- Same-Store Net Sales: Dollar Tree +1.3%; Family Dollar
-0.1%; Enterprise +0.7%
- Diluted Earnings per Share (EPS) of $0.62 and Adjusted
Diluted EPS of $0.67
- Diluted and Adjusted Diluted EPS Includes $0.30 of Costs
Related to General Liability Claims
- Fiscal 2024 Net Sales Outlook Range of $30.6 Billion to
$30.9 Billion
- Fiscal 2024 Adjusted Diluted EPS Outlook Range of $5.20 to
$5.60
- Revised Outlook Incorporates Second Quarter Results, More
Conservative Sales Outlook, Incremental Conversion Costs For 99
Cents Only Stores, and Higher D&A
Dollar Tree, Inc. (NASDAQ: DLTR) today reported financial
results for its second quarter ended August 3, 2024.
“We are encouraged by the continuous progress we are making in
the transformation underway at Dollar Tree and Family Dollar,
despite immense pressures from a challenging macro environment,”
said Rick Dreiling, Chairman and Chief Executive Officer.
“Customers are responding favorably to initiatives like our
expanded multi-price offering and we are already seeing a
meaningful sales lift at the 1,600 Dollar Tree stores that have
been converted to our newest in-line multi-price format. With
thousands of stores left to convert, we believe we are still in the
very early innings of this rollout, with many years of runway left
ahead of us.”
Chief Financial Officer Jeff Davis added, “Our adjusted EPS of
$0.67 was $0.38 below the midpoint of our previous outlook range.
While the vast majority of this variance was attributable to an
adjustment of our general liability accrual, a portion was
attributable to a comp shortfall which reflected the increasing
effect of macro pressures on the purchasing behavior of Dollar
Tree’s middle- and higher-income customers.”
Additional Business
Highlights
- Opened 127 new Dollar Tree and 28 new Family Dollar stores
- Approximately 1,600 Dollar Tree stores have been converted to
in-line multi-price format
- Generated $307 million of net cash provided by operating
activities
- Repurchased 0.75 million shares for $90.8 million
Second Quarter 2024 Key
Operating Results (unaudited)
(Compared to same period fiscal 2023)
Q2 Fiscal 2024
Change
Consolidated Net Sales
$7.37B
0.7%
Same-Store Net Sales Growth:
Dollar Tree Segment
1.3%
Family Dollar Segment
-0.1%
Enterprise
0.7%
Operating Income
$203.1M
-29.4%
Diluted EPS
$0.62
-31.9%
Adjusted Operating Income1
$218.1M
-24.2%
Adjusted Diluted EPS1
$0.67
-26.4%
1
Adjustments are for costs related to store
closures, Family Dollar Strategic Review professional fees, and
severance. See “Reconciliation of Non-GAAP Financial Measures”
below for detailed schedules of these charges.
Second Quarter Results
Unless otherwise noted, all comparisons are to the prior year’s
second quarter, ended July 29, 2023.
Consolidated net sales increased 0.7% to $7.37 billion.
Enterprise same-store net sales increased 0.7%, driven by a 1.1%
increase in traffic, offset by a 0.5% decrease in average ticket.
Dollar Tree same-store net sales increased 1.3%, driven by a 1.4%
increase in traffic, offset by a 0.1% decrease in average ticket.
Family Dollar’s same-store net sales decreased 0.1%, driven by a
0.7% increase in traffic, offset by a 0.8% decrease in average
ticket. Same-store net sales results for the Family Dollar segment
do not include any stores that were closed during the second
quarter as part of our previously announced portfolio
optimization.
Gross profit increased 3.7% to $2.21 billion and gross margin
expanded 80 basis points to 30.0%. Gross margin expansion was
driven primarily by lower freight costs, partially offset by
increased sales of higher cost consumable merchandise, higher
occupancy costs in the Dollar Tree segment resulting from the loss
of leverage from the low single-digit comparable store net sales
increase, and higher distribution costs in the Family Dollar
segment.
Selling, general and administrative expenses were 27.3% of total
revenue, compared to 25.3%. The increase was driven primarily by
unfavorable development of general liability claims, higher
depreciation expense from store investments, temporary labor in the
Dollar Tree segment to support our multi-price rollout, higher
utilities costs, and loss of leverage from the low single-digit
comparable store net sales increase. The increases were partially
offset by lower incentive compensation costs.
On a non-GAAP basis, which excludes costs associated with store
closings, costs associated with the strategic review, and
severance, selling, general and administrative expenses were 27.1%
of total revenue, compared to 25.3%.
