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CHESAPEAKE, Va. — Dollar Tree's second-quarter financial results fell short of analysts' expectations, and the company lowered its outlook for the full fiscal year.
Executives blamed "a challenging macro environment" for sales and earnings that missed targets, but they expressed confidence that the company is on the right track.
“We are encouraged by the continuous progress we are making in the transformation underway at Dollar Tree and Family Dollar, despite immense pressures from a challenging macro environment,” chairman and chief executive officer Rick Dreiling said in a statement. “Customers are responding favorably to initiatives like our expanded multi-price offering and we are already seeing a meaningful sales lift at the 1,600 Dollar Tree stores that have been converted to our newest in-line multi-price format. With thousands of stores left to convert, we believe we are still in the very early innings of this rollout, with many years of runway left ahead of us.”
For its second quarter ended August 3, Dollar Tree reported same-store net sales that were up 1.3% at Dollar Tree, down 0.1% at Family Dollar, and up +0.7% for the company as a whole.
Consolidated net sales increased 0.7% to $7.37 billion. Enterprise same-store net sales increased 0.7%, driven by a 1.1% increase in traffic, offset by a 0.5% decrease in average ticket. Dollar Tree same-store net sales increased 1.3%, driven by a 1.4% increase in traffic, offset by a 0.1% decrease in average ticket. Family Dollar’s same-store net sales decreased 0.1%, driven by a 0.7% increase in traffic, offset by a 0.8% decrease in average ticket.
The company noted that same-store net sales results for the Family Dollar segment do not include any stores that were closed during the second quarter as part of the company's previously announced portfolio optimization plan, under which the company identified approximately 970 underperforming Family Dollar stores, including approximately 600 stores to be closed in the first half of fiscal 2024, and another roughly 370 stores to be closed at the end of each store's current lease term.
As of August 3, the company has closed approximately 655 stores identified under the portfolio optimization review and expects to close an additional 45 during the remainder of the current fiscal year.
Diluted earnings per share (EPS) were $0.62 and adjusted diluted EPS were $0.67.
“We are updating our full-year outlook to reflect second-quarter results, including the general liability charge, a more conservative sales outlook at Dollar Tree for the balance of the year, and incremental start-up costs associated with the conversion of our recently acquired portfolio of 99 Cents Only Stores leases,” chief financial officer Jeff Davis said.
The Company is adjusting its full-year fiscal 2024 consolidated net sales outlook range to $30.6 billion to $30.9 billion. It expects to deliver comparable store net sales growth in the low single digits for the enterprise and both the Dollar Tree and Family Dollar segments.
Adjusted diluted EPS is expected to range from $5.20 to $5.60.
