Dollar Tree To Offload Family Dollar Business For $1 Billion, Anticipates 3% To 5% Standalone Same-Store Sales Growth

Dollar Tree Inc ( DLTR ) shares are trading higher in premarket after the fourth-quarter FY24 earnings.

On Wednesday, the company reported fourth-quarter sales of $8.26 billion, beating the analyst consensus estimate of $8.24 billion.

Adjusted EPS of $2.29 also beat the consensus estimate of $2.19.

The revenue and adjusted EPS data includes the discontinued operations of Family Dollar. All the other data excludes Family Tree operations.

Dollar Tree ( DLTR ) reached an agreement today, under which Brigade Capital Management, LP (Brigade) and Macellum Capital Management, LLC (Macellum) will partner to acquire the company’s Family Dollar business segment for $1.007 billion.

Following an extensive evaluation of various options for the Family Dollar segment, the leadership team and Board of Directors at Dollar Tree ( DLTR ) concluded that selling Family Dollar to Brigade and Macellum would create the greatest value for Dollar Tree ( DLTR ) shareholders and set Family Dollar up for long-term success.

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Net proceeds from the sale are estimated to total approximately $804 million.

Same-store sales increased 2% for the Dollar Tree ( DLTR ) segment, and the sales gained 0.7% on a continuing operations basis.

Gross profit for the quarter decreased 2.8% Y/Y to $1.9 billion, and the gross margin contracted 130 basis points to 37.6%.

Operating income for the quarter plunged 26.5% to $533.6 million, and the margin contracted 390 basis points to 10.7%. 

The company held $1.25 billion in cash and equivalents as of February 1. Operating cash flow for the year totaled $2.2 billion with a free cash flow of $893 million, based on continuing operations.

The company opened 33 new Dollar Tree ( DLTR ) stores in the quarter, bringing full-year openings to 525. Dollar Tree ( DLTR ) repurchased 3.3 million shares for $403.6 million, including applicable excise tax.

“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 ( DLTR ) on a path to realize its full potential to create long-term value for our associates, customers, and shareholders,” said CEO Mike Creedon.

Outlook: Dollar Tree sees FY25 sales from continuing operations of $18.5 billion – $19.1 billion. Same store sales growth of 3% – 5%. The company anticipates FY25 adjusted EPS from continuing operations of $5.00 – $5.50.

Dollar Tree ( DLTR ) sees first-quarter revenue from continuing operations of $4.5 billion – $4.6 billion. Same store sales growth of 3% – 5%. The company expects first-quarter adjusted EPS of $1.10 – $1.25.

Price Action: DLTR shares traded higher by 3.10% at $69.22 in premarket at last check Wednesday.

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