Discount stores operator Dollar Tree, Inc. (DLTR) on Wednesday reported a 22 percent increase in profit for the fourth quarter on higher revenues and margin expansion. Both revenue and earnings per share beat analysts' estimates.
Looking ahead, the company forecast earnings for the first quarter and fiscal 2013 mostly below Street expectations, but projects revenues in line with their estimates.
Bob Sasser, president and CEO of Dollar Tree said, "On top of a very strong fourth quarter performance in 2011, average basket size increased and customers responded this year in record numbers."
Dollar Tree, which sells everything for $1 or less, said that comparable sales, or sales at stores open for at least 12 months, rose 2.4 percent in the fourth quarter. This was on top of a 7.3 percent increase in the year-ago period.
Gross margin for the quarter increased 15 basis points from the prior-year period to 37.9 percent, while operating margin rose 70 basis points to 16.2 percent.
Dollar Tree's fourth-quarter net income increased to $228.6 million or $1.01 per share from $187.9 million or $0.80 per share in the same period last year. On average, 24 analysts polled by Thomson Reuters expected the company to earn $0.99 per share. Analysts' estimates typically exclude special items.
Net sales for the quarter grew 15 percent to $2.25 billion from $1.95 billion in the year-ago period and beat analysts' consensus estimate of $2.23 billion.
These results include a fourteenth week, commensurate with the 53-week retail calendar, which accounted for $125 million in sales and $0.08 earnings per share for both the fourth quarter and fiscal year 2012.
Dollar Tree opened 47 stores, expanded or relocated 6 stores, and closed 6 stores in the fourth quarter. Retail selling square footage increased 7.7 percent compared to a year ago, to 40.5 million square feet.
For fiscal 2012, Dollar Tree's net earnings increased to $619.3 million or $2.68 per share from $488.3 million or $2.01 per share in the previous year.
Excluding a one-time gain on sale of the company's ownership interest in Ollie's Holdings Inc and the impact of the additional 53rd week, adjusted earnings per share for the year were $2.44.
Net sales for the year increased 12 percent to $7.39 billion from $6.63 billion in the prior year. Comparable store sales for the year increased 3.4 percent, on top of a 6.0 percent increase last year.
Analysts expected the company to report earnings of $2.50 per share for the year on revenues of $7.37 billion.
Looking ahead to the first quarter of fiscal 2013, Dollar Tree forecast earnings per share in a range of $0.53 to $0.58 and sales in a range of $1.84 billion to $1.89 billion, based on low single-digit positive comparable store sales and 6.8 percent square footage growth. Analysts expect the company to report earnings of $0.58 per share for the quarter on revenues of $1.87 billion.
For fiscal 2013, Dollar Tree forecast earnings per share in a range of $2.54 to $2.74 and sales between $7.79 billion and $7.97 billion. The estimate is based on low single-digit positive comparable-store sales, and square footage growth of about 7.3 percent for the year. Street expects earnings of $2.81 per share for the year on revenues of $7.90 billion.
DLTR closed Tuesday's regular trading at $41.08. In Wednesday's pre-market, the stock is up $1.88 or 4.58 percent to $42.96.
by RTT Staff Writer
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