Discount stores operator Dollar Tree, Inc. (DLTR: Quote) on Thursday reported a 26 percent increase in profit for the second quarter on double-digit revenue growth. Earnings per share beat analysts' expectations, while revenues came in slightly below their estimates.
Looking ahead, the company forecast earnings for the third quarter below Street view and tightened its sales outlook for fiscal year 2012. The company's shares are down 6 percent in pre-market trading.
Dollar Tree, which sells everything for $1 or less, said that comparable sales, or sales at stores open for at least 12 months, rose 4.5 percent in the second quarter. This was on top of a 4.7 percent increase in the year-ago period.
Gross margin for the quarter was flat with the prior-year period at 35.2 percent. However, operating margin rose 80 basis points from last year to 10.8 percent.
Dollar Tree's net income for the second quarter increased to $119.2 million or $0.51 per share from $94.9 million or $0.39 per share reported last year.
During the latest quarter, Dollar Tree executed a 2-for-1 stock split in the form of a 100 percent common stock dividend. All per-share results reflect the impact of the stock split, the company said.
On average, 24 analysts polled by Thomson Reuters expected the company to earn $0.47 per share. Analysts' estimates typically exclude special items.
Net sales for the quarter grew 11 percent to $1.70 billion from $1.54 billion in the year-ago period, but missed analysts' consensus estimate of $1.71 billion.
Dollar Tree opened 110 stores, closed 10, and expanded or relocated 44 stores in the second quarter.
The company repurchased 1.6 million shares for $80.9 million during the second quarter and currently has $1.1 billion remaining on its share repurchase authorization.
Looking ahead to the third quarter, Dollar Tree forecasts earnings per share in a range of $0.47 to $0.51 and sales in a range of $1.71 billion to $1.75 billion, based on low-to-mid single digit positive comparable store sales.
Analysts expect the company to report earnings of $0.52 per share for the quarter on revenues of $1.77 billion.
For fiscal year 2012, Dollar Tree now expects earnings of $2.45 to $2.54 per share. Earlier, the company projected earnings of $4.74 to $4.94 per share, prior to the stock split.
Dollar Tree now forecasts full-year sales in a range of $7.36 billion to $7.45 billion, compared to the prior range of $7.33 billion to $7.46 billion. This estimate is based on a range of low-to-mid single digit positive comparable store sales.
Analysts expect the company to earn $2.48 per share for the year on revenues of $7.47 billion.
In addition, Dollar Tree said that 2012 will include a 53rd week that will be recorded in the fourth quarter. This extra week is expected to add $120 million to $130 million to sales in the fourth quarter and $0.07 to $0.08 earnings per share, both of which are included in the company's guidance.
DLTR closed Wednesday's regular session at $50.00. In Thursday's pre-market, the stock is down $3.00 or 6.00 percent to $47.00.
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by RTT Staff Writer
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