Retail

What to Expect From Dollar Tree Earnings

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Source: Dollar Tree Inc.
Dollar Tree, Inc. (NASDAQ: DLTR) is scheduled to report its fiscal first-quarter financial results prior to markets opening on Thursday. Thomson Reuters has consensus estimates of $0.75 in earnings per share (EPS) on $2.20 billion in revenue. The first quarter of the previous year had $0.67 in EPS on $2.00 billion.

In the previous earnings report, Dollar Tree issued guidance for the first quarter. Consolidated net sales for the first quarter of 2015 are expected to total between $2.15 billion and $2.20 billion. EPS, excluding acquisition-related costs, are expected to come in between $0.69 and $0.74.

This month the merger with Family Dollar is expected to close, as was announced in April. According to an SEC filing from April, the combined company will have to divest 340 stores, representing about $47.4 million of operating income. The company expects that all or almost all the stores to be divested will be Family Dollar stores.

24/7 Wall St. also included Dollar Tree in its report about the 10 Most Popular Stores in America. Nearly 19% of American consumers visited a Dollar Tree in March, making the discount retailer the 10th most visited store in the country. As opposed to many other discount variety stores, Dollar Tree boasts a price tag of literally one dollar for a substantial portion of its merchandise. While Dollar Tree is not a restaurant, about half of its merchandise is consumable, which may help increase the volume of the store’s customers. Since food is generally purchased more frequently than other goods, stores selling consumable products like food usually have more visitors, independent of their popularity. There are 5,157 Dollar Tree stores in the country. Since its acquisition of Family Dollar in January, however, the company’s total store count has increased dramatically. Dollar Tree now controls more than 8,100 Family Dollar stores.

Before earnings were released a few analysts weighed in on Dollar Tree:

  • Cantor Fitzgerald initiated coverage with a Buy rating and a $96 price target
  • Zacks reiterated a Hold rating
  • BMO Capital Markets reiterated a Hold rating and raised its price target to $84 from $66

On Wednesday afternoon, shares of Dollar Tree were down 0.9% at $76.88 within a 52-week trading range of $49.69 to $84.22. The stock has a consensus analyst price target of $84.76.

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