10-QPeriod: Q2 FY2022

DOLLAR TREE, INC. Quarterly Report for Q2 Ended Jul 31, 2021

Filed August 26, 2021For Securities:DLTR

Summary

Dollar Tree, Inc. reported solid financial results for the second quarter of fiscal year 2021, with net sales increasing by 1.0% to $6.34 billion. Diluted earnings per share (EPS) rose to $1.23, up from $1.10 in the prior year's comparable quarter, indicating improved profitability. The company's operating income also saw a healthy increase of 7.3% to $402.2 million, demonstrating effective cost management and operational execution. Despite ongoing supply chain challenges and inflationary pressures, Dollar Tree showcased resilience. The company's strategic initiatives, including the expansion of the Dollar Tree Plus and Combo Store formats, appear to be progressing well and contributing to the top-line growth. While comparable store sales saw a slight decrease of 1.2% system-wide, driven by lower customer traffic and average ticket, the underlying operational improvements and continued expansion efforts provide a positive outlook for the remainder of the fiscal year.

Financial Highlights

39 data points
Beta

Revenue

$6.34B

29.4% Gross Margin

Net Income

$282.40M

4.5% Net Margin

EPS (Diluted)

$1.23

Total Assets

$20.45B

Cash & Equivalents

$720.80M

Free Cash Flow

$556.20M

Financial Statements
Beta
Revenue$6.34B
Cost of Revenue$4.48B
Gross Profit$1.86B
SG&A Expenses$1.46B
Operating Income$402.20M
Net Income$282.40M
EPS (Basic)$1.24
EPS (Diluted)$1.23
Shares Outstanding (Basic)228.60M
Shares Outstanding (Diluted)229.50M

Key Highlights

  • 1Net sales increased 1.0% to $6.34 billion for the 13 weeks ended July 31, 2021.
  • 2Diluted EPS grew to $1.23 from $1.10 year-over-year.
  • 3Operating income increased by 7.3% to $402.2 million.
  • 4Enterprise comparable store net sales decreased by 1.2% on a constant currency basis.
  • 5Dollar Tree segment comparable store net sales showed a slight decrease of 0.2% on a constant currency basis.
  • 6Family Dollar segment comparable store net sales decreased by 2.1% on a constant currency basis.
  • 7The company repurchased approximately $700.0 million of common stock during the quarter.

Frequently Asked Questions

The increase in net sales was primarily driven by sales from new stores ($167.6 million in the 13-week period). However, this was partially offset by a decrease in comparable store net sales across both the Dollar Tree and Family Dollar segments.

Dollar Tree is facing several challenges including significant shipping delays and port congestion impacting the availability and cost of imported merchandise, increased freight and fuel costs, and labor shortages at distribution centers. These factors contribute to higher operating costs and potential impacts on product availability and sales.

The decrease in comparable store net sales is attributed to lower customer traffic and a slight decrease in average ticket. The company is implementing strategic initiatives such as expanding the Dollar Tree Plus and Combo Store formats, renovating Family Dollar stores (H2 format), and leveraging partnerships like Instacart to drive customer engagement and sales.

Dollar Tree actively engaged in share repurchases during the quarter, buying back approximately $700.0 million worth of common stock. As of July 31, 2021, the company had $1.45 billion remaining under its Board repurchase authorization, indicating a continued commitment to returning capital to shareholders.