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Dollar Tree Q4 Earnings & Sales Miss, Stock Up on Family Dollar Sale
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Dollar Tree, Inc. (DLTR - Free Report) has reported disappointing fourth-quarter fiscal 2024 results, with both earnings and sales missing the Zacks Consensus Estimate and declining year over year. The weaker performance was primarily due to classifying Family Dollar as discontinued operations after the company decided to sell the business as part of its strategic review.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
On March 25, 2025, DLTR entered a definitive agreement to sell its Family Dollar business to Brigade and Macellum for $1.007 billion, subject to adjustments for working capital and net debt. The transaction, expected to close in 90 days, is contingent upon customary closing conditions, including U.S. antitrust approval. Net pre-tax proceeds are estimated at $804 million, with potential tax benefits of $350 million from losses on the sale. The company noted that Family Dollar will continue to be headquartered in Chesapeake, VA.
In fourth-quarter fiscal 2024, Dollar Tree classified Family Dollar as held for sale, reporting its results as discontinued operations in Dollar Tree’s financial statements. As a result, the company’s fiscal fourth-quarter earnings and sales exclude Family Dollar’s results. All prior periods are also adjusted to align with the current presentation.
Shares of Dollar Tree rose 5% in the pre-market session after its fourth-quarter fiscal 2024 announcement, highlighting the completion of the Family Dollar sale. This strategic move positions the company to unlock its full potential, focusing on long-term value creation for associates, customers and shareholders. Shares of this Zacks Rank #3 (Hold) company have lost 11.6% in the past three months compared with the industry’s 4.8% decline.
Dollar Tree’s adjusted earnings per share (EPS) from continuing operations declined 15.3% year over year to $2.11 and missed the Zacks Consensus Estimate of $2.18. EPS for the quarter included 18 from discontinued operations. Including the contribution from discontinued operations (Family Dollar), EPS would have been $2.29 in the reported quarter.
Net sales from continuing operations, excluding Family Dollar, improved 0.7% year over year to $4.997 billion and lagged the Zacks Consensus Estimate of $8.23 billion. Same-store sales (comps) grew 2% year over year. The company’s comps benefited from a 0.7% rise in traffic and a 1.3% increase in the average ticket.
The gross profit declined 2.8% year over year to $1.9 billion, with a 130-basis-points (bps) gross margin contraction to 37.6%. Loss of leverage from the extra sales week in fiscal 2023, lower initial mark-on, and higher shrink, distribution and markdown costs led to the gross margin decline, partly negated by lower freight. Freight costs included a $25-million accrual for duties tied to an anti-dumping case related to fiscal 2024 imports.
We estimated a year-over-year decline of 1.2% in adjusted gross profit and a 100-bps expansion in the gross margin.
Dollar Tree, Inc. Price, Consensus and EPS Surprise
Adjusted selling, general and administrative (SG&A) costs were 27% of sales, up 260 bps from the year-earlier quarter. The rise was driven by software impairments and the contract termination costs related to the Family Dollar sale, along with higher depreciation, stock compensation, professional fees and utility costs. The loss of leverage from the extra sales week in 2023 added to the cost pressures. These increases were partially offset by a decline in general liability claim adjustments. On an adjusted basis, the SG&A expense rate increased 100 bps to 25.1%, excluding software write-offs, stock compensation and professional fees.
Adjusted operating income fell 15.2% year over year to $627.8 million. The operating margin contracted 230 bps to 12.6%. We estimated a year-over-year decline of 13.9% in adjusted operating profit and a 90-bps contraction in adjusted operating margin.
DLTR’s Financial Health
Dollar Tree ended the fiscal 2024 with cash and cash equivalents of $1.3 billion. As of Feb. 1, 2025, net merchandise inventories were $2.67 billion, up 7.1% year over year. It had a net long-term debt, excluding the current portion, of $2.43 billion and shareholders’ equity of $3.98 billion as of Feb. 1, 2025.
In fiscal 2024, the company repurchased 3.3 million shares for $403.6 million. Although share repurchases are not included in the current outlook, as of Feb. 1, 2025, Dollar Tree holds $952 million remaining under its $2.5-billion repurchase authorization.
On March 21, 2025, the company secured a $1.5-billion revolving credit facility with JPMorgan Chase Bank, N.A. as the agent, extending its prior $1.5-billion facility, which was set to expire in December 2026. Additionally, the company established a $1-billion 364-day revolving credit facility in preparation for the upcoming maturity of its 4.00% senior notes due May 2025.
