Dollar Tree Q3 consolidated net sales increased 6.3%
Staff Writer |
Dollar Tree reported results for its third fiscal quarter ended October 28, 2017.
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Consolidated net sales increased 6.3% to $5.32 billion from $5.00 billion in the prior year's third quarter.
Enterprise same-store sales increased 3.2% on a constant currency basis.
Adjusted to include the impact of Canadian currency fluctuations, the enterprise same-store sales increase was 3.3%. The same-store sales growth was driven by increases in average ticket and comparable transaction count.
Same-store sales for the Dollar Tree banner increased 5.0% on a constant currency basis (or 5.2% when adjusted to include the impact of Canadian currency fluctuations). Same-store sales for the Family Dollar banner increased 1.5%.
Gross profit increased 9.6% to $1.67 billion compared to $1.52 billion in the prior year's third quarter. As a percentage of sales, gross margin increased to 31.3% compared to 30.4% in the prior year. The 90 basis point improvement was the result of lower merchandise costs, markdowns and occupancy costs as a percentage of sales.
Selling, general and administrative expenses were 23.3% of sales compared to 23.6% of sales in the prior year's third quarter.
The 30 basis point improvement, as a percentage of sales, was driven primarily by lower depreciation costs, lower healthcare costs and lower store operating costs resulting primarily from lower utility costs as a percentage of sales, partially offset by higher hourly payroll costs and incentive compensation as well as higher operating and corporate expenses resulting from higher advertising and store supplies costs and increased legal fees.
Operating income increased 24.2% to $425.2 million compared with $342.4 million in the same period last year and operating income margin increased to 8.0% of sales in the current quarter from 6.8% in last year's quarter.
The Company's effective tax rate for the quarter was 32.4% compared to 25.5% in the prior year period.
The prior year's third quarter included a one-time tax benefit of $21.4 million, or $0.09 per share, related to a 1% decrease in North Carolina's state tax rate which decreased the deferred tax liability related to the trade name intangible asset.
Net income compared to the prior year's third quarter increased $68.3 million to $239.9 million and diluted earnings per share increased 40.3% to $1.01 compared to $0.72 in the prior year's quarter. ■