Retail

Dollar Tree Earnings Point the Way to New 52-Week High

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Source: Dollar Tree Inc.
Dollar Tree Inc. (NASDAQ: DLTR) reported third-quarter fiscal 2015 results before markets opened Thursday. The discount retailer posted adjusted diluted earnings per share (EPS) of $0.69 on revenues of $2.10 billion. In the same period a year ago, Dollar Tree reported EPS of $0.58 on revenues of $1.88 billion. Third-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.64 and $2.06 billion in revenue.

Same-store sales rose 5.9% in the quarter, compared with a rise of 3.1% in the third quarter of 2013.

In its outlook statement, Dollar Tree estimated fourth-quarter sales in the range of $2.39 billion to $2.46 billion and EPS in the range of $1.07 to $1.14. Consensus estimates call for EPS of $1.13 on revenues of $2.45 billion.

Dollar Tree raised its fiscal year revenues estimate from a range of $8.44 billion to $8.55 billion to a new range of $8.52 billion to $8.58 billion, and its EPS estimate was narrowed from a prior range of $2.94 to $3.06 to a new range of $2.97 to $3.04. The consensus estimates call for EPS of $3.05 on revenues of $8.55 billion. The new estimates include acquisition-related costs of $0.07 for the fiscal year.

The company’s CEO said:

Excluding acquisition costs, we delivered a Company-record third quarter operating margin of 11.2%. Our 5.9% same-store sales growth was our strongest comp since 2011, and represented our 27th consecutive quarter of positive same-store sales. These results validate our value enhancement initiatives targeted to attract new, and retain current, customers.

The company’s offer to buy competitor Family Dollar Stores Inc. (NYSE: FDO) cost Dollar Tree $14.3 million in additional SG&A expenses. On Wednesday, Family Dollar delayed its shareholder vote on the $8.5 acquisition offer from Dollar Tree while the two companies await a decision from antitrust regulators on what they will require to approve the deal.

Dollar Tree’s shares were up about 1.6% in premarket trading to $63.60, which would be a new 52-week high if it holds. The current 52-week range is $49.59 to $62.72. Thomson Reuters had a consensus analyst price target of around $62.60 before the results were announced.

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