CHESAPEAKE, Va. — Dollar Tree's profit declined in the first quarter amid an impairment charge related to its divestiture to Dollar Express.
The company's net income fell to $200.5 million, or 85 cents per share, in the quarter ended April 29, from $232.7 million, or 98 cents per share, in the year-ago period which included a tax rate benefit. Dollar Tree said it recorded an impairment charge of $50.9 million in the quarter ended April 29, due to non-payment by Dollar Express for stores bought from the company. Dollar Express is in the process of liquidating and is in default of its obligations and not cooperating, Dollar Tree said.
Adjusting for the current quarter’s receivable impairment charge and the prior-year quarter’s one-time tax benefit, Dollar Tree's diluted earnings per share improved 10.1% to an adjusted $0.98, compared to an adjusted $0.89 from the prior year quarter.
Consolidated net sales increased 4.0% to $5.29 billion, from $5.09 billion last year. Same-store sales rose 0.5%, lower than analysts expected. Same-store sales for the Dollar Tree banner increased 2.5%. Same-store sales for the Family Dollar banner decreased 1.2%.
"I am extremely pleased with the first quarter performance of our Dollar Tree banner and with the continued progress in re-building the Family Dollar business,” stated Bob Sasser, CEO. "The Dollar Tree banner continues to generate results that are strong, consistent and growing and we are enthusiastic about the opportunity to improve the Family Dollar business as we launch our renovation initiatives in the second quarter."
During the quarter, the retailer opened 164 stores, expanded or relocated 51 stores, and closed 16 stores. Dollar Tree operated 14,482 stores under three banners and across 48 states and five Canadian provinces as of April 29, 2017.
Dollar Tree estimates consolidated net sales for the second quarter of 2017 to range from $5.18 billion to $5.28 billion, based on a slightly positive to low single-digit increase in same-store sales for the combined enterprise. Diluted earnings per share are estimated to be in the range of $0.80 to $0.88.
"I believe we are squarely positioned in the most attractive sector of retail," said Sasser. "Value and convenience are important to our shoppers, and that is exactly what our Dollar Tree and Family Dollar businesses are focused on providing. We have a proven business model, an experienced leadership team, many years of store growth ahead of us, and tremendous opportunities to continue improving our businesses to deliver value to our long-term shareholders.”