A renewed focus on food and drink propelled Dollar Tree to a strong third quarter as consumers increasingly turn to extreme discounters amid soaring inflation, the retailer announced early Tuesday.
Same-store sales across the business climbed 6.5% for the period ended Oct. 29, reflecting an 8.6% increase at Dollar Tree and a 4.1% bump at the Family Dollar banner.
The Chesapeake, Virginia-based discounter reported its operating income increased 22.8%, to $381.3 million, while margins improved 70 basis points to 5.5%.
For the nine months ended Oct. 30, Dollar Tree’s same-store sales rose 9.2%, largely driven by a double-digit increase in average ticket that was offset by a traffic slowdown.
The solid Q3 performance prompted Dollar Tree to boost its sales outlook for the year, with consolidated net sales for 2022 now expected to range from $28.14 billion to $28.28 billion, up from the previous range of $27.85 billion to $28.10 billion. Dollar Tree said it expects to report mid-single-digit same-store sales growth for the year, with Dollar Tree performing better than Family Dollar.
An emphasis on food and beverage sales drove Dollar Tree’s results during the quarter, CEO Mike Witynski said in a statement.
“The efforts to evolve the assortment to drive consumables performance at Dollar Tree, combined with initiatives designed to improve the value proposition at Family Dollar, are working,” Witynski said. “We believe we will continue to be part of the solution to millions of households seeking value at a time when they need us most.”
Earlier this month, West Coast discounter Grocery Outlet reported same-store sales growth of 15.4% during the third quarter, driven by inflation-pressed shoppers.
Dollar Tree said it has now fully rebuilt its C-suite after most of the chain’s executives left the company last summer. Late last week, the company added several new people to leadership posts, including Jennifer Bohaty as chief compliance officer, Terence Goods as chief diversity officer, Jennifer Silberman as chief sustainability officer and Kristin Tetreault as chief communications officer.
In September, the company announced the hiring of Pedro Voyer as chief development officer, just days after naming Michael Creedon, Jr., chief operating officer.
In July, Bobby Aflatooni was added as Dollar Tree’s CIO, replacing Andy Paisley who exited the company during the shake-up.
“I am extremely confident in the new leadership team we have in place,” Witynski said. “We are eager to share more details about the opportunity ahead of us, and the path to get there, in the months ahead. We are focused and energized and believe we are very well positioned to delivery long-term, profitable growth.”
Dollar Tree ended the third quarter with 8,114 Dollar Tree locations and 8,179 Family Dollar stores, for a total store count of 16,293. The retailer closed 41 locations during the period but added 102 new stores.
This month marks one year since Dollar Tree raised most of its prices from $1 to $1.25 to boost its margins during a time of skyrocketing freight costs, supply chain disruptions and inflationary pressures.