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Dollar Tree Stores Inc (NAS:DLTR)
Gross Margin
34.17% (As of Jul. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Dollar Tree Stores Inc's gross profit for the three months ended in Jul. 2014 was $694 Mil. Dollar Tree Stores Inc's revenue for the three months ended in Jul. 2014 was $2,031 Mil. Therefore, Dollar Tree Stores Inc's Gross Margin for the quarter that ended in Jul. 2014 was 34.17%.

DLTR' s 10-Year Gross Margin Range
Min: 34.19   Max: 37.51
Current: 35.28

34.19
37.51

During the past 13 years, the highest Gross Margin of Dollar Tree Stores Inc was 37.51%. The lowest was 34.19%. And the median was 35.95%.

DLTR's Gross Marginis ranked lower than
100% of the Companies
in the Global Discount Stores industry.

( Industry Median: vs. DLTR: 35.28 )

Dollar Tree Stores Inc had a gross margin of 34.17% for the quarter that ended in Jul. 2014 => Competition eroding margins

The 3-Year average Growth Rate of Gross Margin for Dollar Tree Stores Inc was 1.00% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Dollar Tree Stores Inc's Gross Margin for the fiscal year that ended in Jan. 2014 is calculated as

Gross Margin (A: Jan. 2014 )=Gross Profit (A: Jan. 2014 ) / Revenue (A: Jan. 2014 )
=2789.8 / 7840.3
=(Revenue - Cost of Goods Sold) / Revenue
=(7840.3 - 5050.5) / 7840.3
=35.58 %

Dollar Tree Stores Inc's Gross Margin for the quarter that ended in Jul. 2014 is calculated as

Gross Margin (Q: Jul. 2014 )=Gross Profit (Q: Jul. 2014 ) / Revenue (Q: Jul. 2014 )
=694.1 / 2031.1
=(Revenue - Cost of Goods Sold) / Revenue
=(2031.1 - 1337) / 2031.1
=34.17 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Dollar Tree Stores Inc had a gross margin of 34.17% for the quarter that ended in Jul. 2014 => Competition eroding margins


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Dollar Tree Stores Inc Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross Margin 35.5934.5434.1934.4434.2835.4935.4935.8735.8735.58

Dollar Tree Stores Inc Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
Gross Margin 34.9735.1834.8537.8835.1634.9735.0136.9234.8234.17
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