Family Dollar Weakens Dollar Tree Q4 Performance

Dollar Tree beat a fourth quarter Wall Street earnings estimate as comps rose slightly, and the company continued to accelerate its Family Dollar store improvement program.

Net income was $123 million, or 52 cents per diluted share, as compared to a loss of $2.31 billion, or $9.69 per diluted share, in the year-before fourth quarter. With non-recurring charges excluded, adjusted net income was $425.3 million, or $1.79 per diluted share, versus $462 million, or $1.90 per diluted share, in the previous fourth quarter.

Dollar Tree topped a MarketBeat-published analyst consensus adjusted diluted earnings per share estimate by three cents.

Comparable sales increased 0.4% in the quarter year over year. Comps for the Dollar Tree segment gained 1.4% while Family Dollar segment comps declined 0.8%. Consolidated net sales advanced 1.8% to $6.32 billion from $6.21 billion in the year-before quarter. Operating income was $249.4 million versus an operating loss of $2.15 billion in the year-earlier quarter.

For the full fiscal year, net income was $827 million, or $3.47 per diluted share, as compared to a loss of $1.59 billion, or $6.69 per diluted share, in the year before. Adjusted net income for fiscal 2019 was $1.13 billion, or $4.76 per diluted share versus $1.3 billion or $5.42 per diluted share, in fiscal 2018.

Comps increased 1.8% year over year. Comps for the Dollar Tree segment gained 2.3% while Family Dollar segment comps gained 1.4%. Consolidated net sales advanced 3.5% to $23.61 billion from the year before. Operating income was $1.26 billion versus a loss of $939.5 million in 2018.

Gary Philbin, Dollar Tree CEO, said, “I am proud of the team’s accomplishments in 2019, including the successful consolidation of our store support centers, the material acceleration in the Family Dollar store optimization program where we continue to see strong performance at renovated stores and the initial launch of our Dollar TreePlus! initiative. For the fourth quarter, despite the compressed holiday shopping season, we delivered positive comps for the enterprise, while managing margins and costs effectively to achieve adjusted earnings per share near the top of our guidance range. Our support functions are now working together in one location under one leadership team, which we expect will build greater collaboration, efficiencies and teamwork to enable us to support Dollar Tree and Family Dollar stores more effectively. Fiscal 2019 was a very important year for our organization to further develop the foundation to grow and improve our business.”