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Dollar Tree posts sales, profit gains

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Results for Q4 and fiscal year beat estimates

Dollar Tree posts sales, profit gains

CHESAPEAKE, Va. — Dollar Tree Inc. reported better-than-expected sales and earnings for the fourth quarter. Consolidated net sales increased 5.0% to $5.64 billion for the 13 weeks ended January 28, and gross profit increased 9.3% to $1.81 billion.

“We are pleased with our overall performance for fiscal 2016,” said chief executive officer Bob Sasser. “For the fourth quarter, both the Dollar Tree and Family Dollar banners delivered positive growth in same-store sales. Gross margin and operating margin rates improved and EPS grew 40.2% from the prior year’s quarter, exceeding the upper end of our guidance range. For the year, we opened 584 new stores, exceeded $20 billion in sales, delivered record earnings, and continued to make significant progress on our integration of Family Dollar.”

Same-store sales for the company as a whole increased 1.2% on a constant currency basis in the fourth quarter. Adjusted to include the impact of Canadian currency fluctuations, the same-store sales increase was 1.3%. The same-store sales growth was driven by increases in comparable customer count and average ticket. Same-store sales for the Dollar Tree banner increased 2.3% on a constant currency basis (or 2.4% when adjusted to include the impact of Canadian currency fluctuations). Same-store sales for the Family Dollar banner increased 0.2%.

Net income compared to the prior year’s fourth quarter increased $92.8 million, or 40.5%, to $321.8 million, and diluted earnings per share increased to $1.36.

During the quarter, the Dollar Tree opened 104 stores, expanded or relocated 27 stores, and closed 55 stores. Additionally, the company opened eight former Family Dollar store locations as new Dollar Tree stores. Retail selling square footage at fiscal year-end was approximately 112.4 million square feet.

For the full year, consolidated net sales increased 33.7% to $20.72 billion from $15.50 billion in the prior year. The $5.22 billion increase was the result of $4.42 billion in incremental net sales from the acquired Family Dollar stores, sales from new Dollar Tree stores, and a 1.8% same-store sales increase.

Net income increased $613.8 million compared to the prior year, to $896.2 million, resulting in net income of $3.78 per diluted share.

Looking ahead, Dollar Tree expects flat to low single-digit increase in same-store sales and 3.9% square footage growth.

“We believe we are extremely well positioned in the most attractive sector of retail to deliver increased value for our long-term shareholders,” Sasser said. “Our Dollar Tree and Family Dollar banners are each focused on offering great value and convenience to our shoppers. With two great banners, we can effectively grow our store base and serve more customers across a broad geography and a diverse demographic population with the products they need and want. We have a resilient business model, a focused and energized leadership team, a lengthy runway for store growth, and tremendous opportunities to continue improving our businesses.”


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