Higher customer spending and lower costs help drive better-than-expected fourth quarter sales and profit at Dollar Tree.
The discounter’s solid quarterly performance capped a year in which it opened 584 new stores and exceeded $20 billion in sales.
Dollar Tree reported net sales of $5.64 billion for the quarter ended Jan. 28, up 5.0% from $5.37 billion in the year-ago period.
Same-store sales increased 1.2% on a constant currency basis, driven by increases in comparable customer count and average ticket.
Same-store sales for the Dollar Tree banner increased 2.3% on a constant currency basis, and 0.2 for the Family Dollar banner.
Net income rose 41% to $321.8 million, or $1.36 per share, from $229 million, or 97 cents per share, a year earlier.
“We are pleased with our overall performance for fiscal 2016,” stated Bob Sasser, CEO. "For the fourth quarter, both the Dollar Tree and Family Dollar banners delivered positive growth in same-store sales. Gross margin and operating margin rates improved and EPS grew 40.2% from the prior year’s quarter, exceeding the upper end of our guidance range.”
For the full year, consolidated net sales increased 33.7% to $20.72 billion, from $15.50 billion in the prior year. The $5.22 billion increase was the result of $4.42 billion in incremental net sales from the acquired Family Dollar stores, sales from new Dollar Tree stores, and a 1.8% same-store sales increase.
Dollar Tree operated 14,334 stores across 48 states and five Canadian provinces as of January 28, 2017, with stores operating under the banners of Dollar Tree, Family Dollar, and Dollar Tree Canada.
Looking ahead, Dollar Tree estimates consolidated net sales for first quarter 2017 to range from $5.26 billion to $5.35 billion, based on a flat to low single-digit increase in same-store sales for the combined enterprise. Diluted earnings per share are estimated to be in the range of $0.91 to $0.98.
For fiscal 2017, the company estimates consolidated net sales will range from $21.94 billion to $22.33 billion, based on a flat to low single-digit increase in same-store sales and 3.9% square footage growth.
"We believe we are extremely well positioned in the most attractive sector of retail to deliver increased value for our long-term shareholders,” stated Sasser. “With two great banners, we can effectively grow our store base and serve more customers across a broad geography and a diverse demographic population with the products they need and want. We have a resilient business model, a focused and energized leadership team, a lengthy runway for store growth, and tremendous opportunities to continue improving our businesses.”