Dollar Tree swung to a quarterly loss after the retailer took an over $1 billion (€910 million) goodwill impairment charge, as it plans to shut nearly 1,000 stores.
In November, the discount retailer had announced that it would be reviewing its Family Dollar business, including potentially shutting down underperforming stores to return to growth.
The company said it also took a $594.4 million (€543.4 million) charge for a portfolio optimisation review and $950 million (€868.6 million) in other asset impairment charges.
Chief financial officer Jeff Davis stated, “As an organisation, we continue to execute at a high level. Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims.”
Quarterly Highlights
Dollar Tree reported a net loss of $1.71 billion (€1.6 billion), or $7.85 per share in the fourth quarter, compared with a year-ago profit of $452.2 million (€413.4 million), or $2.04 per share.
The company opened 219 new stores in the fourth quarter, taking the total full-year new store openings to 641.
Consolidated net sales increased 11.9% to $8.63 billion (€7.9 billion) during the quarter.
Same-store net sales at Dollar Tree increased 6.3%, driven by a 7.1% increase in traffic, partially offset by a 0.7% decline in average ticket.
Family Dollar’s same-store net sales decreased 1.2%, driven by a 0.7% increase in traffic, partially offset by a 2.0% decline in average ticket, the company noted.
“We finished the year strong, with fourth quarter results reflecting positive traffic trends, market share gains, and adjusted margin improvement across both segments,” said Rick Dreiling, chairperson and chief executive officer.
“While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us. As we look forward in 2024, we are accelerating our multi-price rollout at Dollar Tree and taking decisive action to improve profitability and unlock value at Family Dollar,” Dreiling added.
News by Reuters, additional reporting by ESM.
