US discount retailer Dollar Tree has reported that its gross profit for the third quarter (Q3) of the fiscal year 2024 (FY24) increased by 7.6% to $2.34bn, up from $2.17bn in the same quarter of the previous fiscal year.
The retailer’s gross margin saw an expansion of 120 basis points, reaching 30.9%. This improvement was primarily attributed to reduced freight costs and better shrink results related to accruals, partially offset by heightened distribution costs.
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Operating income for Dollar Tree also saw an uptick, growing by 10.5% to $333.4m, with operating margin widening by 30 basis points to 4.4%.
For the quarter ending 2 November 2024, the consolidated net sales of the retailer increased by 3.5% to $7.56bn, compared to $7.31bn in Q3 FY23.
The retailer’s same-store net sales experienced a growth of 1.8%, propelled by a 1.6% rise in customer traffic and a marginal 0.2% increase in average ticket size.
Dollar Tree’s same-store net sales went up by 1.8%, with traffic up by 1.5% and average ticket size increasing by 0.3%.
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By GlobalDataFamily Dollar reported a same-store net sales increase of 1.9%, driven by a 1.8% surge in traffic, while the average ticket size remained unchanged.
Net income for Dollar Tree stood at $233.3m in Q3 FY24, up from $212.0m in Q3 FY23, with diluted earnings per share (EPS) for the quarter at $1.08 compared to $0.97 in the same quarter of the previous year.
Over the first 39 weeks of the year, ending 2 November 2024, consolidated net sales rose by 2.8% to $22.56bn from $21.94bn in the corresponding period of the previous year.
The company reported a net income of $665.8m during this period, down from $711.4m in the same period a year previously. Diluted EPS was down to $3.08 from $3.23.
Dollar Tree interim chief executive officer Mike Creedon said: “Our Dollar Tree and Family Dollar merchandising efforts produced tangible results, and our third quarter sales came in at the high-end of our expected range. As an organisation, our top priorities remain accelerating the growth of the Dollar Tree segment, completing the Family Dollar strategic review process and unlocking value for Dollar Tree shareholders.”
Dollar Tree has updated its full-year fiscal 2024 consolidated net sales outlook to between $30.7bn and $30.9bn, maintaining expectations for low-single-digit comparable store net sales growth across both Dollar Tree and Family Dollar segments.
For the fourth quarter, the company anticipates that consolidated net sales will range from $8.1bn to $8.3bn, again forecasting low-single-digit growth in comparable store net sales for both segments.
In June 2024, Dollar Tree initiated a review of strategic alternatives for Family Dollar, the business it acquired in 2015.
The process is progressing as expected, but there is no established deadline or specific timeline for its completion, and no guaranteed outcome.
