Dollar Tree(DLTR) - 2024 Q1 - Quarterly Report

Financial Performance - For the 13 weeks ended April 29, 2023, net income was $299.0 million, resulting in a basic net income per share of$1.35, compared to $536.4 million and$2.38 per share for the same period in 2022[38]. - Consolidated net sales for the 13 weeks ended April 29, 2023, were $7,319.5 million, an increase of 6.1$6,900.1 million in the same period last year[44]. - Consolidated gross profit decreased to $2,230.4 million from$2,340.5 million, reflecting a decline in gross margin[44]. - Consolidated operating income fell to $419.7 million from$731.5 million, indicating a significant decrease in profitability[44]. - The effective tax rate for the 13 weeks ended April 29, 2023, was 24.1%, up from 23.1% in the prior year[76]. - Operating income decreased by 42.6% to $419.7 million, with the operating income margin dropping to 5.7$3,931.7 million, up from $3,781.8 million, while Family Dollar segment net sales increased to$3,387.8 million from $3,118.3 million[44]. - The percentage change in comparable store net sales for the consolidated segment was 4.8$3,387.8 million, with comparable store net sales increasing by 6.6%[81]. - Dollar Tree segment net sales increased by 4.0% to $3,931.7 million, with a comparable store net sales increase of 3.4$151.1 million during the 13 weeks ended April 29, 2023, with $1.7 billion remaining under the Board repurchase authorization[39]. - The company repurchased 1,025,000 shares of common stock for$151.1 million during the 13 weeks ended April 29, 2023, compared to 89,779 shares for $14.2 million in the same period last year[89]. Operational Metrics - The company operated a total of 16,419 stores as of April 29, 2023, an increase from 16,162 stores a year earlier[57]. - The average size of new stores opened during the quarter was approximately 9,520 square feet for Dollar Tree and 9,410 square feet for Family Dollar[57]. - Selling, general and administrative expenses increased by 12.6$1,815.0 million, raising the expense rate to 24.8% from 23.3%[70]. - Selling, general and administrative expense rate increased to 24.6% for the 13 weeks ended April 29, 2023, from 23.0% for the same period last year[84]. Cash Flow and Investments - Net cash provided by operating activities increased by $213.5 million to$752.0 million for the 13 weeks ended April 29, 2023, compared to $538.5 million for the same period last year[86]. - Net cash used in investing activities increased by$96.4 million due to higher capital expenditures, totaling $(352.7) million for the 13 weeks ended April 29, 2023[87]. Legal and Regulatory Matters - The company has accrued$30.0 million for DC 202-related legal matters, indicating a probable risk of liability[31]. - The company is currently engaged in discussions with the government regarding a federal grand jury subpoena related to pest and sanitation compliance[29]. - The FDA closed its inspection related to DC 202, and the company does not expect further regulatory enforcement actions on this matter[34]. Economic Factors - The company is exposed to inflationary pressures, particularly in merchandise, transportation, and labor costs, which could impact financial performance[92]. - Interest rate risk is associated with the Revolving Credit Facility, which bears interest at SOFR plus a margin based on credit ratings[91]. Strategic Initiatives - The company is investing in strategic initiatives across four key areas: associates, distribution, product pricing, and technology infrastructure to support long-term growth[65]. - The company plans to continue renovating existing Family Dollar stores and expanding its store formats, including Dollar Tree Plus and Combo Store formats[48].