Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
Profitability Ratios (Summary)
Return on Sales
Return on Investment
Dollar Tree Inc., profitability ratios
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 profitability profile over the analyzed six-year period is characterized by general stability, interrupted by a significant contraction in the fiscal year ending February 2, 2019, followed by a consistent recovery. While the core ability to generate gross profit remained steady, bottom-line metrics and return ratios experienced substantial volatility during the middle of the period.
- Gross Profit Margin
- The gross profit margin remained relatively consistent, fluctuating within a narrow range between 29.37% and 31.57%. This stability indicates a consistent relationship between pricing and the cost of goods sold, regardless of the volatility observed in operating expenses and net income.
- Operating and Net Profit Margins
- A sharp decline is evident in the fiscal year ending February 2, 2019, where the operating profit margin fell to -4.12% and the net profit margin dropped to -6.97%. This represents a significant departure from the positive margins observed in 2017 and 2018. A recovery followed in the subsequent years, with net profit margins stabilizing between 3.50% and 5.26% from 2020 through 2022.
- Return on Equity (ROE) and Return on Assets (ROA)
- Return metrics mirrored the volatility of the net profit margin. ROE shifted from a peak of 23.87% in 2018 to a low of -28.19% in 2019, before rebounding to a range of 13.22% to 18.42% in the following three years. Similarly, ROA experienced a steep decline to -11.78% in 2019, later recovering and normalizing between 4.22% and 6.48%.
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Gross Profit Margin
Dollar Tree Inc., gross profit margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Gross profit | 7,725,900) | 7,787,400) | 7,040,700) | 6,947,500) | 7,021,900) | 6,394,700) | |
| Net sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Profitability Ratio | |||||||
| Gross profit margin1 | 29.37% | 30.53% | 29.82% | 30.44% | 31.57% | 30.86% | |
| Benchmarks | |||||||
| Gross Profit Margin, Competitors2 | |||||||
| Costco Wholesale Corp. | 10.48% | 11.13% | — | — | — | — | |
| Target Corp. | 29.28% | 29.27% | — | — | — | — | |
| Walmart Inc. | 24.44% | 24.30% | — | — | — | — | |
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).
1 2022 Calculation
Gross profit margin = 100 × Gross profit ÷ Net sales
= 100 × 7,725,900 ÷ 26,309,800 = 29.37%
2 Click competitor name to see calculations.
Net sales demonstrated consistent growth over the six-year period, while the gross profit margin experienced volatility, ultimately reaching its lowest point in the final year despite record-high revenue.
- Revenue Growth Trends
- Net sales exhibited a steady upward trajectory, rising from 20,719,200 thousand in 2017 to 26,309,800 thousand in 2022. This indicates a continuous expansion of the company's top-line performance throughout the analyzed timeframe.
- Gross Profit Trajectory
- Gross profit generally increased in alignment with net sales, though the growth was not linear. Notable increases occurred in 2018 and 2021, while slight declines were observed in 2019 and 2022. The gross profit reached its peak in 2021 at 7,787,400 thousand before dipping slightly in 2022.
- Gross Profit Margin Fluctuations
- The gross profit margin peaked at 31.57% in 2018 but trended generally downward thereafter, with a brief recovery in 2021. By 2022, the margin declined to 29.37%, the lowest value in the sequence. This represents a compression of 2.2 percentage points from the 2018 peak.
- Profitability Analysis
- A divergence is observed between the growth in net sales and the stability of the gross profit margin. The decline in the margin to 29.37% in 2022, coinciding with the highest recorded net sales, indicates that the cost of goods sold increased at a faster rate than revenue, leading to reduced operational efficiency at the gross level.
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Operating Profit Margin
Dollar Tree Inc., operating profit margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Operating income (loss) | 1,811,400) | 1,887,900) | 1,262,200) | (939,500) | 1,999,100) | 1,704,800) | |
| Net sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Profitability Ratio | |||||||
| Operating profit margin1 | 6.88% | 7.40% | 5.35% | -4.12% | 8.99% | 8.23% | |
| Benchmarks | |||||||
| Operating Profit Margin, Competitors2 | |||||||
| Costco Wholesale Corp. | 3.50% | 3.49% | — | — | — | — | |
| Target Corp. | 8.44% | 6.99% | — | — | — | — | |
| Walmart Inc. | 4.57% | 4.06% | — | — | — | — | |
| Operating Profit Margin, Sector | |||||||
| Consumer Staples Distribution & Retail | 4.76% | 4.26% | — | — | — | — | |
| Operating Profit Margin, Industry | |||||||
| Consumer Staples | 8.44% | 8.48% | — | — | — | — | |
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).
