Dollar Tree reports increase in foot traffic despite soft margins

(Source: Bigstock)

Discount variety store Dollar Tree has registered an uptick in in-store traffic as customers try to capitalise on low-price offerings.

For the quarter ended July 29, consolidated net sales increased 8.2 per cent to $7.32 billion with Dollar Tree’s same-store sales up 7.8 per cent, Family Dollar’s same-store sales up 5.8 per cent and Enterprise sales up 6.9 per cent.

The business opened 118 new stores and added $3, $4 and $5 frozen and refrigerated items to 1645 additional Dollar Tree stores.

In-store traffic also increased at both chains – by 9.6 per cent at Dollar Tree and by 3.4 per cent at Family Dollar.

Rick Dreiling, chairman and CEO of Dollar Tree, said the strong sales trends were driven by increased traffic and accelerated market share gains.

Neil Saunders, MD at GlobalData, said the business has now “hit its stride” in terms of producing consistent and sustainable revenue growth.

“Some of the success comes from inflation both in the form of higher prices for essentials at Family Dollar and from the introduction of some higher price points at Dollar Tree.

“The latter has been deliberately engineered while the former is more a consequence of economic conditions, but both have been helpful to the sales line,” said Saunders.

For the full year, the group expects consolidated net sales to be in the range of $30.6 billion to $30.9 billion.

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