Dollar Tree Sales Up As Coronavirus Complicates Outlook

Dollar Tree has reported its comparable sales trends through March 29, with quarter to date comps up 7.1% for namesake stores and up 14.4% for Family Dollar but also with a late moderation of those gains.

Sales have materially moderated recently, the company noted, even as it enters the peak of the Easter selling season with Dollar Tree recording comparable sales down 19.4% in the seven days ending March 29, and Family Dollar up 8.8%. Sales of household consumables and food remain strong at both banners, the company indicated. Dollar Tree’s first quarter ends May 2 and the company plans to report earnings on May 28.

Dollar Tree noted that sales uncertainties related to the company’s ability to secure and re-stock certain products in high demand could impact the remainder of the first quarter as could consumer shopping patterns, especially in states and communities with shelter-in-place mandates, weaker-than-expected sales and related markdowns for certain discretionary products, and a COVID-19-related impact to the Easter holiday selling season.

The company expects to see merchandise mix pressure to gross margin rates at both Dollar Tree and Family Dollar, and it anticipates certain costs to be higher than previously anticipated, including investments in pay and benefits, the distribution and transportation related to the material demand volume increase in consumables, and additional hours dedicated to enhanced cleaning protocol in stores, distribution centers and its store support center.

Dollar Tree has withdrawn its outlook for the first quarter and full-year fiscal 2020 financial results. In addition, the company has suspended Family Dollar H2 renovations and Dollar Tree Snack Zone installations through at least April 27. The company added that it has a strong balance sheet with significant liquidity and a resilient business model.

The company has continued to assess and enhance protocols and initiatives to help ensure customer and employee safety as well, including those involved with cleaning, and it has sought to hire new staffers and provide additional pay for workers who are laboring under difficult coronavirus-associated conditions.