The retailer also detailed its strategic investment plans

CHESAPEAKE, Va.— Dollar Tree reported a 43.2% increase in net income, to $536.4 million for the first quarter ended April 30. Diluted earnings per share for the quarter increased 48.1% to a first-quarter company record $2.37, compared to $1.60 in the prior year’s quarter, the company said Thursday.

Consolidated net sales increased 6.5% to $6.90 billion and same-store sales for the company as a whole grew by 4.4%, with a 11.2% increase for the Dollar Tree chain and a 2.8% decline for Family Dollar.

“The team delivered a solid start to the year – with a 6.5% top-line sales expansion, a 19.2% lift to gross profit, and a 48.1% increase to earnings per share,” Dollar Tree president and chief executive officer Michael Witynski said. “During the quarter, the Dollar Tree team successfully completed its conversion to the $1.25 price point, contributing to both sales and margin improvements. Shoppers are responding favorably as the new, greater value products hit our shelves. Importantly, other key strategic initiatives, including the expansion of the $3 and $5 Plus assortment in Dollar Tree stores, as well as our Combo Stores and H2 Renovations at Family Dollar are working.”

During the quarter, the Company opened 112 new stores, expanded or relocated 33 stores, and closed 30 stores. The company expanded its multi-price Plus offering into an additional 790 Dollar Tree stores and completed 118 Family Dollar store renovations. Retail selling square footage at quarter-end increased 3.1% from the prior year’s quarter to approximately 129.8 million square feet.

“Our initiatives are working and providing increased profits and cash flow,” Witynski said. “We believe now is the ideal time to accelerate investments focused on driving growth through improved associate and shopper experience, while propelling greater efficiencies. We anticipate these multi-year investments will be focused around our associates, our distribution network and supply chain, our pricing and value proposition, and our technology.”

The company said its strategic investments are expected to include:

• Investing in Associates. Dollar Tree said its investment in its store and distribution center associates and field leadership will be focused on competitive wages, improved store and DC operating standards and enhanced safety.
• Investing in Distribution Center Network and Supply Chain. The company said it is committed to improving the capabilities and efficiency of its supply chain to enhance store productivity through better in-stock positions. The focus will be on delivering improved safety, conditions and operational standards across its network through use of data, analytics, process improvements and automation.
• Investing in Product through Pricing and Value Proposition. On the Family Dollar side of the business, the company said it will be investing to ensure it exceeds customer expectations for value, with its product offering being clearly and competitively priced every day.
• Investing in Technology. Dollar Tree said it has recently begun a detailed assessment of its vision for systems infrastructure plans for 2023 and beyond. Among the information technology systems under review are merchandising, supply chain, data analytics, and store systems.

Dollar Tree also updated its guidance for the year. Diluted earnings per share for full-year fiscal 2022 are now expected to range from $7.80 to $8.20. Consolidated net sales for the year are now expected to range from $27.76 billion to $28.14 billion compared to the Company’s previously expected range of $27.22 billion to $27.85 billion. The Company expects to deliver a mid-single-digit comparable store sales increase for the year, comprised of a high single-digit increase in the Dollar Tree segment and more or less flat comparable store sales in the Family Dollar segment. Selling square footage is expected to grow by approximately 3.9%.

The Company estimates consolidated net sales for the second quarter of 2022 will range from $6.65 billion to $6.78 billion, based on a low-to-mid single-digit increase in same-store sales for the enterprise. Diluted earnings per share for the quarter are estimated to be in the range of $1.45 to $1.55. This estimate includes approximately $0.24 per share for costs associated with the West Memphis distribution center and stock compensation expense.

While share repurchases are not included in the outlook, the Company had $2.5 billion remaining under its board repurchase authorization as of April 30, 2022.

“We are taking the necessary actions now to position ourselves for accelerated growth in what I view as the most attractive sector in retail, especially in the current economic environment,” Witynski said. “We will be investing to improve associate and shopper experience while enhancing operational efficiencies.
Value and convenience are more important than ever to our shoppers and the communities we serve. We have a robust balance sheet and expect to continue generating a significant amount of cash flow in our business. Our management team and Board are strategically aligned and believe our Company is very well-positioned to deliver long-term, profitable growth.”