Discount stores operator Dollar Tree Inc. (DLTR) on Wednesday reported a 51% rise in profit for the second quarter from last year, as cost-conscious shoppers flocked to its stores to stretch their dollars amid the economic slowdown. Earnings per share for the quarter rose 50% and topped analysts' consensus estimate. Buoyed by the results, the company issued earnings outlook for the third quarter above analysts' estimates and raised its earnings as well as revenue outlook for the full year. The company's shares are up more than 5% in the regular trading session.
Second-Quarter Results
The Chesapeake, Virginia-based company, which sells most of its merchandise for $1 or less, said its net income for the second quarter increased 51.3% to $56.9 million from $37.6 million in the year-ago quarter. On a per share basis, earnings surged 50% to $0.63 from $0.42 earned in the same quarter of last year.
On average, fifteen analysts polled by Thomson Reuters expected the company to report earnings of $0.54 per share for the quarter. Analysts' estimates typically exclude special items.
Net sales for the quarter were $1.22 billion, up 11.9% from $1.09 billion in the previous-year quarter, and matched analysts' consensus revenue estimate of $1.22 billion. Comparable store sales for the quarter increased 6.8%.
The results for the quarter exceeded the company's own estimates. While reporting its financial results for the first quarter in May, Dollar Tree had forecast earnings for the second quarter between $0.47 and $0.51 per share, and sales in a range of $1.17 billion-$1.20 billion, based on low to mid single digit positive comparable store sales.
Commenting on the results, Bob Sasser, President and CEO of Dollar Tree, said, "Our sales continue to grow across a wide range of merchandise categories. Now more than ever, customers are relying on Dollar Tree for high value basic products including Health and Beauty Care, Household Supplies and Food, in addition to discretionary items including party goods, floral, toys, books and variety merchandise for all seasons."
Peer Performance
In early August, 99 Cents Only Stores (NDN) reported a profit for the first quarter, compared to a loss in the year-ago period, helped by strong sales from non-Texas regions. Net income attributable to the company for the quarter was $9.51 million, or $0.14 per share, compared to loss of $1.51 million, or $0.02 per share, in the same quarter a year ago. Total sales for the quarter grew to $332.11 million from $304.92 million in the comparable quarter last year. Same-store sales for the quarter rose 7.2%.
In July, Family Dollar Stores Inc. (FDO) posted a 35% increase in profit for the third quarter from last year, on increased sales propelled by consumer traffic growth and strong performance in consumables category. The company's net income for the quarter rose to $87.7 million, or $0.62 per share, from $64.7 million, or $0.46 per share, a year ago. Quarterly net sales advanced to $1.84 billion from the $1.70 billion in the year-ago period, while comparable store sales increased 6.2%.
Other Metrics
Dollar Tree's gross margin for the quarter was 34.5%, up from 33.2% in the year-ago period.
Operating margin for the quarter increased 170 basis points from the previous-year quarter to 7.3%, driven by a 130 basis point increase in gross margin and a 40 basis point reduction in selling, general and administrative expenses.
As at the end of the quarter, Dollar Tree's cash and cash equivalents were $358.2 million, up from $114.6 million at the end of the year-ago quarter.
The company repurchased 1.0 million shares of its common stock for $42.5 million during the quarter.
During the second quarter, Dollar Tree opened 60 stores, closed 10 stores, and expanded or relocated 16 stores. As of August 1, 2009, the company operated 3,717 stores in 48 states. Retail selling square footage at the end of the quarter was 31.4 million square feet, a 6.4% increase compared to a year ago.
Year-To-Date Results
For the first six months of fiscal year 2009, Dollar Tree's net income rose to $117.3 million, or $1.29 per share, from $81.2 million, or $0.90 per share, in the year-ago period.
Net sales for the half year rose to $2.42 billion from $2.14 billion a year ago.
Outlook
For the third quarter, Dollar Tree forecasts earnings in a range of $0.58-$0.64 per share and sales in a range of $1.19 billion-$2.13 billion, based on low-to-mid single digit positive comparable store sales. Analysts expect the company to report earnings of $0.54 per share for the quarter on revenues of $1.21 billion. For fiscal year 2009, the company raised its earnings outlook to a range of $3.10-$3.25 per share from the prior range of $2.75-$2.90 per share. The company also raised its outlook for sales to a range of $5.09 billion-$5.19 billion from the prior range of $5.05 billion-$5.15 billion. Analysts expect the company to earn $3.02 per share for the year on revenues of $5.15 billion.
Stock Performance In Wednesday's regular trading session, DLTR is trading at $50.77, up $2.87 or 5.99% on a volume of 0.16 million shares. In the past 52 weeks, the stock has been trading in a range of $27.61-$48.21.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.