Our general liability claims related to customer accidents and
other incidents at our stores continue to develop unfavorably due
to the rising cost to reimburse, settle, or litigate the claims. As
a result, our actuarially determined liabilities were increased
during the second quarter, contributing to incremental general
liability claim expenses that adversely impacted our adjusted net
income – relative to our earnings outlook provided on June 5, 2024
– by approximately $0.30 per share.
Operating income decreased 29.4% to $203.1 million and operating
margin declined 110 basis points to 2.8%. On a non-GAAP basis,
adjusted operating income decreased 24.2% to $218.1 million and
adjusted operating margin declined 90 basis points to 3.0%.
The Company’s effective tax rate was unchanged at 24.0%. On a
non-GAAP basis, the adjusted effective tax rate was 24.2% compared
to 24.0%.
Net income was $132.4 million and diluted earnings per share was
$0.62. On a non-GAAP basis, adjusted net income was $143.4 million
and adjusted diluted EPS was $0.67.
The company repurchased 0.75 million shares for $90.8 million,
including applicable excise tax.
Year-to-Date Results
Unless otherwise noted, all comparisons are between the 26 weeks
ended August 3, 2024, and the 26 weeks ended July 29, 2023.
Consolidated net sales increased 2.5% to $15.00 billion.
Enterprise same-store sales increased 0.8%. Dollar Tree same-store
sales increased 1.5%, driven by a 2.1% increase in traffic,
partially offset by a 0.6% decline in average ticket. Family
Dollar’s same-store sales were flat and were comprised of a 0.8%
increase in traffic along with a 0.8% decline in average
ticket.
Gross profit increased 4.5% to $4.56 billion and gross margin
expanded 60 basis points to 30.4%.
Selling, general and administrative expenses were 26.3% of total
revenue, compared to 25.0%. On a non-GAAP basis, selling, general
and administrative expenses were 26.1% of total revenue, compared
to 24.8%.
Operating income decreased 11.8% to $623.7 million and operating
income margin decreased 60 basis points to 4.2%. On a non-GAAP
basis, operating income decreased 11.4% to $653.7 million and
operating income margin decreased 60 basis points to 4.4%.
The Company’s effective tax rate was 24.2% compared to 24.0%. On
a non-GAAP basis, the effective tax rate was 24.2% compared to
23.6%.
Net income was $432.5 million and diluted EPS was $2.00. On a
non-GAAP basis, net income was $454.9 million and diluted EPS was
$2.10.
The Company repurchased 3.28 million shares for $403.6 million,
including applicable excise tax.
Strategic Alternatives Review
Update
During the second quarter of fiscal 2024, we announced that we
had initiated a formal review of strategic alternatives for the
Family Dollar business segment, which could include among others, a
potential sale, spin-off, or other disposition of the business.
There is not a set deadline or definitive timetable for the
completion of the strategic alternatives review process, and there
can be no assurance that this process will result in any
transaction or particular outcome.
Tornado Damage Update
On April 28, 2024, a tornado destroyed our Dollar Tree
distribution center in Marietta, Oklahoma. Based on the significant
damage sustained by the facility, the inventory contained in the
facility and the facility itself are not salvageable. We incurred
losses totaling $117.0 million in the first quarter of fiscal 2024,
consisting of $70.0 million related to damaged inventory and $47.0
million related to property and equipment. These losses were fully
offset by insurance receivables. As of August 3, 2024, we have
received insurance proceeds totaling $70.8 million, including $45.0
million related to damaged inventory and $25.8 million related to
damaged property and equipment. We expect that the remaining
inventory losses and property and equipment losses will be fully
offset by insurance recoveries under our distribution center
insurance policies.
Portfolio Optimization
Review
During the fourth quarter of fiscal 2023, we announced that we
had initiated a comprehensive store portfolio optimization review
which involved identifying stores for closure, relocation or
re-bannering based on an evaluation of current market conditions
and individual store performance, among other factors. As a result
of the portfolio optimization review, we identified approximately
970 underperforming Family Dollar stores, including approximately
600 stores to be closed in the first half of fiscal 2024, and
approximately 370 stores to be closed at the end of each store's
current lease term. As of August 3, 2024, we have closed
approximately 655 stores identified under the portfolio
optimization review and expect to close an additional 45 during the
remainder of fiscal 2024.
Fiscal 2024 Outlook
“We are updating our full-year outlook to reflect second quarter
results, including the general liability charge, a more
conservative sales outlook at Dollar Tree for the balance of the
year, and incremental start-up costs associated with the conversion
of our recently acquired portfolio of 99 Cents Only Stores leases,”
Davis added.
The Company is adjusting its full-year fiscal 2024 consolidated
net sales outlook range to $30.6 billion to $30.9 billion. The
Company expects to deliver comparable store net sales growth in the
low-single-digits for the enterprise and both the Dollar Tree and
Family Dollar segments.
