8-KOther Events

DOLLAR TREE, INC. 8-K Report (Aug 26, 2003)

Filed August 26, 2003For Securities:DLTR

Summary

Dollar Tree Stores, Inc. reported strong performance in its second fiscal quarter of 2003, with earnings per share reaching $0.25, a 19% increase year-over-year. This growth was driven by robust sales, which exceeded company forecasts, reaching $626.0 million, a 22.2% increase from the prior year, aided by a 5.1% rise in comparable-store sales. The acquisition of Greenbacks, completed in June 2003, contributed an additional $12 million to sales during the quarter and is proceeding according to plan, with expected margin improvements. Management attributed the positive results to strong merchandise offerings, a focus on brand-name products, and effective store-level execution. The company also noted improved consumer confidence and economic conditions as contributing factors to increased foot traffic. Looking ahead, Dollar Tree is raising its full-year guidance, now expecting sales and earnings growth of at least 19%, up from the initial 15% target, reflecting the strong first-half performance and the Greenbacks acquisition.

Key Highlights

  • 1Q2 2003 EPS of $0.25, up 19% from $0.21 in Q2 2002.
  • 2Q2 2003 total sales of $626.0 million, up 22.2% year-over-year, exceeding company guidance.
  • 3Comparable-store sales increased by 5.1% in Q2 2003.
  • 4Acquired Greenbacks chain contributed $12 million in Q2 sales; integration proceeding on plan.
  • 5Raised full-year 2003 guidance to at least 19% for sales and earnings growth.
  • 6Total assets grew significantly to $1.33 billion, driven by property and equipment, and intangibles from the Greenbacks acquisition.
  • 7Cash flow from operations was $3.1 million for the year-to-date period, a significant improvement from a use of $21.7 million in the prior year.

Frequently Asked Questions

The primary drivers were strong overall sales growth, exceeding company forecasts, a solid increase in comparable-store sales, and the successful integration of the recently acquired Greenbacks chain. Management also cited improved merchandise, a focus on brand-name products, effective store operations, and favorable consumer confidence as contributing factors.

The acquisition of Greenbacks contributed $12 million to second-quarter sales. While it initially diluted gross margin due to its lower margin profile and the consolidation of these sales for the final five weeks of the quarter, management expects to improve these stores' margins and is on track with the sales plan for this acquisition.

Yes, Dollar Tree has raised its full-year 2003 guidance. The company now expects sales and earnings growth to be at least 19%, an increase from the previously projected 15%, supported by the strong first-half results and the inclusion of Greenbacks' expected contribution.

Effective January 1, 2003, Dollar Tree adopted FIN 46, which required the consolidation of four distribution centers previously accounted for as operating leases. This adoption resulted in approximately $2 million of additional pre-tax expense in the second quarter's results.