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Dollar Tree Logs Mixed Quarter Amid Continued Brick-and-Mortar Expansion

Dollar Tree Inc. recorded a mixed fourth quarter as it continued to work on expanding its brick-and-mortar fleet as well as introduced a new format of stores.

For the three months ended Jan. 30, the Chesapeake, Va.-based retailer logged adjusted earnings of $2.13 per share, compared with the prior year period’s adjusted earnings of $1.79 per share. Analysts had predicted earnings of $2.11 per share. Revenues improved 7.2% to $6.77 billion, versus market watchers’ forecasts of $6.79 billion.

According to the discount chain, enterprise same-store sales rose 4.9% on a constant currency basis, with comps at Family Dollar jumping 8.1% and those at Dollar Tree climbing 2.4%.

“I am very pleased with the team’s operating performance for the fourth quarter, highlighted by a solid same-store sales increase, improved gross margin and expense leverage,” president and CEO Michael Witynski said in a statement.

Over the three-month period, the company opened 124 new locations, expanded or relocated 11 units and shuttered 45 outposts. In addition, it completed 106 Family Dollar store renovations.

What’s more, Dollar Tree has finished rolling out its expanded Crafter’s Square assortment to all locations and Dollar Tree Plus — an initiative that offers merchandise above $1 at its stores — to a total of 500 outposts. Family Dollar has also joined forces with delivery service firm Instacart — a partnership that the company suggested was “continuing to see strong results.”

In addition, the retailer announced that its new “combination store format,” which debuted in nearly 50 small towns and rural communities last year, has performed “extremely well.” The format, according to the company, combines Family Dollar’s “value and assortment” with Dollar Tree’s “‘thrill of the hunt’ and fixed price-point” and targets areas with populations of around 3,000 to 4,000 people. It shared that, compared with other Family Dollar stores located in small markets, the “combination stores” deliver a same-store sales lift of greater than 20% on average.

During the quarter, Dollar Tree Inc. also repurchased 1.83 million shares for $200 million. Following a recent $2 billion increase in its share repurchase authorization, combined with a remaining $400 million, it now has $2.4 billion in its share repurchase authorization program.

For the 2020 fiscal year, the company posted adjusted earnings of $5.65 per share, compared with the prior year’s adjusted earnings of $4.76 per share. Revenues advanced 8% to $25.51 billion. Enterprise same-store sales saw an uptick of 6.1% on a constant currency basis, with comps at Family Dollar and Dollar Tree accelerating a respective 10.5% and 2.2%.

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