Same-store sales at its Family Dollar unit increased 11.6% in the 13 weeks ended August 1. Comps at Dollar Tree stores were up 3.1%.
“Consumer shopping patterns are evolving,” Mike Witynski, Dollar Tree’s president and chief executive officer said in a statement. “Customers are shopping with a purpose, while looking to minimize risk and exposure. As a result, we are seeing material increases in average ticket, while seeing a decline in average visits. Our store and distribution center teams have done a remarkable job of serving customers through an incredibly dynamic time in retail. Their continual efforts to ensure we are providing a clean, safe shopping experience, along with the great value and convenience our stores offer, contributed to our solid operating performance for the quarter.”
Dollar Tree posted $1.92 in gross profit in the second quarter, up 16.2% from a year earlier, thanks to improved merchandise costs, leverage on occupancy costs from improved same-store sales, reduced markdowns and better shrink results.
Those gains were partially offset by $11.4 million in COVID-19-related payroll expenses and the incremental increase of $10.8 million in tariffs. Profits were also nicked by store damage, lost inventory and other expenses related to civil unrest in some communities.
The company said it incurred nearly $152 million in costs related to COVID-19 and civil unrest during the quarter.
Dollar Tree said it opened 131 new stores in the quarter, expanded or relocated 22 stores, and closed 26 stores. The company also completed 76 renovations to the Family Dollar H2 format. That format features new merchandise offerings, including an assortment of $1 merchandise like that offered in Dollar Tree outlets.
Dollar Tree has budgeted about $1 billion in capital spending in fiscal 2020, and company leaders expect the opening of 500 new stores this year, with 325 operating under the Dollar Tree banner and the rest as Family Dollar stores. Some 750 Family Dollar H2 renovations are expected this year.
“We will continue to manage our business with increased clarity, focus and speed to deliver the value and convenience that customers are looking for,” Witynski said. “I could not be more proud of the entire team’s commitment and efforts, and we are well-prepared for the back half of the year.”