-
-
Roku to launch subscription video channels business
-
Novo Nordisk CEO backs ending drug industry rebate system
-
Cuban Evangelicals Push Back Against Same-Sex Marriage
-
U.S. Dollar Index (DX) Futures Technical Analysis – Overtaking 97.470 Could Trigger Surge into 97.920
-
Design Capital Limited (HKG:1545) Earns A Nice Return On Capital Employed
-
Earnings Preview: Macy's to report 3Q profits
-
3 Big Stock Charts for Friday: PulteGroup, Microsoft and Hologic
-
Trump calls for shift in coronavirus strategy to allow for end to lockdowns
LeisureWASHINGTON, June 5 (Reuters) - U.S. President Donald Trump on Friday called for a shift in strategy ...2024-09-29 11:27阅读:2348- The Global Virtualization in Industrial Automation Market is expected to grow by $ 216.39 mn during 2020-2024 progressing at a CAGR of 4% during the forecast period2024-09-29 11:37
- Governor Backs Property-Tax Relief, Job Growth Fund2024-09-29 11:35
- Forex Daily Outlook – February 1, 20192024-09-29 11:21
- AMWD vs. WSC: Which Stock Should Value Investors Buy Now?2024-09-29 10:43
- Vior Completes Till Sampling and Expands Its Land Position at Skyfall, Abitibi, Quebec2024-09-29 10:21
- What Is Hope Bancorp, Inc.'s (NASDAQ:HOPE) Share Price Doing?2024-09-29 10:08
- Should You Be Excited About The Ensign Group, Inc.'s (NASDAQ:ENSG) 16% Return On Equity?2024-09-29 10:05
-
} Guardant Health Announces Pricing of Upsized Public Offering
LeisureREDWOOD CITY, Calif., June 01, 2020 (GLOBE NEWSWIRE) -- Guardant Health, Inc. (GH) (“Guardant Health ...2024-09-29 10:53阅读:659- Aptose to Hold Corporate Update Sunday, December 6th2024-09-29 12:04
- Canadians are Filing Online in Greater Numbers this Year2024-09-29 11:33
- Aurobindo Pharma to recall 80 lots of blood pressure medicine valsartan in the US2024-09-29 11:20
- The 50-State Cybersecurity Class Action Is Here to Stay. How to Defend Against It!2024-09-29 10:29
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
Read more here:
Under Armour: A Tough Start to 2020
Walmart: Continued Omni-Channel Progress
Match: An Impressive Start to 2020
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on
GuruFocus
.
Warning! GuruFocus has detected 4 Warning Signs with DLTR. Click here to check it out.
DLTR 30-Year Financial Data
The intrinsic value of DLTR
Peter Lynch Chart of DLTR
View comments
>5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
Read more here:
Under Armour: A Tough Start to 2020
Walmart: Continued Omni-Channel Progress
Match: An Impressive Start to 2020
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on
GuruFocus
.
Warning! GuruFocus has detected 4 Warning Signs with DLTR. Click here to check it out.
