Dollar Tree Solidly on Growth Path in Q1

Dollar Tree, Inc. is successfully stretching its own dollars, reporting increases mostly across the board for the first quarter of its fiscal year. For the three-month period ending April 30, the discount retailer boosted net sales by 6.5% to $6.9 billion, with sales comps up 11.2% at Dollar Tree banner stores and gross profits company wide coming in 19.2% higher compared to the first quarter of 2021.

Gross margin was in the black too, improving to 33.9% versus 30.3% during the prior year’s first quarter. As the company tapped into consumers’ desire for discounts during a time of ever-climbing inflation, its diluted earnings per share (EPS) surged 48.1%, a company record for a first quarter.

The positive performance came at a time when Dollar Tree was finishing up conversions to the $1.25 price point. That pricing adjustment propelled sales and margin increases, along with other factors.

Michel Witynski, president and CEO, shared some of those factors and said that the company is making strong progress in its growth plans. “The team delivered a solid start to the year. Shoppers are responding favorably as the new, greater value products hit our shelves,” he remarked. “Importantly, other key strategic initiatives, including the expansion of the $3 and $5 Plus assortment in Dollar Tree stores, as well as our Combo Stores and H2 Renovations at Family Dollar are working.”

Although the numbers were strong in many areas, same-store comps dipped 2.8% at Family Dollar stores. That decline was attributed to the cycling of federal stimulus dollars released during the first quarter of the previous year and the fact that 400 Family Dollar stores were temporarily closed during part of this year’s first quarter due to a product-related recall.

From an activity standpoint, Dollar Tree started off the year with a bang, opening 112 stores and expanding or relocating 33 stores during the Q1 period. The company also broadened its multi-price offering into nearly 800 more Dollar Tree locations.

According to Witynski, the retailer will build on the first quarter momentum going forward. “Our initiatives are working and providing increased profits and cash flow. We believe now is the ideal time to accelerate investments focused on driving growth through improved associate and shopper experience, while propelling greater efficiencies,” he shared. “We anticipate these multi-year investments will be focused around our associates, our distribution network and supply chain, our pricing and value proposition, and our technology.” Among other investments and improvements, Dollar Tree will continue to provide competitive wages, improve store operating standards and assess its technology infrastructure needs across merchandising, supply chain, data analytics and store systems.

Dollar Tree’s outlook for the rest of its fiscal 2022 includes a projection of consolidated net sales between $27.75 billion and $28.14 billion, compared to the previously expected range of $27.22 billion to $27.85 billion for the year.

Chesapeake, Va.-based Dollar Tree, which operates more than 16,000 stores across 48 states and five Canadian provinces, including stores operating under the Family Dollar banner, is No. 29 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.