Dollar Tree Ramps Up Family Dollar Turnaround Plans

Dollar Tree reported solid sales in its fourth quarter, while ramping up its Family Dollar integration and turnaround plans, which includes store closings this year.

Consolidated net sales for fourth quarter were $6.21 billion, compared to $6.36 billion in the prior year’s fourth quarter. Same-store sales increased 2.4%. Same-store sales for the Dollar Tree banner increased 3.2% while same-store sales for the Family Dollar banner increased 1.4%. Net loss for the quarter, including several charges, was $2.31 billion and GAAP diluted loss per share was $9.66 compared to diluted earnings per share of $4.37 in the prior year’s quarter.

In the fiscal year, consolidated net sales for 2018 increased to $22.82 billion from $22.25 billion in fiscal 2017. Same-store sales increased 1.7%. Same-store sales for the Dollar Tree banner increased 3.3% while same-store sales for the Family Dollar banner increased 0.1%. Net loss, including discrete charges, for fiscal 2018 was $1.59 billion and GAAP diluted loss per share was $6.66 compared to diluted earnings per share of $7.21 in the prior year.

In fiscal 2019, the company noted that it will be accelerating its store optimization program, and currently expects to renovate at least 1,000 Family Dollar stores. The company plans to open 350 new Dollar Tree and 200 new Family Dollar stores, as well as re-bannering an additional 200 Family Dollar stores to Dollar Tree stores. The company also expects to accelerate its pace of Family Dollar store closings by closing as many as 390 additional under-performing stores.

“Sales for the quarter were strong,” said Gary Philbin, president and CEO, Dollar Tree. “Our results demonstrate the increasing strength of the Dollar Tree brand, and accelerated progress on the Family Dollar turnaround, as Family Dollar delivered its strongest quarterly same-store sales growth of the year. We are confident in our progress and we have good momentum. Our merchants at both banners have delivered a 2019 plan that we believe overcomes most of the effect of tariffs at the 25% level, and provides opportunity for margin improvements if tariffs are not increased. We moved aggressively in the fourth quarter to optimize Family Dollar’s performance, including closing 84 stores and announcing plans to renovate at least 1,000 stores in 2019. The renovated stores will include new $1.00 Dollar Tree merchandise sections. Approximately 200 Family Dollar stores will be re-bannered to Dollar Tree, and we plan to close as many as 390 Family Dollar stores this year. We also recorded an inventory reserve in part because of the different inventory needs of this new optimized store base. Excluding this markdown and the non-cash goodwill impairment charge related to Family Dollar, the combined companies performed well in the quarter.”