Adjusted diluted EPS is expected to range from $5.20 to
$5.60.
The revised full-year fiscal 2024 EPS outlook reflects the
Company’s second quarter 2024 results, the revised sales outlook,
approximately $0.12 of incremental upfront costs associated with
the acquisition and re-opening of the acquired 99 Cents Only Stores
leases, and approximately $0.12 related to incremental depreciation
and amortization expense resulting from higher project costs and
cadence.
Third Quarter 2024
Outlook
The Company expects consolidated net sales for the third quarter
will range from $7.4 billion to $7.6 billion, based on comparable
store net sales growth in the low-single-digits for the enterprise
and both the Dollar Tree and Family Dollar segments.
Adjusted diluted EPS for the third quarter 2024 is estimated to
be in the range of $1.05 to $1.15.
The third quarter EPS outlook reflects the revised sales
outlook, approximately $0.07 of incremental upfront costs
associated with the acquisition and re-opening of the acquired 99
Cents Only Stores leases, and approximately $0.06 related to
incremental depreciation and amortization expense resulting from
higher project costs and cadence.
While share repurchases are not included in the outlook, the
Company has approximately $952 million remaining under its $2.5
billion share repurchase authorization as of August 3, 2024.
Conference Call
Information
On Wednesday, September 4, 2024, the Company will host a
conference call to discuss its earnings results at 8:00 a.m.
Eastern Time. The telephone number for the call is (877) 407-3943
or (201) 689-8855. A recorded version of the call will be available
for seven days after the call and may be accessed by dialing (877)
660-6853 or (201) 612-7415. The access code is 13748388. A webcast
of the call is also accessible through the Investor Relations
portion of the Company’s website.
Supplemental financial information for the second quarter is
available on the Investor Relations portion of the Company’s
website, at https://corporate.dollartree.com/investors.
Dollar Tree, a Fortune 200 Company, operated more than 16,300
stores across 48 states and five Canadian provinces as of August 3,
2024. Stores operate under the brands of Dollar Tree, Family
Dollar, and Dollar Tree Canada. To learn more about the Company,
visit www.DollarTree.com.
Use of Non-GAAP Financial
Measures
The Company reports its financial results in accordance with
accounting principles generally accepted in the United States
(“GAAP”). From time-to-time, the Company supplements the reporting
of its financial information determined under GAAP with certain
non-GAAP financial information. The non-GAAP financial measures we
have disclosed include adjusted selling, general and administrative
expenses; adjusted selling, general and administrative expense
rate; adjusted operating income (loss); adjusted operating income
(loss) margin; adjusted net income; adjusted diluted earnings per
share; adjusted effective tax rate; and free cash flow.
Reconciliations of the non-GAAP financial measures to the
corresponding amounts prepared in accordance with GAAP appears in
the tables under the heading “Reconciliation of Non-GAAP Financial
Measures” below. These tables provide additional information
regarding the adjusted measures.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the fact that they address future
events, developments or results and do not relate strictly to
historical facts. Any statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements include,
without limitation, statements preceded by, followed by or
including words such as: “believe”, “anticipate”, “expect”,
“intend”, “plan”, “view”, “target” or “estimate”, “may”, “will”,
“should”, “predict”, “possible”, “potential”, “continue”,
“strategy”, and similar expressions. For example, our
forward-looking statements include statements relating to our
business and financial outlook for fiscal 2024, including without
limitation our expectations regarding net sales, comparable store
sales and adjusted diluted earnings per share for the third fiscal
quarter and full fiscal year 2024, and various factors that are
expected to impact our quarterly and annual results of operations
for fiscal 2024; our plans and expectations regarding our business,
including the impact of various initiatives, investments, and
reviews on the company’s performance and prospects for long-term
growth; our plans to close, relocate or re-banner stores as a
result of our store portfolio optimization review; the impacts of
tornado damage to our Dollar Tree distribution center in Marietta,
Oklahoma, including expectations regarding inventory and property
damage, related losses, the availability of insurance coverage and
expected insurance recoveries, changes within our supply chain
network and our customer shopping experience; and our other plans,
objectives, expectations (financial and otherwise) and intentions,
including our review of strategic alternatives at our Family Dollar
segment. These statements are subject to risks and uncertainties.
For a discussion of the risks, uncertainties and assumptions that
could affect our future events, developments or results, you should
carefully review the "Risk Factors," "Business" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections in our Annual Report on Form 10-K filed March
20, 2024, our Form 10-Q for the most recently ended fiscal quarter
and other filings we make from time to time with the Securities and
Exchange Commission. We are not obligated to release publicly any
revisions to any forward-looking statements contained in this press
release to reflect events or circumstances occurring after the date
of this report and you should not expect us to do so.
