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Dollar Tree Q1 Results Top Estimates; Does Not Issue Outlook

dollartree may28 lt

Discount store chain Dollar Tree, Inc. (DLTR) reported Thursday a profit for the quarter that declined from last year, due to lower gross margins, despite an 8.2 percent sales growth. Both adjusted earnings per share and quarterly net sales topped analysts' expectations. Further, the company did not issuing its updated guidance amid the ongoing COVID-19 pandemic.

For the first quarter, net income declined to $247.6 million or $1.04 per share from $267.9 million or $1.12 per share in the prior-year quarter.

Excluding items, adjusted earnings for the quarter was $1.04 per share, compared to $1.14 per share last year.

On average, analysts polled by Thomson Reuters expected the company to report earnings of $0.91 per share for the quarter. Analysts' estimates typically exclude special items.

Consolidated net sales for the quarter increased 8.2 percent to $6.23 billion from $5.81 billion in the same quarter last year. Analysts expected revenues of $6.11 billion for the quarter.

Enterprise same-store sales increased 7.0 percent. Same-store sales for the Dollar Tree segment edged down 0.9 percent, while same-store sales for the Family Dollar segment increased 15.5 percent.

As a percentage of net sales, gross margin contracted to 28.5 percent from last year's 29.7 percent, driven by merchandise mix, incremental tariffs of $23 million, markdowns related to Easter merchandise, and higher distribution center payroll costs, partially offset by leverage on occupancy costs from stronger same-store sales.

Looking ahead, the company said it is not issuing updated guidance at this time, given the expectation of continued volatility and uncertainty.

The company had withdrawn its first quarter and fiscal 2020 financial guidance on March 31, 2020, due to uncertainty related to the COVID-19 pandemic. The Company also then temporarily suspended share repurchases.

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