Family Dollar: Our results are strong so we will close nearly 400 stores
Staff Writer |
“Sales for the quarter were strong,” stated Gary Philbin, Family Dollar president and chief executive officer.
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“Our results demonstrate the increasing strength of the Dollar Tree brand, and accelerated progress on the Family Dollar turnaround, as Family Dollar delivered its strongest quarterly same-store sales growth of the year.”
Philbin continued, “We are confident in our progress and we have good momentum.
“Our merchants at both banners have delivered a 2019 plan that we believe overcomes most of the effect of tariffs at the 25% level, and provides opportunity for margin improvements if tariffs are not increased.
“We moved aggressively in the fourth quarter to optimize Family Dollar’s performance, including closing 84 stores and announcing plans to renovate at least 1,000 stores in 2019.
“The renovated stores will include new $1.00 Dollar Tree merchandise sections.
“Approximately 200 Family Dollar stores will be re-bannered to Dollar Tree, and we plan to close as many as 390 Family Dollar stores this year.
“We also recorded an inventory reserve in part because of the different inventory needs of this new optimized store base.
“Excluding this markdown and the non-cash goodwill impairment charge related to Family Dollar, the combined companies performed well in the quarter.”
Consolidated net sales for the fourth quarter 2018 were $6.21 billion, compared to $6.36 billion in the prior year’s fourth quarter, which included fourteen weeks.
Excluding $406.6 million of sales from the extra week in the prior year’s quarter, consolidated net sales increased 4.2%.
On a constant currency basis, enterprise same-store sales increased 2.4% (or 2.3% when adjusted to include the impact of Canadian currency fluctuations).
Same-store sales for the Dollar Tree banner increased 3.2% on a constant currency basis (or 3.1% when adjusted to include the impact of Canadian currency fluctuations).
Same-store sales for the Family Dollar banner increased 1.4%.
Gross profit for the quarter was $1.91 billion, compared to $2.10 billion in the prior year’s fourteen-week quarter.
As a percentage of sales, gross margin decreased to 30.8% compared to 33.0% in the prior year.
The decline was driven primarily by higher markdowns, including a $40.0 million SKU rationalization markdown reserve at Family Dollar, domestic freight, shrink, distribution costs, and occupancy costs which de-levered due to cycling the extra week in the prior year’s fourth quarter, partially offset by lower merchandise costs.
Consolidated net sales for the 52-week fiscal 2018 increased 2.6% to $22.82 billion from $22.25 billion in the 53-week fiscal 2017.
Excluding $406.6 million of sales from the prior year’s 53rd week, consolidated net sales increased 4.5%.
Enterprise same-store sales increased 1.7%.
Same-store sales for the Dollar Tree banner increased 3.3%.
Same-store sales for the Family Dollar banner increased 0.1%.
Gross profit decreased by $74.4 million to $6.95 billion in fiscal 2018 compared to $7.02 billion in the prior year’s 53-week period.
As a percentage of sales, gross margin decreased to 30.4% from 31.6% in the prior year. ■
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