DOLLAR TREE, INC. Condensed Consolidated Income
Statements (In millions, except per share data)
(Unaudited) 13 Weeks Ended 26 Weeks
Ended August 3,2024 July 29,2023 August
3,2024 July 29,2023 Revenues Net sales
$
7,372.7
$
7,320.1
$
14,999.1
$
14,639.6
Other revenue
6.1
5.2
12.5
9.5
Total revenue
7,378.8
7,325.3
15,011.6
14,649.1
Expenses Cost of sales
5,158.2
5,185.4
10,436.9
10,274.5
Selling, general and administrative expenses
2,017.5
1,852.1
3,951.0
3,667.1
Operating income
203.1
287.8
623.7
707.5
Interest expense, net
28.9
24.2
53.3
50.1
Other (income) expense, net
-
(0.1
)
0.1
-
Income before income taxes
174.2
263.7
570.3
657.4
Provision for income taxes
41.8
63.3
137.8
158.0
Net income
$
132.4
$
200.4
$
432.5
$
499.4
Net earnings per share: Basic
$
0.62
$
0.91
$
2.00
$
2.26
Weighted average number of shares
215.0
220.1
216.4
220.6
Diluted
$
0.62
$
0.91
$
2.00
$
2.26
Weighted average number of shares
215.2
220.5
216.7
221.1
Selling, general and administrative expense rate
27.3
%
25.3
%
26.3
%
25.0
%
Operating income margin
2.8
%
3.9
%
4.2
%
4.8
%
Income before income taxes as percentage of total revenue
2.4
%
3.6
%
3.8
%
4.5
%
Effective tax rate
24.0
%
24.0
%
24.2
%
24.0
%
Net income margin
1.8
%
2.7
%
2.9
%
3.4
%
The selling, general and administrative expense rate, operating
income margin and net income margin are calculated by dividing the
applicable amount by total revenue.
DOLLAR TREE, INC.
Segment Information (In millions) (Unaudited)
13 Weeks Ended 26 Weeks Ended August
3,2024 July 29,2023 August 3,2024 July
29,2023 Net sales: Dollar Tree
$
4,065.5
$
3,873.4
$
8,231.1
$
7,805.1
Family Dollar
3,307.2
3,446.7
6,768.0
6,834.5
Total net sales
$
7,372.7
$
7,320.1
$
14,999.1
$
14,639.6
Gross profit: Dollar Tree
$
1,391.3
34.2
%
$
1,293.3
33.4
%
$
2,867.8
34.8
%
$
2,681.9
34.4
%
Family Dollar
823.2
24.9
%
841.4
24.4
%
1,694.4
25.0
%
1,683.2
24.6
%
Total gross profit
$
2,214.5
30.0
%
$
2,134.7
29.2
%
$
4,562.2
30.4
%
$
4,365.1
29.8
%
Operating income (loss): Dollar Tree
$
342.0
8.4
%
$
397.8
10.3
%
$
864.3
10.5
%
$
933.5
12.0
%
Family Dollar
(14.6
)
(0.4
%)
11.8
0.3
%
22.3
0.3
%
20.6
0.3
%
Corporate, support and other
(124.3
)
(1.7
%)
(121.8
)
(1.7
%)
(262.9
)
(1.8
%)
(246.6
)
(1.7
%)
Total operating income
$
203.1
2.8
%
$
287.8
3.9
%
$
623.7
4.2
%
$
707.5
4.8
%
DOLLAR TREE, INC. Condensed Consolidated Balance
Sheets (In millions) (Unaudited)
August 3,2024 February 3,2024 July 29,2023
ASSETS Current Assets: Cash and cash equivalents $
570.3
$
684.9
$
512.7
Merchandise inventories
5,101.6
5,112.8
5,329.4
Other current assets
420.4
335.0
315.3
Total current assets
6,092.3
6,132.7
6,157.4
Restricted cash
74.1
72.3
70.1
Property, plant and equipment, net
6,533.1
6,144.1
5,359.2
Operating lease right-of-use assets
6,699.6
6,488.3
6,670.9
Goodwill
913.0
913.8
1,983.3
Trade name intangible asset
2,150.0
2,150.0
3,100.0
Deferred tax asset
7.5
9.0
13.1
Other assets
147.0
113.3
74.0
Total assets $
22,616.6
$
22,023.5
$
23,428.0
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Short-term borrowings $
249.8
$
-
$
-
Current portion of long-term debt
1,000.0
-
-
Current portion of operating lease liabilities
1,536.5
1,513.0
1,478.6
Accounts payable
2,236.1
2,063.8
1,776.4
Income taxes payable
0.4
52.7
10.0
Other current liabilities
977.1
1,067.2
885.3
Total current liabilities
5,999.9
4,696.7
4,150.3
Long-term debt, net, excluding current portion
2,428.7
3,426.3
3,423.9
Operating lease liabilities, long-term
5,582.6
5,447.6
5,447.8
Deferred income taxes, net
916.7
841.1
1,107.6
Income taxes payable, long-term
19.3
22.0
18.1
Other liabilities
289.9
276.7
249.3
Total liabilities
15,237.1
14,710.4
14,397.0
Shareholders' equity
7,379.5
7,313.1
9,031.0
Total liabilities and shareholders' equity $
22,616.6
$
22,023.5
$
23,428.0
The February 3, 2024 information was derived from the
audited consolidated financial statements as of that date.
