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Dollar Tree’s 2Q17 Results Beat Expectations

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Part 2
Dollar Tree’s 2Q17 Results Beat Expectations PART 2 OF 7

Dollar Tree’s 2Q17 Top Line Driven by Positive Comparables

Dollar Tree beat 2Q17 top-line expectations

Dollar Tree Stores (DLTR), which reported its fiscal 2Q17 results on August 24, 2017, posted a 5.7% rise in total sales. Its revenue stood at $5.3 billion, which was $45.0 million more than the consensus data compiled by Reuters. Its top-line growth was fueled by positive comps (comparables) at its Dollar Tree and Family Dollar banners.

Dollar Tree’s 2Q17 Top Line Driven by Positive Comparables

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“I’m extremely pleased with the quarter delivered by both the Dollar Tree banner and the Family Dollar banner. Dollar Tree continues to gain momentum and deliver its 38th consecutive quarter of positive comp store sales. Both banners were successful in driving sales, enhancing gross margin, and leveraging SG&A effectively as compared to the prior year’s quarter,” stated Bob Sasser, Dollar Tree’s chief executive officer.

Competitor Dollar General (DG), which is slated to report its first quarter results on August 31, 2017, is expected to register a 7.6% rise in sales.

What drove the 2Q17 top line?

The 5.7% rise in Dollar tree’s top line was driven by an 8.3% rise in Dollar Tree banner sales and a 3.3% rise in Family Dollar sales. Enterprise same-store sales increased 2.4%, and the company opened 99 new stores during the quarter.

Growth in Dollar Tree stores was anchored by a 3.9% rise in same-store sales and 62 net new store openings. The current quarter represents the 38th consecutive quarter of positive sales comps for the Dollar Tree banner.

Family Dollar comps also turned positive and rose 1.0% during the quarter. Analysts on average were expecting a 0.60% rise in 2Q17 comps.

“Visits to Family Dollar stores show better stock levels, improved merchandising and more compelling assortment of products,” said Anthony Riva, an analyst at GlobalData Retail.

Investors looking for exposure to Dollar Tree through ETFs can consider the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 0.74% of its total holdings in the company.

In the next part of this series, we’ll take a look at the company’s 2Q17 profitability and margins.

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