Dollar Tree Inc. (DLTR, Financial) released its first-quarter 2021 results before the market opened on May 27. Both earnings and revenue surpassed analysts' projections and rose year over year.
Highlights
The Chesapeake, Virginia-based company recorded earnings per share of $1.60, which was more than the $1.04 reported in the year-ago period. Revenue of $6.48 billion surged 3% on a year-over-year basis. Analysts had anticipated EPS of $1.40 on $6.4 billion in revenue.
Comparable store sales improved 0.8% in the reported quarter thanks to strong performance at Dollar Tree stores (up 4.7%). Family Dollar comps, however, declined 2.8%, but that did little to impact the overall quarterly growth.
Selling, general and administrative expenses were 22.3% of sales compared to 22.7% of sales in the year-ago quarter. This was driven by expense leverage courtesy of robust same-store sales, which was partially negated by Coronavirus-related expenses associated with frontline worker wage premiums (to keep employees from quitting due to risking their lives for poverty wages) as well as management bonuses. Likewise, operating income of $519.9 million was up 42.1%.
Store count
During the quarter, Dollar Tree launched 106 new outlets, modernized or repositioned 36 stores and closed 19 locations. It also plans to open 600 stores in fiscal 2021 and complete 1,250 Family Dollar H2 store renovations. At quarter's end, the retailer operated 15,772 stores located in 48 U.S. states and five Canadian provinces.
President and CEO Michael Witynski had the following to say:
"Looking forward, I am most excited about the growth of Dollar Tree Plus! and our strategic store formats, which shoppers are responding to favorably, as evidenced by market share gains and improved customer satisfaction scores. These offerings, along with other key sales- and traffic-driving initiatives and a robust balance sheet, gives us confidence that we have increased the long-term earnings potential for both banners."
Financials
The discount retailer had cash and cash equivalents of $1.5 billion as of May 1. It paid down the $300 million legacy Family Dollar note, which was due in February. Net long-term debt (barring current maturities) stood at $3.23 billion.
During the quarter, the company repurchased 2.15 million shares at a total cost of $250 million. The discount retailer now has $2.15 billion left on the share buyback authorization.
Looking ahead
The company is off to a very strong start in the second quarter, given that the same-store sales at both Family Dollar and Dollar Tree are above reported first-quarter levels. Looking ahead, Witynski said that the company will continue to launch new stores, upgrade its store formats and refine its assortments in order to enhance its store productivity, improve its operational efficiencies and generate free cash flow.
Disclosure: I do not hold any positions in the stocks mentioned.
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