“I am extremely pleased with the quarter,” chief executive officer Bob Sasser said in a statement on Thursday. “Both Dollar Tree and Family Dollar produced positive same-store sales, our enterprise operating margin improved 80 basis points and earnings per share exceeded the high end of our guidance range. Consumers continue to view Dollar Tree and Family Dollar as stores that provide great value and convenience.”
The company reported consolidated net sales of $5.28 billion for the quarter, which ended July 29. That is up 5.7% from the $5 billion recorded in the prior year’s second quarter. Same-store sales advanced by 2.4%, driven by higher transaction counts and average tickets. Same-store sales for the Dollar Tree banner increased 3.9%. Same-store sales for the Family Dollar banner increased 1.0%.
Gross profit increased 7.6% to $1.63 billion compared to $1.51 billion in the prior year’s second quarter. As a percent of sales, gross margin increased to 30.8% compared to 30.3% in the prior year. The 50 basis point improvement was driven primarily by lower merchandise and freight costs and lower markdowns in the current quarter, partially offset by higher distribution and occupancy costs, the company said.
Selling, general and administrative expenses were 22.9% of sales compared to 23.1% of sales in the prior year’s second quarter. The 20 basis point improvement, as a percent of sales, was driven primarily by lower depreciation costs, lower payroll costs and workers’ compensation expenses and lower utility costs as a percent of sales, partially offset by higher operating and corporate expenses resulting from increased advertising costs and legal fees.
Net income compared to the prior year’s second quarter increased $63.6 million to $233.8 million and diluted earnings per share increased 36.1% to $0.98 compared to $0.72 in the prior year’s quarter.
During the quarter, the Company opened 133 stores, expanded or relocated 31 stores, and closed 34 stores. Retail selling square footage at quarter-end was approximately 114.5 million square feet.