Dollar Tree Boosts Outlook As Profit Tops View

(RTTNews) - Discount retailer Dollar Tree, Inc. (DLTR) reported Thursday a profit for the first quarter that grew from last year, despite lower gross margins, reflecting improved sales at established stores.

Earnings per share topped analysts' expectations by a penny, while quarterly sales missed their estimates by a whisker. The company also provided earnings and revenue forecast for second quarter, in line with Street view, and raises outlook for the full-year 2014.

"Our first quarter sales grew as the result of increases in both traffic and average ticket with our discretionary business growing slightly faster than consumables. Leading categories during the quarter included candy, check-out products, stationery and seasonal merchandise for Valentines and Easter," CEO Bob Sasser said in a statement.

The Chesapeake, Virginia-based operator of discount variety stores selling everything for $1 or less, reported net income of $138.3 million or $0.67 per share for the first quarter, higher than $133.5 million or $0.59 per share in the prior-year quarter.

On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.66 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter grew 7,2 percent to $2.00 billion from $1.87 billion in the same quarter last year, but missed twenty-three Wall Street analysts' consensus estimate of $2.01 billion by a whisker. Comparable store sales for the quarter increased 2.0 percent.

Gross margin for the quarter contracted 40 basis points to 34.8 percent, while selling, general and administrative expenses declined 40 basis points to 23.2 percent from last year.

Dollar Tree continues to grow as it opened 94 stores, closed 6 stores, and expanded or relocated 28 stores in the first quarter. Retail selling square footage increased 6.8 percent to 44.0 million square feet from last year.

Looking ahead to the second quarter, the company expects earnings in a range of $0.58 to $0.64 per share, on projected quarterly sales between $1.97 billion and $2.02 billion, based on low single digit positive comparable store sales. Analysts project earnings of $0.64 per share on revenues of $2.01 billion for the quarter.

For fiscal 2014, Dollar Tree now expects earnings in a range of $2.94 to $3.12 per share, on projected annual sales between $8.37 billion and $8.54 billion, compared to the prior earnings forecast in the $2.91 to $3.13 per share, on sales between $8.35 billion and $8.58 billion. However, the company continues to expect low single-digit positive comparable-store sales.

Street is currently looking for full-year 2014 earnings of $3.17 per share on revenues of $8.51 billion.

"Our stores are currently filled with a balanced mix of consumable products and exciting variety merchandise for Summer Fun. Inventory is clean and fresh and our associates are focused on providing a great shopping experience for every customer, at every store, every day," Sasser added.

DLTR closed Wednesday's regular trading session at $50.00, down $1.04 on a volume of 3.51 million shares. In the past 52-week period, the stock has been trading in a range of $47.70 to $60.19.