Dollar Tree’s Store Update
In fourth-quarter fiscal 2024, DLTR opened 33 Dollar Tree stores, bringing fiscal 2024 store openings to 525. At the end of fiscal 2024, the company had approximately 2,900 Dollar Tree 3.0 multi-price format stores, including 2,600 conversions and 300 new stores.
Q1 & FY25 Expectations for DLTR
Dollar Tree provided its fiscal 2025 outlook on a continuing operations basis, which includes the Dollar Tree segment, corporate, support and other functions. The company projects net sales of $18.5-$19.1 billion, supported by comps growth of 3-5%. Adjusted EPS is expected to be $5.00-$5.50.
However, earnings will be negatively impacted by 30-35 cents per share due to shared service costs tied to the Family Dollar sale, mostly concentrated in the first two quarters of fiscal 2025. While these costs will be incurred throughout 2025, the company will only receive reimbursement in the second half under a Transition Services Agreement (“TSA”), anticipated to begin upon the sale closing in June 2025.
For the fiscal first quarter, Dollar Tree anticipates net sales of $4.5-$4.6 billion, with comps growth of 3-5%. Adjusted EPS is forecast between $1.10 and $1.25, reflecting the full burden of shared services costs without any offsetting TSA reimbursements.
Gap, a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s financial-year sales and EPS indicates growth of 1.6% and 7.7%, respectively, from the year-ago quarter’s reported figures. GAP delivered a trailing four-quarter earnings surprise of 77.5%, on average.
Nordstrom is a leading fashion specialty retailer in the United States. JWN presently flaunts a Zacks Rank #1. JWN delivered a trailing four-quarter negative earnings surprise of 26.1%, on average.
The Zacks Consensus Estimate for Nordstrom’s current fiscal-year sales indicates growth of 1.9% from the year-ago quarter’s actual. The consensus mark for the current fiscal year EPS suggests a year-over-year decline of 1.8%.
Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Tapestry’s current fiscal-year sales and EPS indicates growth of 3% and 14.5%, respectively, from the year-ago quarter’s reported figures. TPR delivered a trailing four-quarter earnings surprise of 11.9%, on average.
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Dollar Tree Q4 Earnings & Sales Miss, Stock Up on Family Dollar Sale
Dollar Tree, Inc. (DLTR - Free Report) has reported disappointing fourth-quarter fiscal 2024 results, with both earnings and sales missing the Zacks Consensus Estimate and declining year over year. The weaker performance was primarily due to classifying Family Dollar as discontinued operations after the company decided to sell the business as part of its strategic review.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
On March 25, 2025, DLTR entered a definitive agreement to sell its Family Dollar business to Brigade and Macellum for $1.007 billion, subject to adjustments for working capital and net debt. The transaction, expected to close in 90 days, is contingent upon customary closing conditions, including U.S. antitrust approval. Net pre-tax proceeds are estimated at $804 million, with potential tax benefits of $350 million from losses on the sale. The company noted that Family Dollar will continue to be headquartered in Chesapeake, VA.
In fourth-quarter fiscal 2024, Dollar Tree classified Family Dollar as held for sale, reporting its results as discontinued operations in Dollar Tree’s financial statements. As a result, the company’s fiscal fourth-quarter earnings and sales exclude Family Dollar’s results. All prior periods are also adjusted to align with the current presentation.
Shares of Dollar Tree rose 5% in the pre-market session after its fourth-quarter fiscal 2024 announcement, highlighting the completion of the Family Dollar sale. This strategic move positions the company to unlock its full potential, focusing on long-term value creation for associates, customers and shareholders. Shares of this Zacks Rank #3 (Hold) company have lost 11.6% in the past three months compared with the industry’s 4.8% decline.
Image Source: Zacks Investment Research
DLTR’s Quarterly Performance: Key Metrics & Insights
Dollar Tree’s adjusted earnings per share (EPS) from continuing operations declined 15.3% year over year to $2.11 and missed the Zacks Consensus Estimate of $2.18. EPS for the quarter included 18 from discontinued operations. Including the contribution from discontinued operations (Family Dollar), EPS would have been $2.29 in the reported quarter.
Net sales from continuing operations, excluding Family Dollar, improved 0.7% year over year to $4.997 billion and lagged the Zacks Consensus Estimate of $8.23 billion. Same-store sales (comps) grew 2% year over year. The company’s comps benefited from a 0.7% rise in traffic and a 1.3% increase in the average ticket.