1 2022 Calculation
Operating profit margin = 100 × Operating income (loss) ÷ Net sales
= 100 × 1,811,400 ÷ 26,309,800 = 6.88%
2 Click competitor name to see calculations.
Between the fiscal years ending January 2017 and January 2022, a consistent increase in net sales is observed, with revenue growing from approximately 20.7 billion USD to 26.3 billion USD. Despite this steady top-line expansion, the operating profit margin exhibited significant volatility, characterized by a severe contraction in 2019 followed by a period of recovery and stabilization.
- Revenue Growth Trajectory
- Net sales demonstrated an uninterrupted upward trend throughout the analyzed period. This growth indicates a consistent expansion of the company's scale, moving from 20.7 billion USD in 2017 to 26.3 billion USD by 2022.
- Operating Income Volatility
- Operating performance experienced a dramatic fluctuation. After reaching a peak of 1.99 billion USD in 2018, operating income fell sharply to a loss of 939.5 million USD in 2019. This resulted in the operating profit margin dropping from 8.99% to -4.12%, marking the only year of negative profitability in the dataset.
- Recovery and Stabilization Phase
- A recovery in operational efficiency began in 2020, with the operating profit margin returning to 5.35%. This recovery peaked in 2021 at 7.40%, as operating income rose to 1.89 billion USD. In 2022, a slight contraction in the operating profit margin to 6.88% occurred, although operating income remained resilient at 1.81 billion USD.
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Net Profit Margin
Dollar Tree Inc., net profit margin calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 1,327,900) | 1,341,900) | 827,000) | (1,590,800) | 1,714,300) | 896,200) | |
| Net sales | 26,309,800) | 25,508,400) | 23,610,800) | 22,823,300) | 22,245,500) | 20,719,200) | |
| Profitability Ratio | |||||||
| Net profit margin1 | 5.05% | 5.26% | 3.50% | -6.97% | 7.71% | 4.33% | |
| Benchmarks | |||||||
| Net Profit Margin, Competitors2 | |||||||
| Costco Wholesale Corp. | 2.62% | 2.61% | — | — | — | — | |
| Target Corp. | 6.55% | 4.67% | — | — | — | — | |
| Walmart Inc. | 2.41% | 2.43% | — | — | — | — | |
| Net Profit Margin, Sector | |||||||
| Consumer Staples Distribution & Retail | 2.95% | 2.72% | — | — | — | — | |
| Net Profit Margin, Industry | |||||||
| Consumer Staples | 6.11% | 6.21% | — | — | — | — | |
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).
1 2022 Calculation
Net profit margin = 100 × Net income (loss) ÷ Net sales
= 100 × 1,327,900 ÷ 26,309,800 = 5.05%
2 Click competitor name to see calculations.
The financial performance over the analyzed six-year period is characterized by consistent top-line growth contrasted with significant volatility in bottom-line profitability and net margins.
- Revenue Growth Trends
- Net sales exhibited a steady and uninterrupted upward trajectory, increasing from US$ 20.72 billion in 2017 to US$ 26.31 billion in 2022. This indicates a consistent expansion of the company's scale of operations throughout the period.
- Net Income Volatility
- Net income experienced substantial fluctuations. Following a peak of US$ 1.71 billion in 2018, a significant reversal occurred in 2019, resulting in a net loss of US$ 1.59 billion. Profitability returned to positive territory in 2020 and subsequently stabilized, with 2021 and 2022 recording net incomes of US$ 1.34 billion and US$ 1.33 billion, respectively.
- Net Profit Margin Analysis
- The net profit margin mirrored the volatility of net income. The margin expanded from 4.33% in 2017 to a high of 7.71% in 2018, before contracting sharply to -6.97% in 2019. A recovery phase began in 2020 with a margin of 3.50%, eventually normalizing to a range between 5.05% and 5.26% by 2022.
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Return on Equity (ROE)
Dollar Tree Inc., ROE calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 1,327,900) | 1,341,900) | 827,000) | (1,590,800) | 1,714,300) | 896,200) | |
| Shareholders’ equity | 7,718,500) | 7,285,300) | 6,254,800) | 5,642,900) | 7,182,300) | 5,389,500) | |
| Profitability Ratio | |||||||
| ROE1 | 17.20% | 18.42% | 13.22% | -28.19% | 23.87% | 16.63% | |
| Benchmarks | |||||||
| ROE, Competitors2 | |||||||
| Costco Wholesale Corp. | 28.31% | 28.51% | — | — | — | — | |
| Target Corp. | 54.15% | 30.25% | — | — | — | — | |
| Walmart Inc. | 16.42% | 16.69% | — | — | — | — | |
| ROE, Sector | |||||||
| Consumer Staples Distribution & Retail | 22.67% | 20.26% | — | — | — | — | |
| ROE, Industry | |||||||
| Consumer Staples | 32.10% | 31.40% | — | — | — | — | |
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).
