Following a sometimes rocky second quarter, Dollar Tree Inc. has some good news for its investors. The company saw increased sales performance and comparable traffic for the third quarter ended Oct. 29, leading Dollar Tree to increase its sales outlook for the year.
Consolidated net sales increased 8.1% to $6.94 billion year-over-year, same-store sales in the Dollar Tree segment were up 8.6%, the Family Dollar segment saw a 4.1% increase in same-store sales and enterprise same-store sales increased 6.5% in the same time period. Operating income rose 22.8% to $381.3 million and operating income margin improved 70 basis points to 5.5%.
Thanks to price actions taken during Q2, Family Dollar experienced its strongest quarterly same-store sales increase since 2020 and grew comparable traffic for the first time in 12 quarters. Year-over-year gross profit increased 17.5% to $2.07 billion and gross margin improved 240 basis points to 29.9%, mainly driven by improved initial mark-on and leverage on occupancy and distribution costs.
“Our third quarter sales performance reflects the timely execution of merchandising initiatives to drive our consumables business in this uncertain and inflationary environment,” said Mike Witynski, president and CEO. “Same-store sales for both segments improved from the prior quarter and delivered a sequential monthly improvement throughout the quarter.”
The positive quarter has led Dollar Tree to increase its sales outlook for the year.
“The efforts to evolve the assortment to drive consumables performance at Dollar Tree, combined with initiatives designed to improve the value proposition at Family Dollar, are working. We believe we will continue to be part of the solution to millions of households seeking value at a time when they need us most,” said Witynski. “I am extremely confident in the new leadership team we have in place. We are eager to share more details about the opportunity ahead of us, and the path to get there, in the months ahead. We are focused and energized and believe we are very well-positioned to deliver long-term profitable growth.”
Chesapeake, Va.-based Dollar Tree operated 16,231 stores under the Dollar Tree, Family Dollar and Dollar Tree Canada banners across 48 states and five Canadian provinces as of July 30.