Dollar Tree, Inc. (NASDAQ:DLTR) today provided a business update
regarding impacts related to the novel coronavirus (COVID-19).
In March, directly related to COVID-19 concerns, both Dollar
Tree and Family Dollar stores began to experience a material
pick-up in store traffic and sales related to essential products,
including cleaning supplies and sanitizer, household products,
paper goods, food and over-the-counter medicine.
“Customers rely on Dollar Tree and Family Dollar as an essential
retailer for their daily shopping needs. Understandably, they are
very concerned about the recent global spread of the coronavirus.
Our stores experienced an unprecedented spike in demand for certain
products,” stated Gary Philbin, Chief Executive Officer. “Our
efforts have been focused on continuing to protect the health and
safety of our associates and customers, and to effectively serve
customers during their time of need.”
Recently, the Company issued three press releases related to the
current macro-environment:
- March 18 – Modifying store hours to close all stores at 8:00
p.m. local time to provide store teams adequate time to exercise
enhanced cleaning protocols and to replenish store shelves;
- March 19 – Communicating the Company’s plans to hire 25,000
motivated individuals to support its stores and distribution
centers; and
- March 25 – Rewarding hourly-paid store and distribution
associates with an estimated total of $30 million in wage premiums
for at least a four-week period in recognition of the team’s
extraordinary efforts. Additionally, the Company is dedicating the
first operating hour each morning in all 15,000-plus stores to
serving at-risk customers.
Also, to assist in minimizing exposure to COVID-19, the Company
has taken several proactive, precautionary steps, including
communicating and adhering to Centers for Disease Control and
Prevention (CDC) recommendations; equipping stores, distribution
centers and its store support center with necessary supplies for
enhanced cleaning protocol; activating its Business Response Team
to meet daily to communicate, assess and address potential exposure
throughout the organization; eliminating all non-essential air
travel; utilizing technology options for all large group meetings;
prohibiting external visitors access to its store support center;
and enabling the majority of its support teams to work remotely.
The Company’s Board of Directors remains engaged and has been
briefed on the Company’s actions in response to COVID-19 and its
impact on the Company and its stakeholders.
Regarding same-store sales trends through March 29,
quarter-to-date same-store sales were +7.1% for Dollar Tree and
+14.4% for Family Dollar. Sales have materially moderated very
recently, however, as the Company enters the peak of the Easter
selling season with Dollar Tree recording same-store sales of
-19.4% in the seven days ending March 29, and Family Dollar +8.8%.
Sales of household consumables and food remain strong in both
banners. The Company’s first quarter will end on May 2, 2020 and
the Company is scheduled to report earnings on May 28, 2020.
Sales for the remainder of the first quarter could be impacted
by uncertainties related to the Company’s ability to secure and
re-stock certain products in high demand; consumer shopping
patterns, especially in states and communities with
shelter-in-place mandates; weaker-than-expected sales and related
markdowns for certain discretionary products, and COVID-19 related
impact to the Easter holiday selling season.
The Company expects to see merchandise mix pressure to gross
margin rates in both business segments in the quarter.
Additionally, certain first quarter costs are expected to be higher
than previously anticipated, including investments in pay and
benefits, the distribution and transportation related to the
material demand volume increase in consumables, and the additional
hours dedicated to enhanced cleaning protocol in stores,
distribution centers and its store support center.
As a result of the volatile economic environment related to
COVID-19, including uncertain customer demand and government
actions, the Company has a wide range of potential financial
outcomes for the first quarter and fiscal 2020. Accordingly, the
Company is withdrawing its outlook for first quarter and full-year
fiscal 2020. The Company is in the process of reassessing its
full-year fiscal 2020 plans and initiatives given the current state
of uncertainty. In order to protect its associates, all Family
Dollar H2 renovations and Dollar Tree Snack Zone installations have
been suspended through at least April 27, 2020.
The Company has a strong balance sheet with significant
liquidity and a resilient business model. The Company has a $1.25
billion revolving line of credit. As of March 30, the Company had
approximately $1.9 billion of cash and investments, including $750
million drawn on its revolver. The Company plans to repay the
remaining $250 million of its floating rate note due in April. The
Company does not expect to repurchase shares in the near term under
the current share repurchase authorization that has $800 million
remaining.
"I could not be more proud of our team’s commitment, dedication
and efforts during this unprecedented time. Their focus on
supporting our stores and rising to the occasion to serve customers
seeking essential products has been extraordinary," added Philbin.
"Over time, Dollar Tree has demonstrated its ability to perform
well through ever-changing economies. The focus on value and
convenience may be greater in the months ahead than ever before.
Our strong balance sheet and financial flexibility, the experience
and alignment of our leadership teams and the commitment from more
than 190,000 associates across North America prepares us to be part
of the solution for millions of customers through these challenging
times."
Dollar Tree, a Fortune 200 Company, operated 15,288 stores
across 48 states and five Canadian provinces as of February 1,
2020. Stores operate under the brands of Dollar Tree, Family
Dollar, and Dollar Tree Canada. To learn more about the Company,
visit www.DollarTree.com.
A WARNING ABOUT FORWARD-LOOKING STATEMENTS: Our press release
contains "forward-looking statements" as that term is used in the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements can be identified by the fact that they address future
events, developments or results and do not relate strictly to
historical facts. Any statements contained in this press release
that are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements include,
without limitation, statements preceded by, followed by or
including words such as “believe, anticipate, expect, intend, plan,
view, target or estimate, may, will, should, predict, possible,
potential, continue, or strategy,” and similar expressions. For
example, our forward-looking statements include statements
regarding the withdrawal of prior guidance concerning first quarter
2020 and full-year fiscal 2020 results of operations, including
consolidated net sales, same-store sales, and diluted earnings per
share; our plans concerning share repurchases, loan repayments and
fiscal 2020 store openings and Family Dollar renovations into the
H2 format; the impact of the COVID-19 coronavirus and related
uncertainties on our business, business model and practices,
balance sheet, results of operations, liquidity, and fiscal 2020
outlook; our expectations regarding changes in merchandise mix,
costs and gross margin; and our other plans, objectives,
expectations (financial and otherwise) and intentions. These
statements are subject to risks and uncertainties. For a discussion
of the risks, uncertainties and assumptions that could affect our
future events, developments or results, you should carefully review
the "Risk Factors," "Business" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" sections
in our Annual Report on Form 10-K filed March 20, 2020, and other
filings with the Securities and Exchange Commission. We are not
obligated to release publicly any revisions to any forward-looking
statements contained in this press release to reflect events or
circumstances occurring after the date of this report and you
should not expect us to do so.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200331005127/en/
Dollar Tree, Inc. Randy Guiler, 757-321-5284 Vice President,
Investor Relations www.DollarTree.com DLTR-G
Dollar Tree (NASDAQ:DLTR)
Historical Stock Chart
From May 2024 to Jun 2024
Dollar Tree (NASDAQ:DLTR)
Historical Stock Chart
From Jun 2023 to Jun 2024