Dollar Tree, Inc. (NASDAQ: DLTR) stock lost over 5.8% on 27th August, 2020 (As of 2:19 pm GMT-4; Source: Google finance) post second quarter of FY20 performance. Gross profit margin for the Dollar Tree segment fell over 10 basis points to 33.7% against prior corresponding period due to rise in distribution costs by 70 basis points, due to higher payroll costs and depreciation. Start-up expenses of the two new distribution centers coupled with over $6.7 million or 20 basis points of COVID-related expenses hurt the margins.
Consolidated net sales rose 9.4% to $6.28 billion, with Enterprise same-store sales surged 7.2% during the second quarter of FY20. Operating income surged 39.4% to $374.9 million from $268.9 million in the same period last year. Operating income margin improved 130 basis points to 6% compared to last year’s second quarter. Net Income per diluted share of incremental operating costs for COVID-19-related expenses and $16.8 million or $0.05 per diluted share for civil unrest costs against net earnings of $180.3 million or $0.76 per share in the prior year’s quarter.
Cash and cash equivalents surged to $1.75 billion from $539.2 million as at the end of fiscal 2019. Outstanding debt as of August 1, 2020, was approximately $4.1 billion, which includes $500 million drawn on our revolving line of credit.
Inventory for Dollar Tree fell 4.2% during the quarter, while selling square footage rose 4.9%. Inventory per selling square foot lost 8.7%. Inventory for Family dollar fell 7% for the same period last year, while selling square footage rose 0.6%.
For fiscal 2020, the firm expect consolidated capital expenditures to be over $1 billion. But did not give sales and EPS guidance. Net interest expense is forecasted to be over $38 million during the third quarter and $152 million for fiscal 2020. Weighted average diluted share are expected to be 238.3 million shares for the third quarter and 238.1 million shares for the full year.