Dollar Tree (DLTR): A look at the discount retailer’s expectations for the near term

Shares of Dollar Tree Inc. (NASDAQ: DLTR ) was down more than 1% on Tuesday. The stock has fallen 5% over the past month. The company reported revenue and earnings for the fourth quarter of 2022, as well as an increase in same-store sales. Here’s a look at discount retailers’ expectations for the near term:

results

Dollar Tree’s consolidated net sales rose 9% year over year to $7.72 billion in the fourth quarter of 2022. Net sales under its namesake banner rose 8% to $4.3 billion while Family Dollar banner sales rose 10% to $3.4 billion in the quarter.

For the first quarter of 2023, Dollar Tree expects net sales to be between $7.2-7.4 billion. For the full year 2023, combined net sales are expected to be $29.9-30.5 billion.

Same store sales

In Q4, same-store sales rose 7.4%. Same-store sales for the Dollar Tree banner rose 8.7%, driven by a 10% average ticket increase that was partially offset by a 1% decline in traffic. Family Dollar same-store sales rose 5.8%, helped by average ticket increases of 5.3% and traffic of 0.5%.

For the first quarter of 2023, the company expects a mid-single-digit increase in company-wide same-store sales, with a low-single-digit comp increase at the Dollar Tree banner and a mid-single-digit comp increase at the Family Dollar banner.

For the full year 2023, the discount retailer expects comparable store sales to increase in the mid-single digits, including a low single-digit increase in the Dollar Tree segment and a mid-digit increase in Family Dollar. part.

Profit and loss

In Q4 2022, Dollar Tree posted EPS of $2.04, which was up 1.5% year over year. Gross margin increased by 70 basis points to 30.9% while operating margin decreased by 20 basis points to 8%.

The company expects EPS between $1.46-1.56 in the first quarter of 2023. For the full year, EPS is estimated at $6.30-6.80. Dollar Tree expects gross and operating profit to decline in the first half of 2023 and then see a pickup during the second half.

Click here to read the full transcript of Dollar Tree’s Q4 2022 earnings conference call