Dollar Tree grows Q4 profits
Don Hogsett -- Home Textiles Today, January 27, 2003
Although it missed Wall Street projections by more than a penny, Dollar Tree Stores Inc., the nation's largest retailer of variety merchandise at the $1.00 price-point, drove fourth-quarter profits up by 14.3 percent as it drove sales higher by more than 15 percent and slashed its interest costs by almost 80 percent.
Sales at the 2,263-unit retailer advanced by 15.8 percent, to $827.5 million from $714.8 million last year. Same-store sales were not reported in the earnings release, and the company had not yet filed its 10-Q quarterly report.
In a big lift to the bottom line, the off-price retailer slashed its interest expense by 77.7 percent, to $292,000 from $1.3 million last year, generating a cash savings of $1.0 million. The retailer's modest long-term debt, excluding the current portion, was whittled down by 50 percent, to $6 million from $12 million.
Average gross margin narrowed modestly, by 50 basis points, or one-half of a percentage point, to 37.7 percent from 38.2 percent a year ago.
The contraction, said the company, was "primarily due to higher merchandise costs, including freight, and loss of leverage on occupancy costs."
Operating costs improved slightly, by ten basis points, to 20.6 percent of sales from 20.7 percent the prior year, "primarily due to improvement sin payroll and related costs, which were somewhat offset by higher depreciation expense."
Lifted mostly by rising sales, but nicked by the margin weakness, the retailer's operating profit rose by 14.2 percent, to 13.4 percent, to $141.6 million from $124.9 million last year.
Dollar Tree Stores Inc.
|Qtr. 12/31 (x000)||2002||2001||% change|
|Oper. income (EBIT)||141,582||124,861||13.4|
|Per share (diluted)||0.76||0.67||13.4|
|Average gross margin||37.7%||38.2%||—|
|Oper. income (EBIT)||253,921||203,865||24.6|
|Per share (diluted)||1.35||1.09||23.9|
|Average gross margin||36.4%||36.0%||—|