Consumers are looking to stretch budgets and Dollar Tree was a beneficiary in the third quarter as the company made changes to management, pricing and store standards to make it more competitive.
Dollar Tree beat a Yahoo Finance-published earnings analyst consensus estimate of $1.18 per share as well as a sales estimate of $6.84 billion.
Third quarter year-over-year comparable sales in the Dollar Tree segment were up 8.6%, or 8.5% when adjusted for currency fluctuations, the company reported, while comps at the Family Dollar segment were up 4.1%. Company-wide comps gained 6.5% in the period year over year.
Consolidated net sales gained 8.1% to $6.94 billion versus the year-earlier quarter. Operating income advanced 22.8% to $381.3 million from the period a year prior.
Even as it was preparing to announce Q3 results, Dollar Tree announced that, as part of its efforts to realign management, it had hired Jennifer Bohaty as chief compliance officer, Terence Goods as chief diversity officer, Jennifer Silberman as chief sustainability officer and Kristin Tetreault as chief communications officer. Before joining Dollar Tree, Bohaty was global chief of ethics and compliance at LL Flooring, Goods was vp of diversity and inclusion at Southern Glazer’s Wine and Spirits, Silberman was vp of ESG for Yeti and Tetreault was Stanley Black and Decker vp of enterprise and executive communications.
In a conference call, Rick Dreiling, Dollar Tree executive chairman, said that Family Dollar has been making adjustments to achieve “price parity with key competitors” and expanded its advantage over supermarkets and drug chains. It did so even while the company updated its leadership team as part of driving cultural change throughout the organization. Across the enterprise, he said, the company is boosting store standards to drive results on a unit level even as it makes technology and supply chain improvements.
In announcing the third quarter results, Mike Witynski, president and CEO, said, “Our third quarter sales performance reflects the timely execution of merchandising initiatives to drive our consumables business in this uncertain and inflationary environment. Same-store sales for both segments improved from the prior quarter and delivered a sequential monthly improvement throughout the quarter. Shoppers are responding to our new value proposition at Family Dollar and Dollar Tree as we focus on driving both traffic and store productivity. I am very proud of our associates for their willingness to accept and embrace change. Our new executive team is in place which will lead the company through the next evolution of growth. We are committed to transforming our culture, meeting our shoppers’ and associates’ needs, improving store productivity and efficiencies, and delivering improved long-term operating results.”
Witynski added that Dollar Tree is increasing its sales outlook for this year, noting, “The efforts to evolve the assortment to drive consumables performance at Dollar Tree, combined with initiatives designed to improve the value proposition at Family Dollar, are working. We believe we will continue to be part of the solution for millions of households seeking value at a time when they need us most. I am extremely confident in the new leadership team we have in place. We are eager to share more details about the opportunity ahead of us, and the path to get there, in the months ahead. We are focused and energized and believe we are very well-positioned to deliver long-term profitable growth.”