DOLLAR TREE, INC. Condensed Consolidated Statements of
Cash Flows (In millions) (Unaudited) 26
Weeks Ended August 3,2024 July 29,2023 Cash flows
from operating activities: Net income
$
432.5
$
499.4
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
480.6
399.0
Provision for deferred income taxes
76.7
3.8
Stock-based compensation expense
57.5
53.2
Impairments
0.2
1.3
Other non-cash adjustments to net income
5.4
38.6
Changes in operating assets and liabilities
(50.3
)
(71.5
)
Total adjustments
570.1
424.4
Net cash provided by operating activities
1,002.6
923.8
Cash flows from investing activities: Capital expenditures
(972.9
)
(775.8
)
Proceeds from insurance recoveries
25.8
-
Payments for fixed asset disposition
(2.9
)
(5.2
)
Net cash used in investing activities
(950.0
)
(781.0
)
Cash flows from financing activities: Net proceeds from
commercial paper notes
249.7
-
Proceeds from stock issued pursuant to stock-based compensation
plans
5.7
5.5
Cash paid for taxes on exercises/vesting of stock-based
compensation
(20.3
)
(27.7
)
Payments for repurchase of stock
(400.0
)
(250.0
)
Net cash used in financing activities
(164.9
)
(272.2
)
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
(0.5
)
0.9
Net decrease in cash, cash equivalents and restricted cash
(112.8
)
(128.5
)
Cash, cash equivalents and restricted cash at beginning of period
757.2
711.3
Cash, cash equivalents and restricted cash at end of period
$
644.4
$
582.8
DOLLAR TREE, INC. Segment Information
(Unaudited) 13 Weeks Ended August
3,2024 July 29,2023 Dollar Family
Dollar Family Tree Dollar Total
Tree Dollar Total Store Count:
Beginning
8,520
7,877
16,397
8,153
8,266
16,419
New stores
127
28
155
48
70
118
Re-bannered stores (a)
3
-
3
2
-
2
Closings
(23
)
(144
)
(167
)
(26
)
(37
)
(63
)
Ending
8,627
7,761
16,388
8,177
8,299
16,476
Selling Square Footage (in millions)
75.2
59.3
134.5
70.9
62.8
133.7
Growth Rate (Square Footage)
6.1
%
(5.6
%)
0.6
%
1.0
%
3.8
%
2.3
%
26 Weeks Ended August 3,2024 July
29,2023 Dollar Family Dollar Family
Tree Dollar Total Tree Dollar
Total Store Count: Beginning
8,415
8,359
16,774
8,134
8,206
16,340
New stores
243
69
312
80
145
225
Re-bannered stores (a)
8
(10
)
(2
)
4
(1
)
3
Closings
(39
)
(657
)
(696
)
(41
)
(51
)
(92
)
Ending
8,627
7,761
16,388
8,177
8,299
16,476
Selling Square Footage (in millions)
75.2
59.3
134.5
70.9
62.8
133.7
Growth Rate (Square Footage)
6.1
%
(5.6
%)
0.6
%
1.0
%
3.8
%
2.3
%
(a) Stores are included as re-banners when they close or open,
respectively.
52 Weeks Ended August 3,2024
July 29,2023 Dollar Family Dollar
Family Tree Dollar Total Tree
Dollar Total Sales per Square Foot (b)
$235
$225
$231
$225
$218
$222
(b) Sales per square foot is calculated based on total net sales
for the reporting period divided by the average selling square
footage during the period.
DOLLAR TREE, INC.
