As penny-pinching shoppers continued to hunt for low prices, Dollar Tree Inc. (DLTR) reported higher net profit for the third-quarter, with a 12.1% increase in top line. Per share earnings rose 61.7% and topped the Street view. The company also issued guidance for the fourth quarter and boosted its full-year forecast.
Q3 Results
The Chesapeake, Virginia-based company earned $68.2 million or $0.76 per share, compared to $43.1 million or $0.48 per share in the year-ago quarter. On average, 17 analysts polled by Thomson Reuters expected the company to report earnings of $0.66 per share. Analysts' estimates typically exclude special items.
Quarterly net sales grew to $1.25 billion from the previous year's $1.11 billion, and exceeded fifteen analysts' consensus revenue estimate of $1.24 billion. Comparable store sales rose 6.5% during the latest quarter.
Bob Sasser, President and CEO of Dollar Tree, said, "Sales and earnings were above plan, operating margin improved significantly, we leveraged our SG&A expenses and we continued to expand our nation-wide store base. The sell-through on Halloween and fall seasonal products was excellent and our stores are now set with an exciting presentation of extreme-value merchandise for Thanksgiving and the Holiday season."
Dollar Tree, a Fortune 500 Company, opened 94 stores, closed 8 stores, and expanded or relocated 33 stores during the third quarter.
Year-to-Date
For the first nine months of fiscal 2009, the company posted earnings of $185.5 million or $2.05 per share, higher than $124.3 million or $1.37 per share in the comparable period last year. Net sales rose to $3.68 billion from $3.26 billion in the same period of 2008.
Outlook For Q4, FY09
Looking forward to the fourth-quarter, the company projects earnings to be in the range of $1.30 - $1.39 per share, with sales between $1.49 billion and $1.53 billion, based on low to mid single digit positive comparable store sales. Wall Street analysts estimate earnings of $1.35 per share, on revenues of $1.53 billion.
For the full year, earnings are now expected in the range of $3.34 - $3.43, up from the prior range of $3.10 - $3.25 per share. The company also raised its sales outlook to $5.17 billion - $5.21 billion from the earlier forecast of $5.09 billion - $5.19 billion. Analysts currently estimate earnings of $3.29 per share, on revenues of $5.20 billion.
Peer Review
Among Dollar Tree's rivals, 99¢ Only Stores (NDN) reported second-quarter net income of $9.6 million or $0.14 per share, compared with a loss of $9.4 million or $0.13 per share in the prior year period. Net sales for the second quarter rose 2.2% to $324.7 million from $317.8 million in the year-ago period.
Another competitor, Family Dollar Stores Inc. (FDO) reported a 13% growth in the fourth-quarter profit that totaled $60.12 million or $0.43 per share, versus $53.15 million or $0.38 per share last year. Net sales rose 2.6% to $1.811 billion from $1.767 billion in the prior-year quarter.
For the first quarter, Family Dollar expects earnings per share between $0.45 and $0.50, with net sales projected to increase between 5% and 7%. For fiscal 2010, Family Dollar anticipates earnings per share between $2.15 and $2.35 and net sales growth of 5% - 7%.
Stock Performance
Dollar Tree shares, which have been trading between $32.94 and $51.72 in the past 52 weeks, closed at $49.10.
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