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Dollar Tree Q3 Profit Rises, Trims Full-year Sales View


Discount stores operator Dollar Tree, Inc. (DLTR) Thursday reported a higher third-quarter profit, reflecting growth in sales and a significant margin expansion. The company also forecast earnings and sales outlook for the fourth quarter, but cut its sales view for the full year.

Dollar Tree, which sells everything for $1 or less, said that comparable sales or sales at stores open for at least 12 months increased 1.6 percent.

Bob Sasser, president and CEO of the company stated, "Sales increased in both basic and variety categories. Comp store sales were positive every month and we saw sequential improvement from August through October."

In the third quarter, Dollar Tree's net income increased to $155.4 million from $104.5 million in the previous year. Earnings per share for the latest-quarter were $0.68, which included a one-time gain of $0.17 per share related to the company's previously announced sale of its ownership interest in Ollie's Holdings, Inc.

Excluding this gain, earnings per share were $0.51 in the recent quarter. In the prior-year quarter, the company's earnings were $0.43 per share.

On average, 24 analysts polled by Thomson Reuters expected the company to earn $0.49 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 7.8 percent to $1.72 billion, but was slightly below analysts' estimate of $1.73 billion.

Operating margin improved 40 basis points to 10.7 percent.

Looking ahead to the fourth quarter, the company expects earnings per share to be in the range of $0.97 to $1.02 per share. Sales are estimated to be between $2.20 billion and $2.26 billion, based on flat- to- a low-single digit comparable store sales increase.

Analysts expect the company to report earnings of $0.98 per share on revenues of $2.24 billion for the fourth-quarter.

For the fiscal year ending January 2013, the company projects earnings per share to be in the range of $2.65 to $2.70, including $0.16 earnings per share from the sale of Ollie's in the third quarter. Earlier, the company had expected full-year earnings of $2.45 to $2.54 per share.

Sales for the year are anticipated to be between $7.35 billion and $7.41 billion, lower than the prior forecast of $7.36 billion to $7.45 billion. Analysts are looking for earnings of $2.48 per share, on revenues of $7.39 billion in fiscal 2012.

The company said the estimates assume no impact from potential additional share repurchase activity, and incorporate the impact of a 53rd week in 2012, that will be recorded in the fourth quarter.

During the third quarter, Dollar Tree opened 111 stores, expanded or relocated 16 stores, and closed 4 stores. Retail selling square footage increased 7.1 percent to 40.1 million square feet.

DLTR is currently trading at $38.82, up $1.06 or 2.81 percent, on a volume of 898 thousand shares on the Nasdaq.

by RTTNews Staff Writer

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