Dollar Tree, Inc, a leading US-based operator of discount variety stores, has reported an increase of 6.1 per cent year-on-year (YoY) in consolidated net sales to $7.32 billion in the first quarter (Q1) of fiscal 2023 (FY23). This was underpinned by a notable increase in enterprise same-store sales of 4.8 per cent YoY.

The company's Dollar Tree stores saw same-store sales increase by 3.4 per cent YoY in Q1 FY23, driven by a 5.5-per cent rise in customer traffic, although this was slightly offset by a 2.1-per cent decrease in average ticket value. Family Dollar stores, part of the Dollar Tree portfolio, experienced a higher 6.6-per cent YoY same-store sales increase, bolstered by a 4.3-per cent YoY traffic rise and a 2.2-per cent increase in the average ticket.

However, Dollar Tree reported a 4.7-per cent YoY decrease in gross profit, falling to $2.23 billion, and a gross margin decline of 340 basis points YoY to 30.5 per cent. This drop in gross margin was attributed to a lower initial mark-on, an unfavourable sales mix, and shrinkage. The decline was partially offset by lower freight costs, the company said in a press release.

Selling, general and administrative expenses rose to represent 24.8 per cent of total revenue, up from 23.3 per cent in the prior year's first quarter.

Operating income for Q1 FY23 was reported at $419.7 million, with an operating margin of 5.7 per cent. Adjusted operating income, however, was slightly higher at $449.7 million, with an adjusted operating margin of 6.1 per cent.

The company's net income stood at $299.0 million with a diluted EPS of $1.35, while the adjusted diluted EPS was higher at $1.47.

“Our initiatives to drive customer traffic and increase store productivity are having the desired impact. The Dollar Tree segment delivered a 3.4 per cent comp, successfully cycling the 11.2 per cent comp from the prior year’s quarter. Family Dollar continued its sales momentum with a 6.6 per cent same-store sales increase. Importantly, both segments experienced a mid-single digit percent step-up in comp traffic. We are clearly gaining market share across the entire enterprise,” said Rick Dreiling, chairman and chief executive officer.

Fibre2Fashion News Desk (DP)

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