Dollar Tree Posts Q4 Gains, Shuns Tobacco

CHESAPEAKE, Va. — Dollar Tree net earnings improved by 10.2% in the fourth quarter, helped by sales growth, cost reductions, a slight improvement in margins and the effect of an extra week in the selling period, the company here said Wednesday.

Sales for the 14-week quarter, which ended Feb. 2, totaled $2.25 billion, a 15.4% increase from the 13-week fourth quarter last year. Comparable-store sales improved by 2.4%. Net income was $228.6 million, as the gross profit margin improved to 37.9% of sales.

Bob Sasser, president and chief executive officer of Dollar Tree, in a conference call discussing results acknowledged that issues including rising payroll taxes and fiscal cliff negotiations were affecting shoppers, but also said he felt the company would benefit as a result.

“The consumer is under pressure. ‘Burdened and concerned’ is the way we characterize the consumer right now. … But at Dollar Tree we think of ourselves as part of the solution for a cash-strapped customer that’s trying to balance their budget.”

Although discount competitors Dollar General and Family Dollar are rolling out tobacco to their stores, Sasser said Dollar Tree would not. “It’s bad for you, and also bad for our margins,” he said. He instead highlighted the chain’s plans to add frozen and refrigerated foods to another 475 stores in 2013.

For the 53-week fiscal year, Dollar Tree’s sales improved 11.5% to $7.4 billion vs. a 52-week year in 2011. Comps improved by 3.4%. Net income improved 8.4% to $619.3 million.