Discount retailer, Dollar Tree Inc. (NASDAQ: DLTR) reported on Thursday that its fiscal first-quarter earnings increased 15%, driven by stronger-than-expected growth in comparable-store-sales.
The Company also upwardly revised its full-year earnings guidance. The discount retailer, which operates stores under the names of Dollar Tree, Deal$, Dollar Tree Deal$, Dollar Giant and Dollar Bills, anticipates earnings to be in the range of $2.61 to $2.77 a share on sales of $7.81 billion to $7.97 billion. Earlier in February, the Company projected earnings of $2.54 to $2.74 a share on sales of $7.79 billion to $7.79 billion.
For the current quarter, Dollar Tree is expecting earnings to be in the range of 52 cents to 57 cents a share on sales of $1.81 billion to $1.86 billion. Analysts’ most recent estimate was for earnings of 57 cents a share on sales of $1.86 billion.
The discount retailer has been posting consistent quarterly growth in the recent past as Americans in the backdrop of weak macroeconomic environment and high level of unemployment are still spending frugally and preferring discount chains over high-end retailers, which in turn increased the customer traffic. Furthermore, the Company also added more varieties in its product basket to attract more customers. For Instance, the Dollar Tree now offers more private-label brands, started selling frozen and refrigerated food items. In order to counter rival Family Dollar Stores Inc’s rapid expansion, the Company has now also started to accept food stamps in most of its stores.
For the fiscal first quarter ended May 4, Dollar Tree reported a net income of $133.5 million or 59 cents a share compared to a profit of $116.1 million or 50 cents a share, in the year-earlier quarter. Sales soared 8.3% to $1.87 billion.
In February the company projected earnings to be in the range of 53 cents to 58 cents a share on revenue of $1.84 billion to $1.89 billion.
Gross margin widened to 35.2% from 35% and operating margin increased to 11.6% from 10.9%.
Comparable-store-sales increased 2.1% while analysts’ consensus estimate was for a growth of 1.9%.
The Stock, which was up 19% by Wednesday close gained about 5% by midday trade on Thursday.
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