Dollar Tree reported results for the first quarter ended May 2, 2015. Consolidated net sales increased 8.8% to $2.18 billion from $2 billion in the prior year's first quarter.
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Consolidated same-store sales increased 3.4% on a constant currency basis, compared to a 2.0% increase in the prior-year period. Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 3.1%.
Sales performance was negatively impacted by delayed receipts at four of the Company's 10 distribution centers related to the west coast port congestion and the previously disclosed estimate of $8 million impact from the holiday calendar shift.
Gross profit increased 7.5% to $748.9 million from $696.6 in the prior year's first quarter. As a percent of sales, gross margin decreased by 40 basis points to 34.4%. The primary contributors to the decrease were increased freight costs, an adjustment for the previously announced inventory accounting method change related to Canadian operations, and higher shrink.
Selling, general and administrative expenses were 23.7% of sales compared to 23.2% of sales in the prior year's first quarter. The quarter included $10.4 million in acquisition-related costs associated with the pending merger with Family Dollar Stores, Inc.
Excluding acquisition-related costs, selling, general and administrative expenses were 23.2% of sales, flat compared to the prior year's first quarter. Payroll costs, as a percent of sales, increased 10 basis points related to store bonuses and health care claims, and were partially offset by improved productivity in store payroll.
Depreciation expense, as a percent of sales, improved by 10 basis points based on leverage of same-store sales.
Net income, compared to the prior year's first quarter, including acquisition-related costs, was $69.5 million and diluted earnings per share were $0.34. Excluding acquisition-related costs, net income increased approximately $8.0 million to $146.3 million and diluted earnings per share increased 6% to $0.71. ■