Dollar Tree, Inc. (NASDAQ:DLTR) saw its shares gain ground on reporting quarterly earnings.
Consolidated net sales increased 7.5% to $6.18 billion from $5.75 billion in the prior year’s third quarter. Enterprise same-store sales increased 5.1%. Same-store sales for Family Dollar increased 6.4%. Dollar Tree same-store sales increased 4.0%.
Gross profit increased 12.9% to $1.92 billion in the quarter compared to the prior year’s third quarter. Gross margin increased 150 basis points to 31.2%, compared to 29.7% in the prior year’s quarter.
The increase in gross margin was driven by improved merchandise costs including freight, leverage on occupancy costs from stronger same-store sales, improved shrink results and reduced markdowns, partially offset by higher distribution costs, which included $10.9 million in COVID-19-related payroll costs.
Selling, general and administrative expenses were 23.7% of net sales, compared to 23.5% of net sales in the prior year's third quarter. The increase was driven by COVID-19 costs of $35.3 million, or 57 basis points, related to frontline associate wage premiums, field management bonuses and store cleaning/PPE supplies.
Operating income for the quarter improved 29.9% to $465.5 million, compared with $358.4 million in the same period last year and operating income margin was 7.5% in the current quarter, compared to 6.2% in last year’s quarter. The third quarter of 2020 included total incremental operating costs of $46.3 million, or $0.15 per diluted share, for COVID-19-related expenses.
DLTR shares galloped $10.32, or 10.6%, to $107.93.
