10-QPeriod: Q2 FY2014

DOLLAR TREE, INC. Quarterly Report for Q3 Ended Aug 3, 2013

Filed August 22, 2013For Securities:DLTR

Summary

Dollar Tree, Inc. reported solid financial results for the second quarter of fiscal year 2013, demonstrating consistent growth and profitability. Net sales increased by 8.8% to $1.85 billion for the 13 weeks ended August 3, 2013, driven by a 3.7% increase in comparable store net sales and the addition of new stores. This growth reflects successful initiatives such as the expansion of frozen and refrigerated merchandise and increased SNAP acceptance. The company's operational efficiency is evident in the slight improvement in operating income margin to 10.9% of net sales, despite a minor decrease in gross profit margin. Selling, general, and administrative expenses were well-managed, decreasing as a percentage of net sales. Diluted earnings per share saw a healthy increase, reflecting the company's ability to translate sales growth into bottom-line performance. Dollar Tree continues to actively return capital to shareholders through its share repurchase program, with a significant amount remaining under its authorization, underscoring a commitment to shareholder value.

Financial Highlights

41 data points
Beta

Revenue

$1.87B

35.2% Gross Margin

Net Income

$133.50M

7.2% Net Margin

EPS (Diluted)

$0.59

Total Assets

$2.81B

Cash & Equivalents

$383.30M

Free Cash Flow

$26.10M

Financial Statements
Beta
Revenue$1.87B
Cost of Revenue$1.21B
Gross Profit$656.00M
SG&A Expenses$439.40M
Operating Income$216.60M
Net Income$133.50M
EPS (Basic)$0.60
EPS (Diluted)$0.59
Shares Outstanding (Basic)224.20M
Shares Outstanding (Diluted)225.20M

Key Highlights

  • 1Net sales for the 13 weeks ended August 3, 2013, increased by 8.8% to $1.85 billion compared to the prior year period.
  • 2Comparable store net sales grew by 3.7% in the 13-week period, indicating healthy performance in existing stores.
  • 3Operating income margin improved slightly to 10.9% of net sales for the quarter.
  • 4Diluted net income per share increased to $0.56 for the 13 weeks ended August 3, 2013, up from $0.51 in the prior year.
  • 5The company continued its store expansion, operating 4,682 stores in the U.S. and 160 in Canada by August 3, 2013.
  • 6Dollar Tree repurchased approximately $43.7 million of its common stock during the 13-week period, with $747.7 million remaining under its repurchase authorization.
  • 7Expansion of frozen and refrigerated merchandise and increased SNAP acceptance continue to drive customer traffic and sales.

Frequently Asked Questions

Dollar Tree's sales growth was driven by a combination of new store openings and a 3.7% increase in comparable store net sales for the 13 weeks ended August 3, 2013. Initiatives like the expansion of frozen and refrigerated merchandise and increased SNAP acceptance in stores also contributed positively.

The company demonstrated effective expense management. Selling, general, and administrative expenses decreased as a percentage of net sales, primarily due to leverage from comparable store sales increases and lower operating expenses like inventory service fees. This helped offset a slight decrease in gross profit margin.

Dollar Tree actively repurchases its common stock. In the 13 weeks ended August 3, 2013, the company repurchased approximately $43.7 million of stock, and as of August 3, 2013, it had $747.7 million remaining under its share repurchase authorization, indicating a continued commitment to shareholder returns.

Dollar Tree is involved in several legal proceedings, primarily class or collective action lawsuits related to employment matters such as wage and hour claims. While the company is vigorously defending itself and does not believe these matters will have a material adverse effect individually or in aggregate, it cannot guarantee that resolution of one or more lawsuits will not materially impact its results of operations in the period of resolution.