Dollar Tree Outlook Tightens as Merger Completion Nears

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Source: Dollar Tree Inc.
Dollar Tree Inc. (NASDAQ: DLTR) reported first-quarter 2015 results before markets opened Thursday. The discount retailer posted adjusted diluted earnings per share (EPS) of $0.71 on revenues of $2.18 billion. In the same period a year ago, Dollar Tree reported EPS of $0.67 on revenues of $2.0 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.75 and $2.2 billion in revenue.

Same-store sales rose 3.4% in the quarter. Including the impact of Canadian currency exchange rates, same-store sales rose 3.1%.

In its outlook statement, Dollar Tree estimated second-quarter sales in the range of $2.17 billion to $2.23 billion and adjusted EPS in the range of $0.63 to $0.68. Consensus estimates call for EPS of $0.70 on revenues of $2.23 billion.

Dollar Tree changed its fiscal year revenues estimate from a previous range of $9.21 billion to $9.45 billion to a new range of $9.24 billion to $9.42 billion, and its EPS estimate was changed from a prior range of $3.30 to $3.50 to a new range of $3.32 to $3.47. The consensus estimates call for EPS of $3.49 on revenues of $9.41 billion. The outlook excludes costs related to the acquisition of Family Dollar stores.

The company’s CEO said:

Customers are shopping with us more often and they are buying more on each visit. Our performance continues to validate that Dollar Tree is part of the solution for millions of customers seeking great values for their hard-earned dollars. Despite challenges presented by delayed receipts of merchandise related to the west coast port congestion and the impact of the holiday calendar shift, our team worked together to deliver solid sales and earnings, both of which were well within our guidance range.

Dollar Tree said that the Federal Trade Commission has “substantially” completed its review of the Family Dollar Stores Inc. (NYSE: FDO) acquisition and that Dollar Tree will divest approximately 330 Family Dollar stores, representing $45.5 million in operating income. The company now says that it expects to close the merger in early July.

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Dollar Tree’s shares traded down about 3% in premarket trading to $74.00. The current 52-week range is $52.26 to $84.22. Thomson Reuters had a consensus analyst price target of $84.76 before the results were announced. The highest price target s $98.00.