Single-price point dollar stores' operator Dollar Tree Inc. (DLTR) Wednesday reported a surge in second quarter profit as increased demand for basic, consumable product drove more customers, resulting in higher earnings and operating margin. The company provided third-quarter earnings forecast and raised the full year earnings outlook.
Second-quarter net income rose 15.4% to $37.6 million from $32.6 million in the comparable quarter a year ago. Earnings per share were up 27.3% to $0.42 from $0.33 in the same quarter last year on lower share count. On average, twelve analysts polled by First Call/Thomson expected the company to earn $0.41 per share for the quarter.
Sales for the quarter increased 12.5% to $1.09 billion from $971.2 million in the prior-year quarter, and came above Street expectation of $1.08 billion. Comparable store sales increased 6.5% for the quarter.
Operating income was up at $61.6 million and operating margin improved 10 basis points to 5.6% from the year-earlier quarter.
Gross profit percentage for the quarter was 33.2%, compared to 33.6% in the same quarter last year hurt by the planned shift in the merchandise mix towards consumables and increased diesel fuel costs, relative to last year.
For the six-month period, net income was $81.2 million or $0.90 per share, up from $70.7 million or $0.71 per share in the prior-year period. Sales for the period surged to $2.14 billion from $1.95 billion in the year-ago period.
For the third quarter, the company expects earnings in the range of $0.40 to $0.43 per share, roughly in line with current Street expectation of $0.42 per share. Third quarter sales are anticipated to be in the range of $1.06 billion to $1.11 billion, while Street expects $1.08 billion. The company also expects third quarter comparable store sales to be low-to-low mid single digit positive.
For the full year, the company now expects earnings in the range of $2.33 to $2.43 per share, up from the prior guidance range of $2.23 to 2.39 per share. The Street currently expects earnings of $2.44 per share for the year.
The company also projects full-year sales in the range of $4.61 billion to $4.68 billion, based on low-to-low-mid single digit positive comparable store sales, up from previous outlook range of $4.52 billion to $4.63 billion. The Street currently expects sales of $4.64 billion for the year.
DLTR is currently trading at $36.71, down $2.47 or 6.30% on the Nasdaq.
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