Reconciliation of Non-GAAP Financial Measures (In
millions, except per share data) (Unaudited) From
time-to-time, the Company discloses certain financial measures not
derived in accordance with GAAP. These non-GAAP financial measures
should not be used as a substitute for GAAP financial measures, or
considered in isolation, for the purposes of analyzing operating
performance, financial position, liquidity, or cash flows. The
non-GAAP financial measures we have disclosed include adjusted
selling, general and administrative expenses; adjusted selling,
general and administrative expense rate; adjusted operating income
(loss); adjusted operating income (loss) margin; adjusted net
income; adjusted diluted earnings per share; adjusted effective tax
rate; and free cash flow. The Company believes providing additional
information in these non-GAAP measures that exclude the unusual
expenses described below is beneficial to the users of its
financial statements in evaluating the Company's current operating
results in relation to past periods. In addition, the Company's
debt covenants exclude the impact of certain unusual expenses. The
Company has included a reconciliation of these non-GAAP financial
measures to the most comparable GAAP measures in the following
tables. 1.) In the first quarter of fiscal 2023, the Company
recorded a $30.0 million charge to its legal reserve for West
Memphis-related matters. In the fourth quarter of fiscal 2023, an
additional $26.7 million charge was recorded to the legal reserve
for these matters. In the first quarter of fiscal 2024, the
existing reserve was reduced by $2.5 million based on updated
information. 2.) During the fourth quarter of fiscal 2023, we
announced that we had initiated a comprehensive store portfolio
optimization review which involved identifying stores for closure,
relocation or re-bannering based on an evaluation of current market
conditions and individual store performance, among other factors.
In connection with this portfolio optimization review, we closed
approximately 600 Family Dollar stores in the first half of fiscal
2024 and incurred more than $24 million of costs including
severance and retention expenses for impacted associates and other
related closure costs. This included the closure of approximately
110 Family Dollar stores during the second quarter of fiscal 2024
and more than $6 million of costs incurred. 3.) During the first
quarter of fiscal 2024, a tornado destroyed our Dollar Tree
distribution center in Marietta, Oklahoma ("DC 8"). We incurred
losses for damaged inventory and property and equipment, which are
fully insured and therefore not contemplated in the non-GAAP
adjustments below. In the second quarter of fiscal 2024, we
incurred $2.2 million of severance-related costs for employees at
DC 8. 4.) During the second quarter of fiscal 2024, we announced
that we had initiated a formal review of strategic alternatives for
the Family Dollar segment, which could include among others, a
potential sale, spin-off or other disposition of the business.
During the second quarter of fiscal 2024, we incurred consulting
and other expenses totaling $6.2 million related to the strategic
review. In addition, the Company discloses free cash flow, a
non-GAAP financial measure that we calculate as net cash provided
by operating activities less capital expenditures. The Company
believes free cash flow is an important indicator of our liquidity
as it measures the amount of cash we generate from our business
operations. Free cash flow may not represent the amount of cash
flow available for general discretionary use, because it excludes
non-discretionary expenditures, such as mandatory debt repayments
and required settlements of recorded and/or contingent liabilities
not reflected in cash flow from operations. The Company has
included a reconciliation of free cash flow to the most comparable
GAAP measures in the following tables. A reconciliation of
the projected non-GAAP diluted EPS, which is a forward-looking
non-GAAP financial measure, to the most directly comparable GAAP
financial measure, is not provided because the company is unable to
provide such reconciliation without unreasonable effort. The
inability to provide a reconciliation is due to the uncertainty and
inherent difficulty predicting the occurrence, the financial impact
and the periods in which the non-GAAP adjustments may be
recognized. GAAP measures may include the impact of such items as
litigation reserves; restructuring charges; goodwill and intangible
asset impairments; natural disasters; our store portfolio
optimization review and strategic review of Family Dollar, and the
tax effect of all such items. Historically, the company has
excluded these items from non-GAAP financial measures. The company
currently expects to continue to exclude these items in future
disclosures of non-GAAP financial measures and may also exclude
other items that may arise (collectively, “non-GAAP adjustments”).
The decisions and events that typically lead to the recognition of
non-GAAP adjustments, such as a decision to exit part of the
business or reaching settlement of a legal dispute, are inherently
unpredictable as to if or when they may occur. For the same
reasons, the company is unable to address the probable significance
of the unavailable information, which could be material to future
results.
