As consumers hunt for value with inflation remaining high, same-store sales at Dollar Tree, Inc.’s banners grew year-over-year, according to the retailer’s latest quarterly report.
For the first quarter ended April 29, overall same-store sales saw a 4.8% increase, with Family Dollar locations increasing sales 6.6% and Dollar Tree stores seeing a 3.4% increase. Dollar Tree’s growth was driven by a 5.5% increase in traffic, partially offset by a 2.1% decline in average ticket, while Family Dollar’s growth consisted of a 4.3% increase in traffic along with a 2.2% increase in average ticket.
“Our initiatives to drive customer traffic and increase store productivity are having the desired impact,” said Rick Dreiling, chairman and CEO of Dollar Tree, Inc. “We are clearly gaining market share across the entire enterprise. While we are seeing early results from our initiatives, we are not immune to the external pressures affecting all of retail, notably, the margin impact of elevated shrink and the product mix shift to consumables.”
Gross profit decreased 4.7% to $2.23 billion and gross margin declined 340 basis points to 30.5%. The prior year’s quarter included an outsized margin benefit from the initial transition to the $1.25 price point at Dollar Tree, said the company. The gross margin decline was driven by lower initial mark-on, an unfavorable sales mix and shrink, partially offset by lower freight costs.Consolidated net sales increased 6.1% to $7.32 billion. Gross profit decreased 4.7% to $2.23 billion and gross margin declined 340 basis points to 30.5%.
As for its retail locations, Dollar Tree, Inc. opened 107 new stores, relocated 33 stores and closed 29 stores in the first quarter. It also completed 252 Family Dollar store renovation projects.
Consolidated net sales for full-year fiscal 2023 are now expected to range from $30.0 billion to $30.5 billion, while the company expects consolidated net sales for the second quarter to range from $7.0 billion to $7.2 billion.
“We are rapidly executing on a multi-faceted plan to fundamentally transform and improve the operating performance of Dollar Tree and Family Dollar for the long-term,” added Dreiling. “I am encouraged by our early progress and traction on initiatives to improve our shoppers’ experience and drive store productivity. We are very confident in our plan and feel we are in control of our company’s destiny."