A red-tag sale designed to empty Family Dollar stores of slow-moving and nonproductive items helped to drive higher quarterly revenues and speed an ongoing effort to clean up the acquired units while pressuring earnings, parent company Dollar Tree said Tuesday.
Reporting a full quarter of results including Family Dollar sales for the first time, Dollar Tree said sales soared by 136% to $4.95 billion, with comparable-store sales increasing by 2.1%, or 1.7% when adjusted for Canadian currency. Net earnings of $81.9 million were down by 38.4% from the same period last year. Adjusted earnings of 49 cents per share was slightly lower than analyst estimates.
In a conference call discussion results, Bob Sasser said a September “red tag” sale at Family Dollar stores — during which the company eliminated $135 million in aged and non-productive items — helped to improve store conditions and reduce inventories. “Customers are already seeing cleaner aisles with less clutter,” he said.
Sasser added that the company had already converted 147 Family Dollar stores to the Dollar Tree banner, with plans to complete 200 conversion by year-end. In January, Sasser said, the company will commence on previously announced plans to flip its Deals stores to the Dollar Tree banner, with plans on converting all 220 of those stores by July.
Sasser said he would likely slow new-store growth for the Family Dollar banner next year, although he declined to provide precise figures.
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