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Dollar Tree CEO: Stores See 2.1% Hike in Foot Traffic But Lower Average Purchase

Dollar Tree store

Dollar Tree has seen an increase in foot traffic to its stores, but those consumers aren’t buying as much.

The retailer, which also is the parent company of Family Dollar, released its first-quarter earnings report Wednesday (June 5) for the quarter ending May 4.

Dollar Tree Chairman and Chief Executive Officer Rick Dreiling credited the decline to lower discretionary spending as consumers — many living paycheck to paycheck — cut back. The retailer saw an average decline of 1.1% in ticket size across both its stores.

“The average ticket declines reflected weaker discretionary demand, particularly in the Dollar Tree segment,” he told analysts during the earnings call Wednesday.

An earlier Easter holiday also curbed spending.

“This year, an early Easter, combined with the extra week in our fourth quarter last year, left us with a much shorter selling season,” Dreiling said. “Also, unusually cold and wet weather throughout much of the country negatively impacted the way many families celebrate this traditionally spring-oriented outdoor-centric holiday.”

Dollar Tree operates 16,397 stores across 48 states and five Canadian provinces under the brands of Dollar Tree, Family Dollar and Dollar Tree Canada.

Many higher-income consumers are also actively seeking ways to save money due to factors such as insufficient income, substantial debt and financial responsibilities toward family members. PYMNTS Intelligence reported that nearly three-quarters of individuals earning over $100,000 a year feel that their incomes have not kept pace with inflation. The data shows almost half of all consumers in this income bracket live paycheck to paycheck, as do 36% of those earning more than $200,000 a year.

Window Shopping

Dreiling credited the chain’s program that introduced new items at higher price points with driving the foot traffic increase. Those Dollar Tree stores that have added the items saw a 3% average increase in foot traffic and a bump in sales.

“We see traffic increase in the multi-price stores to the tune of about approximately 3%. And we also see the ticket goes up about 55 (basis points),” he said.

Dollar Tree’s consolidated net sales increased 4.2% to $7.63 billion for Q1, according to the company.

The retailer also announced a review of its Family Dollar business unit that also includes the possibility of selling off the unit. Dollar Tree has retained J.P. Morgan Securities as a financial adviser and Davis Polk & Wardwell as its legal adviser for the review.

Dreiling did not give a timetable for the review, and the company said in its released statement that it would not comment further on the review.