Shares of Dollar Tree (NASDAQ:DLTR) are lower in Wednesday’s premarket trade after Q4 results came in below Wall Street’s expectations and the company set lackluster guidance for Q1 and 2024.
Shares were more than 7% lower before Wednesday’s open.
The Virginia-based discount retailer earned a profit of $2.55 per share, up from $2.04 per share in the same quarter last year, on a 12% gain in sales to $8.64B. Both, however, missed expectations by ten cents and $10M, respectively.
Enterprise same-store sales (including Family Dollar) were up 3%, driven by a 4.6% increase in traffic. Dollar Tree (DLTR) same store net sales were up 6.3% while Family Dollar same store sales were down 1.2%.
Driven by lower freight costs, sales leverages and higher allowances, the company’s gross profit margin increased 120 basis points to 32.1%, while the adjusted gross margin increased 220 basis points to 33.1%. Operating margin expanded by 70 basis points to 8.7%.
SG&A expenses were 54% of total revenue compared to 22.9% last year with the higher costs partially attributed to litigation charges.
Looking ahead to 2024, the company plans to close approximately 600 Family Dollar stores in H1 with another 370 Family Dollar and 30 Dollar Tree stores slated for closure over the next several years. This portfolio review cost the company $594.4M in addition to a goodwill impairment charge of $1.07B and a trade name intangible asset impairment cost of $950M.
For Q1, Dollar Tree (DLTR) expects to earn a profit of $1.33 to $1.48 per share on $7.6B to $7.9B below expectations for a profit of $1.71 per share on $7.69B in sales.
In 2024, the company is projecting earnings to be within the range of $6.70 to $7.07 on sales of $31.0B to $32.0B. This compares to estimates of a profit of $7.07 per share on $31.74B in revenue.
