DBT Bureau
Pune, 26 March 2025
- Review of Strategic Alternatives Concludes with Agreement to Sell Family Dollar
- Family Dollar Fourth Quarter and Full-Year Fiscal 2024 Results Are Reported as Discontinued Operations
- Dollar Tree Same-Store Net Sales +2.0% on +0.7% Traffic and +1.3% Ticket
- Diluted Loss per Share of $17.17 and Diluted Earnings per Share (EPS) from Continuing Operations of $1.86
- Adjusted Diluted EPS of $2.29, Including $2.11 from Continuing Operations and $0.18 from Discontinued Operations
- Full-Year Fiscal 2025 Outlook Ranges of $18.5 to $19.1 Billion for Net Sales and $5.00 to $5.50 for Adjusted EPS from Continuing Operations, Including $0.30 to $0.35 Negative Impact from Having Only Half-Year Benefit of Family Dollar TSA.
- First Quarter Fiscal 2025 Outlook Ranges of $4.5 to $4.6 Billion for Net Sales and $1.10 to $1.25 for Adjusted EPS from Continuing Operations, Including Full Shared-Service Expense Burden and No Benefit from Family Dollar TSA
Dollar Tree, Inc. reported financial results for its fourth quarter ended February 1, 2025.
“In the fourth quarter, our team was focused on successfully closing out the year, bringing the strategic review to a favorable conclusion, and setting Dollar Tree on a path to realize its full potential to create long-term value for our associates, customers, and shareholders,” said Mike Creedon, Chief Executive Officer. “We finished 2024 on a high note with strong execution at Dollar Tree as growing customer acceptance of our expanded assortment drove sales momentum. With the sale of Family Dollar set to close later this year, we will be able to fully dedicate ourselves to Dollar Tree’s long-term growth, profitability, and returns on capital.”
Sale of Family Dollar
After a thorough review of strategic alternatives, on March 25, 2025, the Company entered into a definitive agreement to sell the Family Dollar business to Brigade and Macellum for a purchase consideration of $1,007.0 million, subject to a number of adjustments, including with respect to working capital and net indebtedness. The closing of the transaction is subject to satisfaction of customary closing conditions, including receipt of US antitrust approval. Net proceeds are estimated to total approximately $804 million. Additionally, we expect the economic impact of tax benefits from losses on the sale to be approximately $350 million. The deal is expected to close in approximately 90 days with the Family Dollar business remaining headquartered in Chesapeake, Virginia.
In the fourth quarter of 2024, the Company determined that the assets of the Family Dollar business met the criteria for classification as held for sale. As such, the results of Family Dollar are presented in Dollar Tree Inc.’s financial results as discontinued operations in the Consolidated Financial Statements for all periods presented and prior periods have been adjusted to conform to the current presentation.
Unless otherwise noted, all amounts and disclosures included in this press release reflect only continuing operations. For additional information, please refer to Note 15 in our Annual Report on Form 10-K to be filed today, March 26, 2025.
Additional Business Highlights
- Opened 33 new Dollar Tree stores, bringing full-year openings to 525
- Finished fiscal 2024 with approximately 2,900 Dollar Tree 3.0 multi-price format stores, including 2,600 conversions and 300 new stores.
- For the full year, generated $2.2 billion of net cash provided by operating activities of continuing operations and $893 million of free cash flow from continuing operations
Fourth Quarter Results
Results for the fourth quarter, ended February 1, 2025, are reported on a continuing operations basis and reflect the Family Dollar segment as discontinued operations. Continuing operations reflect the results of the Dollar Tree segment and corporate, support, and other.
Also, unless otherwise noted, all comparisons are to the prior year’s fourth quarter, ended February 3, 2024, which also have been adjusted to reflect the Family Dollar segment as discontinued operations. Finally, the prior year’s fourth quarter ended February 3, 2024, included an extra week which affects year-over-year comparisons.
Net sales increased 0.7% to $5.0 billion. Same-store net sales increased 2.0%, driven by a 0.7% increase in traffic and a 1.3% increase in average ticket.
Gross profit declined 2.8% to $1.9 billion and gross margin contracted 130 basis points to 37.6%. The decline in gross margin expansion was driven primarily by the loss of leverage from the extra week of sales in 2023, lower initial mark-on, and higher shrink, distribution, and markdown cost, partially offset by lower freight. Freight costs in the quarter include $25.0 million in accrual for duties related to an anti-dumping case for product imported in fiscal 2024.
