Summary
Dollar Tree, Inc. reported its third-quarter results for the period ending November 2, 2013, showing a mixed financial performance. While net sales saw a healthy increase of 9.5% year-over-year for the quarter, driven by new store openings and a 3.1% rise in comparable store net sales, net income declined. For the thirteen weeks ended November 2, 2013, net income was $125.4 million, down from $155.4 million in the prior year's comparable period. This decrease in profitability was largely influenced by a significant increase in interest expense related to the $750 million in senior notes issued in September 2013, and the absence of a substantial gain on the sale of an investment that boosted prior year results. Operationally, the company continued its expansion, opening 292 new stores and adding approximately 2.5 million square feet of selling space during the first 39 weeks of the fiscal year. The strategy of expanding frozen and refrigerated merchandise offerings and increasing SNAP-enabled stores appears to be contributing to customer traffic and sales growth. Despite the decrease in net income for the quarter, the company demonstrated strong cash flow from operations and significantly ramped up its share repurchase program, repurchasing $1 billion of its common stock through accelerated share repurchase agreements and open market purchases.
Financial Highlights
41 data points| Revenue | $1.85B |
| Cost of Revenue | $1.21B |
| Gross Profit | $648.70M |
| SG&A Expenses | $447.40M |
| Operating Income | $201.30M |
| Net Income | $124.70M |
| EPS (Basic) | $0.56 |
| EPS (Diluted) | $0.56 |
| Shares Outstanding (Basic) | 223.40M |
| Shares Outstanding (Diluted) | 224.30M |
Key Highlights
- 1Net sales increased by 9.5% to $1.88 billion for the 13 weeks ended November 2, 2013, compared to $1.72 billion in the prior year.
- 2Comparable store net sales increased by 3.1% for the quarter, indicating growth in existing store performance.
- 3Net income decreased to $125.4 million for the quarter, down from $155.4 million in the prior year, impacted by higher interest expenses and the absence of a prior year gain on investment sale.
- 4The company issued $750 million in senior notes in September 2013, significantly increasing interest expense.
- 5Dollar Tree significantly expanded its share repurchase program, initiating $1 billion in accelerated share repurchases during the quarter.
- 6The company continued its aggressive store expansion, opening 292 new stores in the first 39 weeks of the fiscal year.
- 7Gross profit margin remained stable at 35.0% for the quarter, with slight improvements in merchandise mark-up and occupancy costs offset by higher distribution costs.