1 2022 Calculation
ROE = 100 × Net income (loss) ÷ Shareholders’ equity
= 100 × 1,327,900 ÷ 7,718,500 = 17.20%
2 Click competitor name to see calculations.
The analysis of the company's return on equity (ROE) from 2017 to 2022 reveals a period of significant volatility characterized by a severe downturn in 2019, followed by a steady recovery and stabilization phase.
- Net Income Volatility
- Net income demonstrated substantial fluctuation over the six-year period. After an increase from 896.2 million USD in 2017 to a peak of 1.71 billion USD in 2018, a sharp reversal occurred in 2019, resulting in a net loss of 1.59 billion USD. Profitability returned in 2020 with 827 million USD and trended upward to 1.34 billion USD in 2021, before stabilizing at 1.33 billion USD in 2022.
- Shareholders' Equity Trends
- The equity base expanded from 5.39 billion USD in 2017 to 7.18 billion USD in 2018. The net loss in 2019 caused a contraction in equity to 5.64 billion USD. Subsequently, the equity grew consistently over the following three years, reaching 7.72 billion USD by January 29, 2022, indicating a rebuilding of the capital base.
- Return on Equity (ROE) Performance
- ROE tracked closely with net income movements, rising from 16.63% in 2017 to a high of 23.87% in 2018. The 2019 loss led to a negative ROE of -28.19%, marking the lowest point in the analyzed period. A recovery phase began in 2020 with an ROE of 13.22%, which improved to 18.42% in 2021 and slightly moderated to 17.20% in 2022.
The overall trend indicates that while the company experienced a severe financial shock in 2019, it successfully restored its profitability and equity levels. By 2022, the ROE had normalized to levels comparable to the pre-crisis period, suggesting a restoration of operational efficiency in generating returns for shareholders.
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Return on Assets (ROA)
Dollar Tree Inc., ROA calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net income (loss) | 1,327,900) | 1,341,900) | 827,000) | (1,590,800) | 1,714,300) | 896,200) | |
| Total assets | 21,721,800) | 20,696,000) | 19,574,600) | 13,501,200) | 16,332,800) | 15,701,600) | |
| Profitability Ratio | |||||||
| ROA1 | 6.11% | 6.48% | 4.22% | -11.78% | 10.50% | 5.71% | |
| Benchmarks | |||||||
| ROA, Competitors2 | |||||||
| Costco Wholesale Corp. | 9.11% | 8.45% | — | — | — | — | |
| Target Corp. | 12.91% | 8.52% | — | — | — | — | |
| Walmart Inc. | 5.58% | 5.35% | — | — | — | — | |
| ROA, Sector | |||||||
| Consumer Staples Distribution & Retail | 7.29% | 6.30% | — | — | — | — | |
| ROA, Industry | |||||||
| Consumer Staples | 8.95% | 8.75% | — | — | — | — | |
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).
1 2022 Calculation
ROA = 100 × Net income (loss) ÷ Total assets
= 100 × 1,327,900 ÷ 21,721,800 = 6.11%
2 Click competitor name to see calculations.
The Return on Assets (ROA) for the period between 2017 and 2022 reflects a period of significant volatility, characterized by a sharp peak, a substantial contraction, and a subsequent phase of stabilization. While the overall trajectory since 2020 indicates a return to consistent operational efficiency, the 2019 fiscal year represents a major outlier in terms of both profitability and asset utilization.
- Volatility and Peak Performance
- ROA increased from 5.71% in 2017 to a peak of 10.50% in 2018. This growth was driven by a substantial increase in net income, which rose from approximately $896 million to over $1.71 billion, while the asset base remained relatively stable.
- The 2019 Contraction
- A severe decline occurred in 2019, with ROA falling to -11.78%. This negative return is the result of a net loss totaling $1.59 billion. This period also coincided with a contraction in total assets to $13.5 billion, the lowest level observed in the analyzed timeframe.
- Recovery and Asset Expansion
- From 2020 onward, a recovery trend is observed. Net income returned to positive territory, and total assets expanded rapidly from $19.6 billion in 2020 to $21.7 billion by 2022. This expansion phase saw ROA climb from 4.22% in 2020 to a more stable range above 6%.
- Profitability Stabilization
- The final two years of the analyzed period demonstrate a stabilization of asset efficiency. ROA moved from 6.48% in 2021 to 6.11% in 2022, reflecting a consistent relationship between the growing asset base and net income levels, which remained steady at approximately $1.33 billion.
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