Dollar Tree's Profit, Margins Rise as Sales Climb
March 01 2017 - 9:47AM
Dow Jones News
By Joshua Jamerson
Dollar Tree Inc.'s profit shot up 41% in the latest quarter and
margins expanded amid more shoppers coming to the retailer's stores
-- and spending more while there.
Chief Executive Bob Sasser called the market for discount retail
"the most attractive sector" of a struggling industry. Sales and
traffic have been rising, a contrast to trends across the larger
retail space.
Like rival Dollar General Corp., Dollar Tree generally has
benefited recently from rising wages among core customers. Dollar
Tree said it opened 584 new stores in 2016 as other retailers such
as Macy's Inc. have detailed plans to shutter locations.
Same-store sales at Dollar Tree rose 2.3%, and same-store sales
at Family Dollar locations edged up 0.2%. Dollar Tree bought rival
Family Dollar in 2015 and keeps the store's banner for some
locations. The company said same-store sales growth was driven by
higher comparable customer count and average ticket.
Shares rose 4% to $79.89 in premarket trading.
Over all, for the quarter ended Jan. 28, Dollar Tree reported
net income of $321.8 million, or $1.36 a share, compared with $229
million, or 97 cents a share, in the year-ago period.
Sales rose 5% to $5.64 billion. Analysts polled by Thomson
Reuters expected per-share earnings of $1.32 on $5.62 billion in
revenue.
Gross margin increased to 32.1% compared to 30.8% in the
prior-year fourth quarter, helped by lower merchandise and freight
costs.
For the year ending in January 2018, Dollar Tree estimates $4.20
to $4.56 a share in earnings on net sales of $21.94 billion to
$22.33 billion. Analysts expected $4.49 a share in earnings on
$21.89 billion in revenue.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
March 01, 2017 09:32 ET (14:32 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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