A pandemic-driven rush to stock up on essentials like toilet paper and batteries as well as other low-budget items like arts and crafts supplies helped discount retailer Dollar Tree (DLTR) - Get Report post stronger-than-expected first-quarter earnings and sales.
The Chesapeake, Va.-based chain on Thursday posted adjusted first-quarter earnings of $247.6 million, or $1.04 a share, vs. $267.9 million, or $1.14 a share, a year ago. Sales were $6.29 billion vs. $5.81 billion in the year-earlier quarter.
While below last year's numbers, the results beat analysts' forecasts. Analysts polled by FactSet had been expecting per-share earnings of 85 cents on sales of $6.1 billion.
Same-store sales, a key metric used to measure in-store sales activity, rose 7% during the quarter. Same-store sales for the Family Dollar brand increased 15.5% while Dollar Tree same-store sales dropped 0.9%, the company said.
“After a relatively normal first month in the quarter, our stores experienced an unprecedented spike in demand for certain products in March,” CEO Gary Philbin said.
Offsetting that demand were sales of Easter holiday items, which were “materially impacted” during the quarter, “affecting Dollar Tree’s overall comp for the quarter by approximately 490 basis points,” the company said.
Like many public companies, Dollar Tree withdrew its first quarter and fiscal 2020 guidance at the end of March. It said on Thursday that it will continue to withhold guidance due to what it called “variability” of vendor supply chains as well volatility in consumer demand.
Capital expenditures, including still-in-play plans to open 325 Dollar Tree and 175 Family Dollar stores in 2020, are expected to be approximately $1 billion vs. original expected costs of $1.2 billion, the company said.
Dollar Tree ended the quarter with $1.76 billion in cash on its balance sheet, including $750 million drawn on its revolving line of credit. It suspended its stock buyback program in March.
Shares of Dollar Tree surged more than 12% to $98.63 in trading on Thursday.