Post Earnings Coverage as Dollar Tree's Q4 Earnings Surged 40.2% Y-o-Y
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Upcoming AWS Coverage on Fred's
LONDON, UK / ACCESSWIRE / March 17, 2017 / Active Wall St. announces its post-earnings coverage on Dollar Tree, Inc. (NASDAQ: DLTR). The Company released its financial results for the fourth quarter fiscal 2016 (Q4 FY16) and full year fiscal 2016 (FY16) on March 01, 2017. The Chesapeake, Virginia-based Company's net sales grew 5.0% y-o-y, while diluted EPS surged 40.2% y-o-y. Register with us now for your free membership at:
One of Dollar Tree's competitors within the Discount, Variety Stores space, Fred's, Inc. (NASDAQ: FRED), is estimated to report earnings on March 22, 2017. AWS will be initiating a research report on Fred's in the coming days.
Today, AWS is promoting its earnings coverage on DLTR; touching on FRED. Get our free coverage by signing up to:
Dollar Tree reported net sales of $5.64 billion in Q4 FY16, which came in above $5.37 billion recorded in Q4 FY15. Net sales numbers for Q4 FY16 also beat market consensus estimates of $5.63 billion. During the reported quarter, enterprise same-store sales increased 1.2% y-o-y on a constant currency basis, while the same-store sales increase was 1.3% y-o-y after adjusting for the impact of Canadian currency fluctuations.
The discount variety stores' net income increased during Q4 FY16 to $321.8 million, or $1.36 per diluted share, from $229.0 million, or $0.97 per diluted share, in Q4 FY15. Additionally, the earnings in the reported quarter included expenses of $0.03 per share pertaining to debt prepayment. Therefore the Company's adjusted earnings for Q4 FY16 were $1.39 per diluted share, which came in above Wall Street's expectations of $1.33 per diluted share.
For full year FY16, the Company's net sales stood at $20.72 billion, up 33.7% from $15.50 billion in FY15. The Company's net income surged during FY16 to $896.2 million, or $3.78 per diluted share, from $282.4 million, or $1.26 per diluted share, in FY15.
During Q4 FY16, the Company inaugurated 104 stores, expanded or relocated 27 stores, and pulled shutter on 55 stores. Additionally, the Company opened eight former Family Dollar store locations as new Dollar Tree stores. Retail selling square footage as at the end of FY16 was approximately 112.4 million square feet.
Operating Metrics
For Q4 FY16, the Company's gross profit came in at $1.81 billion, or 32.1% of net sales, compared to $1.65 billion, or 30.8% of net sales, in the year ago same period. The Company's selling, general, and administrative expenses incurred during Q4 FY16 were $1.22 billion, or 21.7%, compared to $1.18 billion, or 22.0% of net sales in Q4 FY15. Additionally, the Company's operating income rose to $586.5 million, or 10.4% of net sales, in Q4 FY16 from $469.7 million, or 8.8% of net sales, in the prior year's comparable period.
Segment Performance
During Q4 FY16, net sales at Dollar Tree were $2.90 billion compared to $2.69 billion in the year ago corresponding quarter. The segment's gross profit increased in Q4 FY16 to $1.09 billion, or 37.5% of segment sales, from $978.9 million, or 36.4% of segment sale, in Q4 FY15. Furthermore, the segment's operating income during Q4 FY16 was $476.1 million, or 16.4% of segment sales, compared to $404.4 million, or 15.0% of segment sales, in Q4 FY15.
Family Dollar's net sales increased to $2.74 billion in Q4 FY16 from $2.68 billion in the previous year's comparable period. In Q4 FY16, the segment's gross profit stood at $718.5 million, or 26.3% of segment sales, up from $673.7 million, or 25.2% of segment sale, in Q4 FY15. Additionally, the segment's operating income for the reported period came in at $110.4 million, or 4.0% of segment sales, compared to $65.3 million, or 2.4% of segment sales, in Q4 FY15.
Cash Flow and Balance Sheet
In the year ended January 28, 2017, Dollar Tree's net cash provided by operating activities surged to $1.67 billion from $802.5 million in FY15. As on January 28, 2017, the Company had cash and cash equivalents balance of $866.4 million compared to a balance of $736.1 million as on January 30, 2016. The Company reported long-term obligation of $6.17 billion in its books of accounts as on January 28, 2017, versus $7.24 billion as on January 30, 2016. Furthermore, net merchandise inventories stood at $2.87 billion as of January 28, 2017, compared to $2.89 billion as of January 30, 2016.
Earnings Outlook
In its guidance for full year FY17, Dollar Tree expects consolidated net sales to range between $21.94 billion and $22.33 billion with flat to low single-digit increase in same-store sales and 3.9% y-o-y square footage growth. Diluted earnings per share for FY17 are expected to be in the range of $4.20 to $4.56.
For Q1 FY17, consolidated net sales are estimated to be in the range of $5.26 billion to $5.35 billion with flat to low single-digit increase in same-store sales. Furthermore, the Company forecasts diluted earnings per share during Q1 FY17 to be between $0.91 and $0.98.
Stock Performance
At the close of trading session on Thursday, March 16, 2017, Dollar Tree's stock price climbed 1.30% to end the day at $75.53. A total volume of 3.59 million shares were exchanged during the session, which was above the 3-month average volume of 2.85 million shares. Shares of the company have a PE ratio of 19.96. Additionally, the stock currently has a market cap of $17.94 billion.
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