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Dollar Tree Q2 sales disappoint

BY Marianne Wilson

A little over one year since it acquired rival Family Dollar, Dollar Tree reported revenue that missed Wall Street expectations amid lower customer traffic.

Dollar Tree and other discounters are also feeling the impact of a recent change by some states regarding the criteria for the Supplemental Nutrition Assistance Program (SNAP), which has made thousands of households ineligible for benefits.

Dollar Tree reported net income of $170.2 million, or 72 cents per share, in quarter ended July 30, compared with a net loss of $98 million, or 46 cents per share, a year earlier.

Net sales for the quarter increased 65.9% to $5.00 billion, below Wall Street expectations, from $3.01 billion in the prior year’s quarter. The increase was the result of an incremental $1.80 billion in net sales from Family Dollar stores, sales from new Dollar Tree stores, and a 1.2% same-store sales increase.

"Just over a year ago, we completed our acquisition of Family Dollar and our integration continues to progress as planned,” said Bob Sasser, CEO, Family Dollar. “The stores are cleaner, the values are greater and our merchandise assortments are improving. Additionally, we are taking the necessary steps to develop our shared services support model, and are continuing our focus on cost-related synergy capture. As a combined organization, we are well-positioned to better serve more customers, generate significant cash flows and deliver long-term value to our shareholders.”

During the quarter, Dollar Tree opened 156 stores, expanded or relocated 52 stores, and closed 17 stores.

Additionally, as part of its re-banner initiative, the company opened 47 former Family Dollar store locations as new Dollar Tree stores, and converted the remaining 32 Deals stores to Dollar Tree stores.

For the current quarter, Dollar Tree expects revenue in the range of $5.02 billion to $5.1 billion. Analysts had expected revenue of $5.1 billion.

The company expects full-year earnings to be $3.67 to $3.82 per share, with revenue ranging from $20.69 billion to $20.87 billion.

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