Dollar Tree Gives Upbeat Guidance
November 22 2016 - 10:10AM
Dow Jones News
Dollar Tree Inc. provided upbeat top- and bottom-line guidance
for the current quarter, and same-store sales fared better than
expected in the latest period.
Shares, down 14% over the past three months, shot up 8.7%
premarket to $89.11.
The company estimates sales for the fourth quarter in the range
of $5.59 billion to $5.69 billion, based on low single-digit
increases in same-store sales for the Dollar Tree and Family Dollar
segments. Per-share earnings are expected in the range of $1.24 to
$1.33, an increase from the prior implied guidance of $1.21 to
$1.30. Analysts are expecting $1.29 a share.
Sales for the year are now expected to be between $20.67 billion
and $20.77 billion compared with the company's previous range of
$20.69 billion to $20.87 billion. The company now anticipates
per-share earnings will range between $3.67 and $3.76 a share,
bringing down the top end of its guidance from $3.82 a share, which
didn't include 9 cents a share of expenses related to debt
refinancing incurred in the third quarter.
"I am encouraged by our continued progress in building the
foundation for a larger, stronger and more profitable Family Dollar
business," Chief Executive Bob Sasser. He said the integration of
that business, for which Dollar Tree signed a deal last year,
continues to progress.
"The stores are cleaner, the values are greater and our customer
feedback scores regarding merchandise assortments and in-stocks
have improved," he said.
Mr. Sasser said the company is well-positioned and prepared for
the holiday selling season.
Like rival Dollar General Corp., Dollar Tree has generally
benefited over the past year from rising wages among core
customers. Sales and traffic have been up in the sector, in
contrast to trends across the larger retail space.
Weaker results in the previous quarter, dragged by declining
traffic, had stoked fears that discount retailers are also
vulnerable to the trend of dwindling consumer spending in
brick-and-mortar stores. But same-store sales increased 1.7% in the
October period, compared with a 2.1% increase a year ago. Analysts,
on average, had expected 1.2% growth in the latest quarter.
In all, Dollar Tree reported a third quarter profit of $171.6
million, or 72 cents a share, up from 81.9 million, or 35 cents a
share, a year earlier. The quarter included 9-cent per-share dent
for debt refinancing. Adjusted earnings were 81 cents a share, in
line with the company's guidance range of 76 cents to 82 cents a
share.
Revenue edged 1.1% higher to $5 billion. Analysts were looking
for $5.07 billion in sales, according to Thomson Reuters.
Gross margin improved to 30.4% from 28.3%, helped by lower
merchandise and freight costs.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
November 22, 2016 09:55 ET (14:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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