterly compare from the prior year; and Family Dollar again demonstrated a sequential acceleration in comp sales. Family Dollar’s 1.9% same-store sales increase is the strongest quarterly performance since we began reporting Family Dollar comps.”
Philbin continued, “Dollar Tree continues to be a destination for customers looking for great values and convenience, as demonstrated by our 45th consecutive quarter of delivering an increase in same-store sales. And, we are excited to kick off the initial introduction of Dollar Tree Plus! multi-pricepoint products into select test stores. These products are designed to provide our shoppers with more choices, more sizes, and more savings. We are in the process of expanding this test to more than 100 Dollar Tree stores. Importantly, our Family Dollar turnaround is gaining traction. Our efforts to accelerate initiatives to optimize the real estate portfolio are making a difference as demonstrated by our improving same-store sales results. As previously communicated, these efforts will increase costs in the first half of fiscal 2019, and will then contribute to the opportunity for operating margin expansion as we work through the back half of this year.”
Noting the potential impact of tariffs, Philbin added, “Our merchandising teams have done a tremendous job of mitigating the effects of 25% tariffs imposed under Section 301 for Chinese goods included on Lists 1, 2, and 3. We are uncertain as to whether, or when, tariffs will be applied to the List 4 products currently being considered by the United States Trade Representative. If tariffs on List 4 products are implemented, we expect that it will be impactful to both our business, and especially to consumers in general. Until we have more clarity, our outlook excludes the impact of tariffs on List 4 products. Our teams are doing an admirable job of controlling the controllables in running our business. We continue to believe we are well-positioned to capture the significant opportunity ahead of us as we focus on creating and driving value for our shareholders.”