Dollar Tree (DLTR), or any brick-and-mortar store for that matter, has three important revenue drivers that are responsible for top-line growth. This growth is comparable to store sales growth, changes in sales area, and new area maturity. In the next couple of articles, we’ll analyze these metrics of Dollar Tree (DLTR).
Comparable store sales growth
Comparable store sales is the most important metric to gauge organic growth in the retail industry. It measures growth in revenue that the company has generated in the recent accounting period, assuming the company hasn’t changed over the last comparable period. So it ignores revenue that comes in inorganic ways like mergers and acquisitions, new store openings, and even foreign exchange rate fluctuations.
Let’s have a look at comparable store sales growth for Dollar Tree (DLTR) historically.
As you can see in the above chart, Dollar Tree (DLTR) is growing in both fronts, organically as well as inorganically, which is a good sign for the future of the company.
2Q15 comparable sales growth
In 2Q15, Dollar Tree (DLTR) reported comparable growth of 2.7% on a constant currency basis. Total revenue growth for the quarter was 48.3%, as you can see in the above chart. This huge difference was due to fully integrating Family Dollar Stores into the company and making it a new segment.