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Stock Analysis on Net

Dollar Tree Inc. (NASDAQ:DLTR)

This company has been moved to the archive! The financial data has not been updated since November 22, 2022.

Common-Size Income Statement

Dollar Tree Inc., common-size consolidated income statement

Microsoft Excel
12 months ended: Jan 29, 2022 Jan 30, 2021 Feb 1, 2020 Feb 2, 2019 Feb 3, 2018 Jan 28, 2017
Net sales 100.00 100.00 100.00 100.00 100.00 100.00
Cost of sales -70.63 -69.47 -70.18 -69.56 -68.43 -69.14
Gross profit 29.37% 30.53% 29.82% 30.44% 31.57% 30.86%
Other revenue 0.04 0.00 0.00 0.00 0.00 0.00
Selling, general and administrative expenses, excluding Goodwill impairment and Receivable impairment -22.52 -23.13 -23.15 -22.61 -22.50 -22.64
Goodwill impairment 0.00 0.00 -1.33 -11.95 0.00 0.00
Receivable impairment 0.00 0.00 0.00 0.00 -0.08 0.00
Selling, general and administrative expenses -22.52% -23.13% -24.47% -34.56% -22.58% -22.64%
Operating income (loss) 6.88% 7.40% 5.35% -4.12% 8.99% 8.23%
Interest expense, net -0.68 -0.58 -0.69 -1.62 -1.36 -1.81
Other income (expense), net 0.00 0.00 -0.01 0.00 0.03 0.00
Income (loss) before income taxes 6.20% 6.82% 4.65% -5.74% 7.66% 6.42%
Provision for income taxes -1.16 -1.56 -1.15 -1.23 0.05 -2.09
Net income (loss) 5.05% 5.26% 3.50% -6.97% 7.71% 4.33%

Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).

The financial analysis reveals a period of relative stability in gross margins, interrupted by a significant non-recurring impairment event in 2019, followed by a recovery and stabilization of net profitability through 2022.

Gross Profitability Trends
Cost of sales remained consistently between 68.43% and 70.63% of net sales. Consequently, gross profit margins fluctuated within a narrow band, peaking at 31.57% in 2018 before experiencing a gradual decline to 29.37% by 2022. This indicates a slight long-term compression in the company's ability to maintain its gross margin percentage.
Operating Expense Analysis
Core selling, general, and administrative (SG&A) expenses, excluding impairments, demonstrated high stability, hovering between 22.50% and 23.15% of net sales. A significant anomaly occurred in 2019, where total SG&A spiked to 34.56% due to a goodwill impairment charge of 11.95%. Aside from this specific event and a smaller impairment in 2020, the operational expense structure remained consistent.
Operating and Net Income Volatility
Operating income exhibited extreme volatility, moving from a high of 8.99% in 2018 to a negative 4.12% in 2019, directly correlating with the goodwill impairment. A recovery followed, with operating margins returning to positive territory at 5.35% in 2020 and reaching 6.88% by 2022. Net income mirrored this pattern, recovering from a loss of 6.97% in 2019 to stabilize between 5.05% and 5.26% in the final two years of the period.
Financing and Tax Obligations
Interest expense as a percentage of net sales showed a marked downward trend, falling from 1.81% in 2017 to 0.68% in 2022. This suggests an improvement in debt management or a reduction in leverage relative to the growth of net sales. The provision for income taxes remained relatively stable as a percentage of sales, with the exception of 2018, where a minimal provision of 0.05% was recorded.

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