The gross profit declined 2.8% year over year to $1.9 billion, with a 130-basis-points (bps) gross margin contraction to 37.6%. Loss of leverage from the extra sales week in fiscal 2023, lower initial mark-on, and higher shrink, distribution and markdown costs led to the gross margin decline, partly negated by lower freight. Freight costs included a $25-million accrual for duties tied to an anti-dumping case related to fiscal 2024 imports.
We estimated a year-over-year decline of 1.2% in adjusted gross profit and a 100-bps expansion in the gross margin.
Dollar Tree, Inc. Price, Consensus and EPS Surprise
Dollar Tree, Inc. price-consensus-eps-surprise-chart | Dollar Tree, Inc. Quote
Adjusted selling, general and administrative (SG&A) costs were 27% of sales, up 260 bps from the year-earlier quarter. The rise was driven by software impairments and the contract termination costs related to the Family Dollar sale, along with higher depreciation, stock compensation, professional fees and utility costs. The loss of leverage from the extra sales week in 2023 added to the cost pressures. These increases were partially offset by a decline in general liability claim adjustments. On an adjusted basis, the SG&A expense rate increased 100 bps to 25.1%, excluding software write-offs, stock compensation and professional fees.
Adjusted operating income fell 15.2% year over year to $627.8 million. The operating margin contracted 230 bps to 12.6%. We estimated a year-over-year decline of 13.9% in adjusted operating profit and a 90-bps contraction in adjusted operating margin.
DLTR’s Financial Health
Dollar Tree ended the fiscal 2024 with cash and cash equivalents of $1.3 billion. As of Feb. 1, 2025, net merchandise inventories were $2.67 billion, up 7.1% year over year. It had a net long-term debt, excluding the current portion, of $2.43 billion and shareholders’ equity of $3.98 billion as of Feb. 1, 2025.
In fiscal 2024, the company repurchased 3.3 million shares for $403.6 million. Although share repurchases are not included in the current outlook, as of Feb. 1, 2025, Dollar Tree holds $952 million remaining under its $2.5-billion repurchase authorization.
On March 21, 2025, the company secured a $1.5-billion revolving credit facility with JPMorgan Chase Bank, N.A. as the agent, extending its prior $1.5-billion facility, which was set to expire in December 2026. Additionally, the company established a $1-billion 364-day revolving credit facility in preparation for the upcoming maturity of its 4.00% senior notes due May 2025.
Dollar Tree’s Store Update
In fourth-quarter fiscal 2024, DLTR opened 33 Dollar Tree stores, bringing fiscal 2024 store openings to 525. At the end of fiscal 2024, the company had approximately 2,900 Dollar Tree 3.0 multi-price format stores, including 2,600 conversions and 300 new stores.
Q1 & FY25 Expectations for DLTR
Dollar Tree provided its fiscal 2025 outlook on a continuing operations basis, which includes the Dollar Tree segment, corporate, support and other functions. The company projects net sales of $18.5-$19.1 billion, supported by comps growth of 3-5%. Adjusted EPS is expected to be $5.00-$5.50.
However, earnings will be negatively impacted by 30-35 cents per share due to shared service costs tied to the Family Dollar sale, mostly concentrated in the first two quarters of fiscal 2025. While these costs will be incurred throughout 2025, the company will only receive reimbursement in the second half under a Transition Services Agreement (“TSA”), anticipated to begin upon the sale closing in June 2025.
For the fiscal first quarter, Dollar Tree anticipates net sales of $4.5-$4.6 billion, with comps growth of 3-5%. Adjusted EPS is forecast between $1.10 and $1.25, reflecting the full burden of shared services costs without any offsetting TSA reimbursements.
Key Picks
We have highlighted three better-ranked stocks, namely Nordstrom (JWN - Free Report) , The Gap Inc. (GAP - Free Report) and Tapestry (TPR - Free Report) .
Gap, a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s financial-year sales and EPS indicates growth of 1.6% and 7.7%, respectively, from the year-ago quarter’s reported figures. GAP delivered a trailing four-quarter earnings surprise of 77.5%, on average.
Nordstrom is a leading fashion specialty retailer in the United States. JWN presently flaunts a Zacks Rank #1. JWN delivered a trailing four-quarter negative earnings surprise of 26.1%, on average.
The Zacks Consensus Estimate for Nordstrom’s current fiscal-year sales indicates growth of 1.9% from the year-ago quarter’s actual. The consensus mark for the current fiscal year EPS suggests a year-over-year decline of 1.8%.
Tapestry is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. TPR currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Tapestry’s current fiscal-year sales and EPS indicates growth of 3% and 14.5%, respectively, from the year-ago quarter’s reported figures. TPR delivered a trailing four-quarter earnings surprise of 11.9%, on average.