10-QPeriod: Q3 FY2010

DOLLAR TREE, INC. Quarterly Report for Q3 Ended Oct 31, 2009

Filed November 24, 2009For Securities:DLTR

Summary

Dollar Tree, Inc. reported a strong third quarter for fiscal year 2009, demonstrating robust growth in net sales and profitability. For the 13 weeks ended October 31, 2009, net sales increased by 12.1% year-over-year, reaching $1,248.7 million. This growth was driven by a solid 6.5% increase in comparable store net sales and contributions from new store openings. The company also saw significant improvements in its gross profit margin, which rose to 35.3% from 34.1% in the prior year's quarter, attributed to lower merchandise and occupancy costs. Diluted earnings per share also saw a substantial increase, rising to $0.76 from $0.47 in the same period last year, reflecting effective cost management and sales momentum. For the 39-week period ending October 31, 2009, Dollar Tree continued its positive trajectory with net sales up 12.7% to $3,672.6 million. The comparable store net sales growth for this period was 7.5%. The gross profit margin improved to 34.8% from 33.7% in the year-ago period. Operating income more than doubled for both the quarter and year-to-date periods, indicating strong operational leverage. The company's proactive approach to store expansion, merchandise mix, and operational efficiencies appears to be paying off, even amidst a challenging economic environment, positioning it well for continued performance.

Financial Highlights

38 data points
Beta

Revenue

$1.22B

34.5% Gross Margin

Net Income

$56.90M

4.7% Net Margin

EPS (Diluted)

$0.21

Total Assets

$2.18B

Cash & Equivalents

$342.10M

Free Cash Flow

$108.80M

Financial Statements
Beta
Revenue$1.22B
Cost of Revenue$807.50M
Gross Profit$421.80M
SG&A Expenses$333.60M
Operating Income$89.20M
Net Income$56.90M
EPS (Basic)$0.26
EPS (Diluted)$0.21

Key Highlights

  • 1Net sales increased by 12.1% to $1,248.7 million for the 13 weeks ended October 31, 2009.
  • 2Comparable store net sales grew by 6.5% for the 13-week period and 7.5% for the 39-week period, indicating strong performance in existing stores.
  • 3Gross profit margin improved to 35.3% for the 13-week period, up from 34.1% in the prior year, driven by lower merchandise and occupancy costs.
  • 4Diluted earnings per share rose significantly to $0.76 for the 13-week period, compared to $0.47 in the same period last year.
  • 5Operating income showed substantial growth, increasing from 6.2% to 8.6% of net sales for the 13-week period.
  • 6The company actively repurchased shares, spending $69.3 million in the 13-week period and $154.6 million in the 39-week period, demonstrating a commitment to returning value to shareholders.
  • 7Store count increased to 3,803 stores by October 31, 2009, reflecting continued expansion efforts.

Frequently Asked Questions

Dollar Tree reported a strong increase in net sales for the 13 weeks ended October 31, 2009, with a 12.1% rise to $1,248.7 million, compared to $1,114.0 million in the same period last year. This growth was fueled by a 6.5% increase in comparable store net sales and contributions from new store openings.

The company actively engaged in share repurchases during the reported periods. For the 13 weeks ended October 31, 2009, Dollar Tree repurchased approximately 1.4 million shares for $69.3 million. For the 39-week period, approximately 3.5 million shares were repurchased for $154.6 million. As of October 31, 2009, approximately $299.1 million remained under its board-approved repurchase authorizations.

Dollar Tree demonstrated effective cost management, leading to improved profitability. The gross profit margin increased to 35.3% for the quarter, up from 34.1% in the prior year, primarily due to lower merchandise costs (including inbound freight) and occupancy/distribution costs. Selling, general, and administrative expenses as a percentage of net sales also decreased, contributing to a significant increase in operating income.

The company attributes its comparable store sales growth to increased customer traffic, the continued roll-out of frozen and refrigerated merchandise to more stores, and the expansion of SNAP (food stamp) acceptance in qualified stores. These initiatives appear to be enhancing customer shopping frequency and basket size.