DLTR 30-Year Financial Data
The intrinsic value of DLTR
Peter Lynch Chart of DLTR
View comments
2024-09-29 10:28- Manali Petrochemicals Limited (NSE:MANALIPETC): The Best Of Both Worlds2024-09-29 09:51
- Does Biosearch, S.A. (BME:BIO) Create Value For Shareholders?2024-09-29 09:36
-
} Top Analyst Reports for Apple, Verizon & PayPal
ComprehensiveMonday, June 1, 2020The Zacks Research Daily presents the best research output of our analyst team. ...2024-09-29 10:31阅读:2751- Coronavirus slows, but doesn't stop real estate lending: Report2024-09-29 11:53
- Construction worker shortage tops sector concerns in 20192024-09-29 11:52
- S&P 500 Has Only Been This Expensive One Other Time — At The Peak Of The Dot-Com Bubble2024-09-29 11:47
- Oman slows spending growth in 2019 budget, may not cut deficit2024-09-29 11:37
- How to Time the Markets Like an Investing Pro - April 01, 20202024-09-29 11:18
- 3 things small business owners should know for 20192024-09-29 11:11
- University of Michigan Consumer Sentiment Index Remains Near Two-Year Lows2024-09-29 10:22
-
} Data Science Salon Launches Three Four-Day Verticalized Virtual Salons
ExplorationMIAMI, June 02, 2020 (GLOBE NEWSWIRE) --Data Science Salon announced today its plans to host three, ...2024-09-29 11:23阅读:1101- Americans See Record Fall in Consumer Spending, Savings Soar2024-09-29 12:15
- Has Shoe Carnival (SCVL) Outpaced Other Retail-Wholesale Stocks This Year?2024-09-29 11:34
- Introducing Apple Hospitality REIT (NYSE:APLE), The Stock That Dropped 20% In The Last Three Years2024-09-29 11:33
- Is Wasatch Emerging India Fund (WAINX) a Strong Mutual Fund Pick Right Now?2024-09-29 10:48
- EnerDynamic Closes Fully Subscribed Non-Brokered Private Placement Corrected Version2024-09-29 10:44
- Almost a third of Norway's car sales in 2018 electric in new record2024-09-29 10:30
- BRIEF-Scanwolf Corporation Says Teoh Teik Kean Resigned As Executive Director2024-09-29 10:03
-
} Coronavirus Could Hold Up Annual Ocean Shipping Contracts
HotspotThe degree of uncertainty within the U.S. container shipping industry is now verging on the surreal. ...2024-09-29 10:46阅读:2574- Great Ajax Corp. to Host Earnings Call2024-09-29 12:12
- Less Scottish fish for EU diners without Brexit deal -fishermen2024-09-29 12:05
- Retailers now selling liquor in Washington2024-09-29 11:35
- South Korea's December exports in surprise fall as global economy cools amid China-U.S. dispute2024-09-29 11:11
- Helius Medical Technologies, Inc. to Present at Upcoming Investor Conferences in November2024-09-29 10:55
- Do Insiders Own Shares In MIC Electronics Limited (NSE:MIC)?2024-09-29 10:44
- U.S. natgas use hits record during freeze, utilities urge conservation2024-09-29 10:44
-
} Memgen Announces Addition to Board of Directors
LeisureHOUSTON / ACCESSWIRE / April 2, 2020 /Memgen, a private biotechnology company developing innovative ...2024-09-29 12:09阅读:1905- 35 Surprising Cities With Low Costs of Living2024-09-29 12:00
- Coface SA: Disclosure of trading in own shares (excluding the liquidity agreement) made between December 24th and December 28th 20182024-09-29 11:51
- Have Insiders Been Buying Citizens First Corporation (NASDAQ:CZFC) Shares?2024-09-29 10:34
- Why the Earnings Surprise Streak Could Continue for AbbVie (ABBV)2024-09-29 10:12
- EXPLAINER-Why automakers are on a drive to sell electric cars in Europe2024-09-29 10:11
- Retailers now selling liquor in Washington2024-09-29 10:00
- BRIEF-Songz Automobile Air Conditioning Signs Agreement To Receive Land Compensation2024-09-29 09:38
友情链接
- BRIEF-Jangho Group's Unit Offers To Buy All Issued Shares In Australia's Healius
- The Zacks Analyst Blog Highlights: Darden Restaurants, Red Robin Gourmet Burgers, AFC Enterprises, Burger King Worldwide and AK Steel Holding
- BRIEF-Shenji Group Kunming Machine Tool Sees FY Consol Net Loss Attributable RMB251.1 MLN
- Indian manufacturing growth slows in December despite price cuts: PMI
- James Gunn Debunks More Superman DCU Casting Rumors
- Top economists expect 'leaner' times ahead: Survey
- UAE Energy Minister remains optimistic about energy market balance
- How to Open a Money Market Account
- 5 Top Stocks to Break the 'October Effect' Jinx
- DANONE : Information on the total number of voting rights and shares