Dollar Tree reported results for its third fiscal quarter ended October 31, 2015. Consolidated net sales increased 136% to $4.95 billion from $2.10 billion in the prior year's third quarter.
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The increase was the result of $2.67 billion in sales from the Family Dollar segment, and a same-store sales increase of 2.1% on a constant currency basis for the Dollar Tree segment. Same-store sales increased 5.9% in the prior-year period for the Dollar Tree segment.
Adjusted for the impact of Canadian currency fluctuations, the same-store sales increase was 1.7%. The positive same-store sales were driven by increases in customer count and average ticket.
Gross profit increased by $674.7 million, or 93.0%, to $1.40 billion in the third quarter compared to $725.3 million in the prior year's third quarter. The dollar increase was primarily driven by $627.8 million of gross profit for Family Dollar as well as higher sales at Dollar Tree
As a percent of sales, gross margin decreased to 28.3% compared to 34.6% in the prior year.
The primary contributors to the decrease were the impact of the overall lower-margin product mix for the Family Dollar business, an additional $13 million of markdown expense for Family Dollar related to SKU rationalization and planned liquidations, and $38.4 million for Family Dollar related to the amortization of the stepped up inventory basis.
Selling, general and administrative expenses were 23.8% of sales compared to 24.1% of sales in the prior year's third quarter. Acquisition-related costs were $11.8 million in the third quarter of 2015 and $14.3 million in the third quarter of 2014.
Excluding acquisition-related costs, selling, general and administrative expenses increased 10 basis points from the prior year's quarter to 23.5% of sales due in large part to integration costs. Integration costs are not included in acquisition-related costs.
Net income compared to the prior year's third quarter, including acquisition-related costs, decreased $51.1 million to $81.9 million, and diluted earnings per share decreased by 45.3% to $0.35.
The company's EBITDA increased from $269.5 million to $391.8 million, adjusted EBITDA increased from $283.8 million to $442.0 million, adjusted cash earnings increased from $210 million to $313.8 million, and adjusted cash EPS increased from $1.02 to $1.33.
During the quarter, the company opened 204 stores, expanded or relocated 63 stores and closed six stores. Additionally, as part of its re-banner initiative, the company closed 167 Family Dollar stores and opened 143 Dollar Tree stores during the quarter.
Retail selling square footage at the end of the quarter was approximately 109.6 million square feet. ■