FINANCE

Dollar Tree Q3 profit and sales beat estimates

BY Marianne Wilson

The nation’s largest dollar-store retailer on Tuesday posted better-than-expected sales and earnings results, fueled by a boost in customer traffic and spending in its stores.

Dollar Tree’s net income increased $68.3 million to $239.9 million for the quarter ended Oct. 28. Earnings per share increased 40.3% to $1.01, compared to $0.72 in the year-ago period. Analysts on average had expected earnings of 90 cents per share.

Consolidated net sales increased 6.3% to $5.32 billion from $5.00 billion last year. Analysts had forecast sales of $5.28 billion

Same-store sales increased 3.2%, more than analysts expected, driven by increases in average ticket and comparable transaction count. By brand, same-store sales rose 5% for Dollar Tree and 1.5% for Family Dollar.

“Our team delivered terrific results in the third quarter,” stated Gary Philbin, president and CEO. “Same-store sales accelerated in both the Dollar Tree and Family Dollar banners; we delivered a 120 basis point improvement in enterprise operating margin; and earnings per share grew more than 40% from the prior year.”

During the quarter, the company opened 169 stores, expanded or relocated 23 stores, and closed six stores. It ended the period with a total of 14,744 stores.

Analyst Neil Saunders, managing director of GlobalData Retail, noted that while low price is important to the success of Dollar Tree, it is not the only factor driving sales.

“Indeed, it is notable that many of the group’s core customers have seen their financial positions improve modestly over the course of this year, yet their loyalty and share of spending at both Dollar Tree and Family Dollar have largely remained the same or increased,” he said. “One of the main reasons for this is that they like the convenience and localness of the stores in addition to the low prices they offer.” For more, click here.

The company estimates consolidated net sales for the fourth quarter of 2017 to range from $6.32 billion to $6.43 billion, based on a low single-digit increase in same-store sales for the combined enterprise. Diluted earnings per share are estimated to be in the range of $1.80 to $1.89.

Consolidated net sales for full-year fiscal 2017 are now expected to range from $22.20 billion to $22.31 billion compared to the company’s previously expected range of $22.07 billion to $22.28 billion. This estimate is based on a low single-digit increase in same-store sales and 3.7% square footage growth. Dollar Tree now anticipates net income per diluted share for full-year fiscal 2017 will range between $4.64 and $4.73, compared to its previous guidance of $4.44 to $4.

“Our stores and teams are well-prepared and energized as we enter the fourth and final quarter of 2017,” said Philbin. “We are confident in our ability to continue driving positive same-store sales, through meeting our customers’ needs and wants; improving enterprise operating margin; and delivering year-over-year earnings per share growth. We believe we are well-positioned in the most attractive sector in retail and will remain intensely focused on delivering great value and convenience to our growing customer base.”

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