Reconciliation of Adjusted Selling, General and
Administrative Expenses 13 Weeks Ended 26 Weeks
Ended August 3,2024 July 29,2023 August
3,2024 July 29,2023 Selling, general and administrative
expenses (GAAP)
$
2,017.5
27.3
%
$
1,852.1
25.3
%
$
3,951.0
26.3
%
$
3,667.1
25.0
%
Deduct: Store Closure Costs
(6.6
)
(0.1
%)
-
-
%
(24.1
)
(0.2
%)
-
-
%
Add/Deduct: Legal Reserve
-
-
%
-
-
%
2.5
-
%
(30.0
)
(0.2
%)
Deduct: Strategic Review Costs
(6.2
)
(0.1
%)
-
-
%
(6.2
)
-
%
-
-
%
Deduct: Severance
(2.2
)
-
%
-
-
%
(2.2
)
-
%
-
-
%
Total adjustments
(15.0
)
(0.2
%)
-
-
%
(30.0
)
(0.2
%)
(30.0
)
(0.2
%)
Adjusted selling, general and administrative expenses (Non-GAAP)
$
2,002.5
27.1
%
$
1,852.1
25.3
%
$
3,921.0
26.1
%
$
3,637.1
24.8
%
DOLLAR TREE, INC.
Reconciliation of Non-GAAP
Financial Measures
(In millions, except per share data) (Unaudited)
Reconciliation of Adjusted Selling, General and
Administrative Expenses - Dollar Tree Segment 13 Weeks
Ended 26 Weeks Ended August 3,2024 July
29,2023 August 3,2024 July 29,2023 Selling,
general and administrative expenses (GAAP)
$
1,049.3
25.8
%
$
895.3
23.1
%
$
2,003.5
24.3
%
$
1,748.4
22.4
%
Deduct: Severance
(2.2
)
-
%
-
-
%
(2.2
)
-
%
-
-
%
Total adjustments
(2.2
)
-
%
-
-
%
(2.2
)
-
%
-
-
%
Adjusted selling, general and administrative expenses (Non-GAAP)
$
1,047.1
25.8
%
$
895.3
23.1
%
$
2,001.3
24.3
%
$
1,748.4
22.4
%
Reconciliation of Adjusted Selling, General and
Administrative Expenses - Family Dollar Segment 13 Weeks
Ended 26 Weeks Ended August 3,2024 July
29,2023 August 3,2024 July 29,2023 Selling,
general and administrative expenses (GAAP)
$
840.7
25.4
%
$
832.3
24.1
%
$
1,678.2
24.8
%
$
1,667.2
24.4
%
Deduct: Store Closure Costs
(4.8
)
(0.1
%)
-
-
%
(21.6
)
(0.3
%)
-
-
%
Add/Deduct: Legal Reserve
-
-
%
-
-
%
2.5
-
%
(30.0
)
(0.4
%)
Deduct: Strategic Review Costs
(6.2
)
(0.2
%)
-
-
%
(6.2
)
(0.1
%)
-
-
%
Total adjustments
(11.0
)
(0.3
%)
-
-
%
(25.3
)
(0.4
%)
(30.0
)
(0.4
%)
Adjusted selling, general and administrative expenses (Non-GAAP)
$
829.7
25.1
%
$
832.3
24.1
%
$
1,652.9
24.4
%
$
1,637.2
24.0
%
DOLLAR TREE, INC. Reconciliation of Non-GAAP Financial
Measures (In millions, except per share data)
(Unaudited) Reconciliation of Adjusted Operating
Income 13 Weeks Ended 26 Weeks Ended August
3,2024 July 29,2023 August 3,2024 July
29,2023 Operating income (GAAP)
$
203.1
2.8
%
$
287.8
3.9
%
$
623.7
4.2
%
$
707.5
4.8
%
SG&A adjustments: Add: Store Closure Costs
6.6
0.1
%
-
-
%
24.1
0.2
%
-
-
%
Add/Deduct: Legal Reserve
-
-
%
-
-
%
(2.5
)
-
%
30.0
0.2
%
Add: Strategic Review Costs
6.2
0.1
%
-
-
%
6.2
-
%
-
-
%
Add: Severance
2.2
-
%
-
-
%
2.2
-
%
-
-
%
Total adjustments
15.0
0.2
%
-
-
%
30.0
0.2
%
30.0
0.2
%
Adjusted operating income (Non-GAAP)
$
218.1
3.0
%
$
287.8
3.9
%
$
653.7
4.4
%
$
737.5
5.0
%
Reconciliation of Adjusted Operating Income - Dollar Tree
Segment 13 Weeks Ended 26 Weeks Ended August
3,2024 July 29,2023 August 3,2024 July
29,2023 Operating income (GAAP)
$
342.0
8.4
%
$
397.8
10.3
%
$
864.3
10.5
%
$
933.5
12.0
%
SG&A adjustments: Add: Severance
2.2
-
%
-
-
%
2.2
-
%
-
-
%
Total adjustments
2.2
-
%
-
-
%
2.2
-
%
-
-
%
Adjusted operating income (Non-GAAP)
$
344.2
8.4
%
$
397.8
10.3
%
$
866.5
10.5
%
$
933.5
12.0
%
Reconciliation of Adjusted Operating Income (Loss) -
