Dollar Tree CEO Bob Sasser on Q3 FY15 results: 31st consecutive quarter of positive same-store sales

Sales increased to $4.95 billion and Same-Store Sales increased 2.1% ~

CHESAPEAKE, Va., 2015-11-25 — /EPR Retail News/ — Dollar Tree, Inc. (NASDAQ:DLTR), North America’s leading operator of discount variety stores, today reported results for its third fiscal quarter ended October 31, 2015.

Bob Sasser, Chief Executive Officer of Dollar Tree, stated, “I am pleased with our Company’s third quarter performance. Dollar Tree delivered same-store sales of 2.1%, which represented our 31st consecutive quarter of positive same-store sales. This was against a 5.9% comp from the prior year, our strongest quarter of 2014. While not included in our comp calculation, Family Dollar delivered positive same-store sales of low to mid-single-digits, as a percent, each month during the quarter.”

Sasser added, “Our integration project is on schedule and we are on track to achieve our stated synergy goals. Today, I am even more enthusiastic about the long-term opportunity this merger provides for our customers, our suppliers, our associates, and our shareholders. As we entered the fourth quarter, both Dollar Tree and Family Dollar stores were well-stocked and prepared for the upcoming holiday season.”

Third Quarter Results

Consolidated net sales increased 136.0% to $4.95 billion from $2.10 billion in the prior year’s third quarter. The increase was the result of $2.67 billion in sales from the Family Dollar segment, and a same-store sales increase of 2.1% on a constant currency basis for the Dollar Tree segment. Same-store sales increased 5.9% in the prior-year period for the Dollar Tree segment. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 1.7%. The positive same-store sales were driven by increases in customer count and average ticket.

Gross profit increased by $674.7 million, or 93.0%, to $1.40 billion in the third quarter compared to $725.3 million in the prior year’s third quarter. The dollar increase was primarily driven by $627.8 million of gross profit for Family Dollar as well as higher sales at Dollar Tree. As a percent of sales, gross margin decreased to 28.3% compared to 34.6% in the prior year. The primary contributors to the decrease were the impact of the overall lower-margin product mix for the Family Dollar business, an additional $13 million of markdown expense for Family Dollar related to SKU rationalization and planned liquidations, and $38.4 million for Family Dollar related to the amortization of the stepped up inventory basis.

Selling, general and administrative expenses were 23.8% of sales compared to 24.1% of sales in the prior year’s third quarter. Acquisition-related costs were $11.8 million in the third quarter of 2015 and $14.3 million in the third quarter of 2014. Excluding acquisition-related costs, selling, general and administrative expenses increased 10 basis points from the prior year’s quarter to 23.5% of sales due in large part to integration costs. Integration costs are not included in acquisition-related costs.

Net income compared to the prior year’s third quarter, including acquisition-related costs, decreased $51.1 million to $81.9 million, and diluted earnings per share decreased by 45.3% to $0.35. The Company’s EBITDA increased from $269.5 million to $391.8 million, adjusted EBITDA increased from $283.8 million to $442.0 million, adjusted cash earnings increased from $210.0 million to $313.8 million, and adjusted cash EPS increased from $1.02 to $1.33. A reconciliation of net income to EBITDA, adjusted EBITDA, adjusted cash earnings, and adjusted cash EPS is contained in the attached tables. Management believes these non-GAAP measures are relevant and useful in understanding the performance of the core business, excluding acquisition-related costs.

During the quarter, the Company opened 204 stores, expanded or relocated 63 stores and closed six stores. Additionally, as part of its re-banner initiative, the Company closed 167 Family Dollar stores and opened 143 Dollar Tree stores during the quarter. Retail selling square footage at the end of the quarter was approximately 109.6 million square feet.

First Nine Months Results

Consolidated net sales increased $4.01 billion, or 65.4%, to $10.13 billion from $6.13 billion in the first nine months of 2014. Family Dollar sales represented $3.49 billion of the increase. Same-store sales, for the Dollar Tree segment, increased 2.8% on a constant currency basis, compared to a 3.9% increase in the prior-year period. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 2.5%.

Gross profit increased $888.2 million, or 42.0%, to $3.00 billion from $2.12 billion in the first nine months of 2014. As a percent of sales, gross margin decreased by 490 basis points to 29.6%. The primary contributors to the decrease were $73 million of markdown expense for Family Dollar related to SKU rationalization and planned liquidations, $49.5 million for Family Dollar related to the amortization of the stepped up inventory basis and the impact of the overall lower-margin product mix for the Family Dollar business.

Selling, general and administrative expenses were 23.9% of sales compared to 23.8% of sales in the first nine months of 2014. Acquisition-related costs were $38.7 million in the first nine months of 2015 and $21.8 million in the first nine months of 2014. Excluding acquisition-related costs, selling, general and administrative expenses were 23.5% of sales, flat compared to the first nine months of the prior year.

Net income, including acquisition-related costs, decreased $339.3 million compared to the prior year’s first nine months, resulting in net income of $0.24 per diluted share. The Company’s EBITDA increased from $807.0 million to $893.1 million, and adjusted EBITDA increased from $828.8 million to $981.3 million. A reconciliation of net income to EBITDA and adjusted EBITDA is contained in the attached tables.

Company Outlook

The Company estimates consolidated net sales for the fourth quarter of 2015 to range from $5.32 billion to $5.42 billion, based on a low single-digit increase in same-store sales. For the full year, the Company estimates consolidated net sales to range from $15.45 billion to $15.55 billion, based on a low single-digit increase in same-store sales. Net income and adjusted cash EPS per diluted share for the fourth quarter are estimated to be in the ranges of $213.2 million to $242.2 million and $2.32 to $2.51, respectively. A reconciliation of projected fourth quarter net income to adjusted cash EPS is contained in the attached tables.

Conference Call Information

On Tuesday, November 24, 2015, the Company will host a conference call to discuss its earnings results at 9:00 a.m. Eastern Time. The telephone number for the call is 888-211-7450. A recorded version of the call will be available until midnight Monday, November 30, 2015 and may be accessed by dialing 888-203-1112. The access code is 7654253. A webcast of the call is accessible through Dollar Tree’s website, and will remain online until Monday, November 30.

Dollar Tree, a Fortune 500 Company, operated 14,038 stores across 48 states and five Canadian provinces as of October 31, 2015. Stores operate under the brands of Dollar Tree, Family Dollar, Dollar Tree Canada, and Deals. To learn more about the Company, visit www.DollarTree.com.

A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements address future events, developments or results and typically use words such as believe, anticipate, expect, intend, plan, forecast, or estimate. For example, our forward-looking statements include statements regarding fourth quarter 2015 net income, EBITDA (and components thereof), adjusted EBITDA (and components thereof), cash EPS (and components thereof) and adjusted cash EPS; fourth quarter 2015 and full year 2015 net sales and same-store sales, the benefits, results, and effects of the merger, future financial and operating results, the combined company’s plans, objectives, expectations (financial or otherwise) and intentions. For a discussion of the risks, uncertainties and assumptions that could affect our future events, developments or results, you should carefully review the “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections in our Annual Report on Form 10-K filed March 13, 2015, the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections in our Quarterly Report on Form 10-Q filed September 1, 2015 and other filings with the Securities and Exchange Commission. We are not obligated to release publicly any revisions to any forward- looking statements contained in this press release to reflect events or circumstances occurring after the date of this report and you should not expect us to do so.

Dollar Tree, Inc.
Randy Guiler, 757-321-5284
Vice President, Investor Relations
www.DollarTree.com
DLTR-E

Source: Dollar Tree, Inc.

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