Dollar Tree Q2 Profit Rises, But Misses View; Lifts Low End Of 2013 Outlook

(RTTNews) - Discount stores operator Dollar Tree, Inc. (DLTR) on Thursday reported a 5 percent increase in profit for the second quarter on higher revenues and improved operating margins. However, both revenue and earnings missed analysts' estimates. Looking ahead, the company raised the lower end of its sales and earnings forecasts for fiscal 2013.

Bob Sasser, Chief Executive Officer of Dollar Tree said, "Sales, customer traffic, average ticket, earnings and operating margin all continue to grow. Customers are responding in record numbers to our outstanding values in both discretionary and consumable merchandise categories. Our stores are well-stocked with a terrific merchandise presentation for back- to- school and the fall selling season."

Dollar Tree, which sells everything for $1 or less, said comparable-store sales for the second quarter increased 3.7 percent, on top of a 4.5 percent increase in the year-ago period.

Operating margin for the period also improved 10 basis points from the year-ago period to 10.9 percent.

Dollar Tree's second-quarter net income was $124.7 million or $0.56 per share, up from $119.2 million, or $0.51 per share in the prior-year quarter. On average, 26 analysts polled by Thomson Reuters expected earnings per share of $0.57 for the quarter. Analysts' estimates typically exclude one-time items.

Consolidated net sales for the quarter rose 9 percent to $1.85 billion from $1.70 billion reported a year back. Analysts had a consensus revenue estimate of $1.86 billion for the quarter.

During the second quarter, Dollar Tree opened 81 stores, closed 2 stores, and expanded or relocated 32 stores. Retail selling square footage increased 7.0 percent to 41.9 million square feet.

Looking ahead to the third quarter, Dollar Tree forecasts earnings per share in a range of $0.54 to $0.59, on sales of $1.87 billion- $1.92 billion that is based on low- to-mid single digit positive comparable-store sales. Analysts expect earnings of $0.60 per share for the quarter on revenues of $1.89 billion.

For fiscal 2013, Dollar Tree forecasts earnings per share of $2.65 to $2.77, on sales in a range of $7.85 billion to $7.97 billion that is based on a range of low-single digit positive comparable store sales. Earlier, the company had forecast earnings per share of $2.61 to $2.77, on sales in a range of $7.81 billion to $7.97 billion that was based on low-single digit positive comparable store sales.

Analysts expect the company to earn $2.82 per share for the year on revenues of $7.94 billion.

DLTR closed Wednesday's trading at $51.84. In Thursday's pre-market trades, the stock is down $0.63 or 1.22 percent to $51.21.