Family Dollar Segment 13 Weeks Ended 26 Weeks
Ended August 3,2024 July 29,2023 August
3,2024 July 29,2023 Operating income (loss) (GAAP)
$
(14.6
)
(0.4
%)
$
11.8
0.3
%
$
22.3
0.3
%
$
20.6
0.3
%
SG&A adjustments: Add: Store Closure Costs
4.8
0.1
%
-
-
%
21.6
0.3
%
-
-
%
Add/Deduct: Legal Reserve
-
-
%
-
-
%
(2.5
)
-
%
30.0
0.4
%
Add: Strategic Review Costs
6.2
0.2
%
-
-
%
6.2
0.1
%
-
-
%
Total adjustments
11.0
0.3
%
-
-
%
25.3
0.4
%
30.0
0.4
%
Adjusted operating income (loss) (Non-GAAP)
$
(3.6
)
(0.1
%)
$
11.8
0.3
%
$
47.6
0.7
%
$
50.6
0.7
%
Reconciliation of Non-GAAP Financial Measures (In
millions, except per share data) (Unaudited)
Reconciliation of Adjusted Net Income 13 Weeks Ended
26 Weeks Ended August 3,2024 July 29,2023
August 3,2024 July 29,2023 Net income (GAAP)
$
132.4
$
200.4
$
432.5
$
499.4
SG&A adjustments: Add: Store Closure Costs
6.6
-
24.1
-
Add/Deduct: Legal Reserve
-
-
(2.5
)
30.0
Add: Strategic Review Costs
6.2
-
6.2
-
Add: Severance
2.2
-
2.2
-
Total adjustments
15.0
-
30.0
30.0
Provision for income taxes on adjustments
(4.0
)
-
(7.6
)
(3.9
)
Adjusted net income (Non-GAAP)
$
143.4
$
200.4
$
454.9
$
525.5
Reconciliation of Adjusted Diluted Earnings Per Share
13 Weeks Ended 26 Weeks Ended August 3,2024
July 29,2023 August 3,2024 July 29,2023
Diluted net income per share (GAAP)
$
0.62
$
0.91
$
2.00
$
2.26
SG&A adjustments: Add: Store Closure Costs
0.03
-
0.11
-
Add/Deduct: Legal Reserve
-
-
(0.01
)
0.14
Add: Strategic Review Costs
0.03
-
0.03
-
Add: Severance
0.01
-
0.01
-
Total adjustments
0.07
-
0.14
0.14
Provision for income taxes on adjustments
(0.02
)
-
(0.04
)
(0.02
)
Adjusted diluted net income per share (Non-GAAP)
$
0.67
$
0.91
$
2.10
$
2.38
Reconciliation of Adjusted Effective Tax Rate 13
Weeks Ended 26 Weeks Ended August 3,2024 July
29,2023 August 3,2024 July 29,2023 Effective tax
rate (GAAP)
24.0
%
24.0
%
24.2
%
24.0
%
Add/Deduct: Tax impact of non-GAAP adjustments (c)
0.2
%
-
%
-
%
(0.4
%)
Adjusted effective tax rate (Non-GAAP)
24.2
%
24.0
%
24.2
%
23.6
%
(c) Adjustments related to the tax effect of non-GAAP
adjustments, which were determined based on the nature of the
underlying non-GAAP adjustments and their relevant tax rates.
DOLLAR TREE, INC. Reconciliation of Non-GAAP
Financial Measures (In millions, except per share data)
(Unaudited) Reconciliation of Net Cash Provided by
(Used in) Operating Activities to Free Cash Flow 13 Weeks
Ended 26 Weeks Ended August 3,2024 July
29,2023 August 3,2024 July 29,2023 Net cash
provided by (used in) operating activities (GAAP)
$
306.9
$
171.8
$
1,002.6
$
923.8
Deduct: Capital expenditures
(500.7
)
(425.4
)
(972.9
)
(775.8
)
Free cash flow (Non-GAAP)
$
(193.8
)
$
(253.6
)
$
29.7
$
148.0
Net cash provided by (used in) investing activities (GAAP)
(d)
$
(477.0
)
$
(428.3
)
$
(950.0
)
$
(781.0
)
Net cash provided by (used in) financing activities (GAAP)
$
122.9
$
(104.6
)
$
(164.9
)
$
(272.2
)
(d) Net cash provided by (used in) investing activities
includes capital expenditures, which is included in our computation
of free cash flow.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240904779087/en/
Dollar Tree, Inc. Robert A. LaFleur, 757-991-5645 Senior Vice
President, Investor Relations www.DollarTree.com DLTR-E
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