Dollar Tree(DLTR) - 2025 Q3 - Quarterly Results

Q3 2024 Earnings Release Summary Financial & Operational Highlights The company reported a 3.5% increase in Q3 2024 consolidated net sales, driven by same-store sales growth and strong free cash flow generation Q3 Fiscal 2024 Performance Highlights | Metric | Value | | :--- | :--- | | Enterprise Same-Store Net Sales | +1.8% | | Dollar Tree Same-Store Net Sales | +1.8% | | Family Dollar Same-Store Net Sales | +1.9% | | Diluted EPS | $1.08 | | Adjusted Diluted EPS | $1.12 | Q3 Fiscal 2024 Key Financial Results (vs. Q3 2023) | Metric | Q3 Fiscal 2024 ($) | Change (%) | | :--- | :--- | :--- | | Consolidated Net Sales | $7.56B | +3.5% | | Operating Income | $333.4M | +10.5% | | Adjusted Operating Income | $343.2M | +13.8% | | Diluted EPS | $1.08 | +11.3% | | Adjusted Diluted EPS | $1.12 | +15.5% | - Key business activities in Q3 included: - Opening 249 new Dollar Tree and 6 new Family Dollar stores - Converting approximately 2,300 Dollar Tree stores to the in-line multi-price format - Generating $785.6 million in net cash from operating activities and $359.2 million in free cash flow[5] Management Commentary & Corporate Developments Management emphasized accelerating Dollar Tree's growth and the ongoing strategic review of Family Dollar, alongside announcing a CFO transition and store portfolio optimization efforts - Interim CEO Mike Creedon stated the organization's top priorities are accelerating Dollar Tree segment growth, completing the Family Dollar strategic review, and unlocking shareholder value[3] - The company announced that CFO Jeff Davis will step down; an external search for a successor has been launched, and Mr. Davis will remain through the fiscal 2024 Form 10-K filing to ensure a smooth transition[3] - The formal review of strategic alternatives for the Family Dollar business, which could include a sale or spin-off, is moving forward as planned with no set deadline[18] - As part of the portfolio optimization review, the company has closed approximately 670 of the 970 identified underperforming Family Dollar stores as of November 2, 2024[19] Financial Performance Analysis The company achieved consolidated net sales growth and gross margin expansion in Q3, though year-to-date operating income declined due to increased SG&A expenses Third Quarter Fiscal 2024 Results Q3 2024 saw consolidated net sales increase 3.5% to $7.56 billion, with gross margin expanding to 30.9% and operating income growing 10.5% Q3 2024 Financial Summary | Metric | Value ($) | Note | | :--- | :--- | :--- | | Consolidated Net Sales | $7.56 billion | +3.5% YoY | | Enterprise Same-Store Sales | +1.8% | Driven by 1.6% traffic increase | | Gross Profit | $2.34 billion | +7.6% YoY | | Gross Margin | 30.9% | Expanded 120 bps | | Operating Income | $333.4 million | +10.5% YoY | | Net Income | $233.3 million | - | | Diluted EPS | $1.08 | - | - SG&A expenses increased as a percentage of revenue to 26.6% from 25.7% in the prior year, primarily due to higher depreciation, professional fees for the Family Dollar review, temporary labor for the multi-price rollout, and higher utilities costs[9] Year-to-Date Fiscal 2024 Results Year-to-date fiscal 2024 consolidated net sales grew 2.8% to $22.6 billion, with gross margin expanding, despite a 5.2% decrease in operating income Year-to-Date 2024 Financial Summary | Metric | Value ($) | Note | | :--- | :--- | :--- | | Consolidated Net Sales | $22.6 billion | +2.8% YoY | | Enterprise Same-Store Sales | +1.2% | Driven by traffic increase | | Gross Profit | $6.9 billion | +5.5% YoY | | Gross Margin | 30.6% | Expanded 80 bps | | Operating Income | $957.1 million | -5.2% YoY | | Net Income | $665.8 million | - | | Diluted EPS | $3.08 | - | - The company repurchased 3.28 million shares for $403.6 million during the year-to-date period[17] Business Outlook The company updated its full-year fiscal 2024 outlook, raising net sales forecasts and providing specific adjusted diluted EPS guidance for both the full year and Q4 Full-Year Fiscal 2024 Outlook Dollar Tree updated its full-year fiscal 2024 guidance, projecting consolidated net sales between $30.7 billion and $30.9 billion and adjusted diluted EPS from $5.31 to $5.51 Full-Year Fiscal 2024 Guidance | Metric | Outlook Range | | :--- | :--- | | Consolidated Net Sales | $30.7 billion to $30.9 billion | | Comparable Store Net Sales Growth | Low-single-digits | | Adjusted Diluted EPS | $5.31 to $5.51 | Fourth Quarter 2024 Outlook For Q4 2024, the company anticipates consolidated net sales between $8.1 billion and $8.3 billion, with adjusted diluted EPS projected from $2.10 to $2.30 Q4 Fiscal 2024 Guidance | Metric | Outlook Range | | :--- | :--- | | Consolidated Net Sales | $8.1 billion to $8.3 billion | | Comparable Store Net Sales Growth | Low-single-digits | | Adjusted Diluted EPS | $2.10 to $2.30 | - As of November 2, 2024, the company has approximately $952 million remaining under its share repurchase authorization[23] Consolidated Financial Statements (Unaudited) This section presents the unaudited consolidated financial statements for Q3 and year-to-date fiscal 2024, including income statements, balance sheets, cash flows, and segment information Condensed Consolidated Income Statements The income statement for Q3 2024 shows total revenue increased to $7.57 billion and net income rose to $233.3 million year-over-year Q3 Income Statement Highlights (in millions) | Line Item | 13 Weeks Ended Nov 2, 2024 | 13 Weeks Ended Oct 28, 2023 | | :--- | :--- | :--- | | Total Revenue | $7,568.2 | $7,314.8 | | Gross Profit (calc.) | $2,343.9 | $2,178.7 | | Operating Income | $333.4 | $301.7 | | Net Income | $233.3 | $212.0 | Segment Information Q3 2024 saw Dollar Tree segment net sales grow to $4.34 billion and remain significantly more profitable than Family Dollar, with a total of 16,590 stores Q3 2024 Net Sales by Segment (in millions) | Segment | Q3 2024 Net Sales | Q3 2023 Net Sales | | :--- | :--- | :--- | | Dollar Tree | $4,338.0 | $4,003.8 | | Family Dollar | $3,223.7 | $3,305.3 | Q3 2024 Operating Income by Segment (in millions) | Segment | Q3 2024 Operating Income | Q3 2023 Operating Income | | :--- | :--- | :--- | | Dollar Tree | $465.2 | $482.7 | | Family Dollar | $1.6 | $(66.3) | Store Count as of November 2, 2024 | Segment | Ending Store Count | | :--- | :--- | | Dollar Tree | 8,868 | | Family Dollar | 7,722 | | Total | 16,590 | Condensed Consolidated Balance Sheets As of November 2, 2024, total assets reached $23.33 billion, with total liabilities at $15.70 billion and shareholders' equity at $7.64 billion Balance Sheet Summary (in millions) | Account | Nov 2, 2024 | Feb 3, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $697.6 | $684.9 | | Merchandise inventories | $5,535.1 | $5,112.8 | | Total Assets | $23,332.8 | $22,023.5 | | Total Liabilities | $15,696.7 | $14,710.4 | | Total Shareholders' Equity | $7,636.1 | $7,313.1 | Condensed Consolidated Statements of Cash Flows For the 39 weeks ended November 2, 2024, net cash from operating activities was $1.79 billion, with significant cash used in investing and financing activities Year-to-Date Cash Flow Summary (in millions) | Activity | 39 Weeks Ended Nov 2, 2024 | | :--- | :--- | | Net cash provided by operating activities | $1,788.2 | | Net cash used in investing activities | $(1,359.1) | | Net cash used in financing activities | $(412.9) | | Net increase in cash | $15.5 | Reconciliation of Non-GAAP Financial Measures This section provides reconciliations of GAAP to non-GAAP financial measures, detailing adjustments for items such as store closure costs and expenses related to the Family Dollar strategic review - The company uses non-GAAP measures to exclude unusual expenses, believing this is beneficial for evaluating current operating results in relation to past periods[41] - Significant adjustments to derive non-GAAP results include: - Costs related to the closure of approximately 630 Family Dollar stores - Consulting and other expenses related to the formal review of strategic alternatives for the Family Dollar segment - Severance-related costs for employees at the destroyed Marietta, Oklahoma distribution center[43][44][45] Q3 2024 GAAP to Non-GAAP EPS Reconciliation | Description | Per Share Amount ($) | | :--- | :--- | | Diluted net income per share (GAAP) | $1.08 | | Store Closure Costs | $0.01 | | Strategic Review Costs | $0.04 | | Provision for income taxes on adjustments | $(0.01) | | Adjusted diluted net income per share (Non-GAAP) | $1.12 |