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Dollar Tree, Inc. (NASDAQ: DLTR) has announced its financial results for the third quarter of fiscal 2024, ending November 2, 2024. The company reported consolidated net sales of $7.56 billion, marking a 3.5% increase compared to the same period in the previous year.

This growth was driven by a 1.8% rise in enterprise same-store net sales, with the Dollar Tree segment witnessing a 1.8% increase in same-store sales and Family Dollar experiencing a 1.9% growth. The increase in sales was attributed to a 1.6% rise in traffic and a slight 0.2% increase in the average ticket size.

Operating income for the quarter climbed 10.5% to $333.4 million, with an operating margin expansion of 30 basis points to 4.4%. The company also reported a gross profit increase of 7.6% to $2.34 billion, with gross margin expanding by 120 basis points to 30.9%. This expansion was primarily driven by lower freight costs and improved shrink results, despite higher distribution costs. Net income for the quarter was $233.3 million, translating to diluted earnings per share (EPS) of $1.08, a notable 11.3% increase from the previous year.

The company opened 249 new Dollar Tree stores and six new Family Dollar stores during the quarter. Approximately 2,300 Dollar Tree stores have been converted to an in-line multi-price format, reflecting the company’s ongoing efforts to enhance store formats and customer experience. Additionally, Dollar Tree generated $785.6 million in net cash from operating activities and $359.2 million in free cash flow, showcasing robust cash generation capabilities.

Dollar Tree Beats Market Expectations in Third Quarter FY24

Dollar Tree’s third-quarter performance exceeded market expectations. The company reported diluted EPS of $1.08, slightly surpassing the anticipated EPS of $1.07. Additionally, the adjusted diluted EPS came in at $1.12, reflecting a 15.5% increase compared to the previous year.

The company’s net sales of $7.56 billion also surpassed the expected revenue of $7.45 billion, indicating stronger-than-anticipated sales performance. The increase in same-store sales across both Dollar Tree and Family Dollar segments contributed to this outperformance. The company’s strategic focus on optimizing store formats and enhancing customer experience appears to be yielding positive results.

Despite facing challenges such as higher depreciation expenses from store investments and increased professional fees related to strategic reviews, Dollar Tree managed to deliver strong financial results. The company’s effective tax rate increased to 23.7% from 21.8%, yet it did not significantly impact the overall performance. The adjusted effective tax rate was 23.8%, reflecting the company’s ability to manage tax-related expenses efficiently.

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Dollar Tree Updates Full Year Fiscal 2024 Outlook

Dollar Tree has updated its full-year fiscal 2024 outlook. The company now expects consolidated net sales to range between $30.7 billion and $30.9 billion. This updated guidance reflects the company’s confidence in sustaining its growth trajectory and achieving low-single-digit comparable store net sales growth for both Dollar Tree and Family Dollar segments.

For the fourth quarter of fiscal 2024, Dollar Tree anticipates consolidated net sales to fall within the range of $8.1 billion to $8.3 billion. The company expects adjusted diluted EPS for the fourth quarter to be between $2.10 and $2.30.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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