Selling, general and administrative expenses increased 260 basis points to 27.0% of total revenue. The increase was driven primarily by software impairments and related contract termination costs in connection with the decision to sell the Family Dollar business, and higher expenses across depreciation, stock compensation, professional fees, utilities costs, and the loss of leverage from the extra week of sales in 2023. The increases were partially offset by lower general liability claim adjustments.
On an adjusted basis, which does not include software write-off, stock compensation, and professional fees, selling, general and administrative expenses increased 100 basis points to 25.1% of total revenue.
Operating income decreased 26.5% to $533.6 million and operating margin contracted 390 basis points to 10.7%. Adjusted operating income decreased 15.2% to $627.8 million and adjusted operating margin contracted 230 basis points to 12.6%.
The Company’s effective tax rate was 25.9% compared to 23.7%. Adjusted effective tax rate was 24.8% compared to 23.8%.
Income from continuing operations was $400.2 million and diluted earnings per share from continuing operations was $1.86. Adjusted net income was $454.8 million and adjusted diluted EPS was $2.11.
Year-to-Date Results
Results for the 52 weeks ended February 1, 2025, are reported on a continuing operations basis and reflect the Family Dollar segment as discontinued operations. Continuing operations reflect the results of our Dollar Tree segment and corporate, support, and other.
Also, unless otherwise noted, all comparisons are to the prior 53 weeks ended February 3, 2024, which also reflect the Family Dollar segment as discontinued operations.
Net sales increased 4.7% to $17.6 billion. Dollar Tree’s same-store sales increased 1.8%, driven by a 1.6% increase in traffic and a 0.1% increase in average ticket.
Gross profit increased 4.5% to $6.3 billion and gross margin was flat at 35.8%.
Selling, general and administrative expenses were 27.5% of total revenue, compared to 25.3%. On a non-GAAP basis, selling, general and administrative expenses were 26.9% of total revenue, compared to 25.2%.
Operating income decreased 17.6% to $1.5 billion and operating income margin decreased 230 basis points to 8.3%. Adjusted operating income decreased 12.7% to $1.6 billion and adjusted operating income margin decreased 180 basis points to 8.9%.
The Company’s effective tax rate was 24.7% compared to 23.8%. Adjusted effective tax rate was 24.2% compared to 23.8%.
Income from continuing operations was $1.0 billion and diluted earnings per share from continuing operations was $4.83. Adjusted income from continuing operations was $1.1 billion and adjusted diluted earnings per share from continuing operations was $5.10.
The Company repurchased 3.3 million shares for $403.6 million, including applicable excise tax.
On March 21, 2025, the Company entered into a new $1.5 billion Revolving Credit Facility, with JPMorgan Chase Bank, N.A., as agent, extending its previous $1.5 billion credit facility which was scheduled to expire in December 2026. Additionally, the Company entered into a $1.0 billion 364-Day Revolving Credit Facility ahead of its 4.00% Senior Notes due May 2025.
Fiscal 2025 Outlook
The Company is offering its full-year fiscal 2025 outlook on a continuing operations basis, reflecting the operations of our Dollar Tree segment, which includes corporate, support, and other. A reclassification of 2024 results into continuing, discontinued, and consolidated operations is provided in the supplemental schedules below.
The Company expects its full-year fiscal 2025 net sales from continuing operations to be in the range of $18.5 billion to $19.1 billion, based on comparable store net sales growth in the range of 3% to 5%.
Our outlook for adjusted diluted EPS from continuing operations includes SG&A costs associated with shared services that are provided to the Family Dollar business. These costs will be incurred for the entirety of fiscal year 2025. Under a Transition Services Agreement (TSA) that would begin with the anticipated closing of the sale in June 2025, the Family Dollar buyer will reimburse the Company for the cost of providing these services. Because Dollar Tree will bear the full year of the costs to support Family Dollar but only expects to receive offsetting reimbursement income in the second half of the year, the Company’s earnings full-year earnings will be negatively impacted by approximately $0.30 to $0.35, with that impact concentrated in the first two quarters of the fiscal year.
Adjusted diluted EPS from continuing operations is expected to range from $5.00 to $5.50.
First Quarter 2025 Outlook
The Company expects net sales from continuing operations for the first quarter will range from $4.5 billion to $4.6 billion, based on comparable store net sales growth in the range of 3% to 5%.
Adjusted diluted EPS for the first quarter 2025 is estimated to be in the range of $1.10 to $1.25, including the full burden of the Company’s shared services expense, with no benefit from the Family Dollar TSA, which is expected to commence with the close of the transaction.
While share repurchases are not included in the outlook, as of February 1, 2025 the Company has approximately $952 million remaining under its $2.5 billion share repurchase authorization, $1.3 billion of cash and cash equivalents, no borrowings under our revolver and no commercial paper outstanding.
