Dollar Tree (DLTR) Shares Soar on 1Q Earnings Beat

Shares of the Dollar Tree Inc. (DLTR) were up +6.69 or +8.54 percent to $85.05 per share in Thursday’s premarket after the company released first quarter earnings early this morning which beat analyst expectations. Dollar Tree stock closed at $78.36, up +0.83 or +1.07 percent in Wednesday’s regular trading session.

Chesapeake, Virginia based Dollar Tree Inc. is the operator of a domestic chain of discount variety stores best known for selling items for one dollar or less is a Fortune 500 company.
Stores operated by Dollar Tree offer a variety of consumable merchandise including food, candy and health and beauty products, as well as houswares, toys, gifts, party goods and greeting cards. Dollar Tree currently operates 13,997 stores under the Dollar Tree, Family Dollar, Deals and Dollar Tree Canada brands in the 48 continental United States and five Canadian provinces.

For the company’s first quarter ended on April 30th, Dollar Tree reported net income of $232.7 million, or $0.98 per diluted share. With the exclusion of a one-time tax benefit, diluted earnings per share came to $0.89 per share. The number included acquisition related costs from the previous year and represented a +25.4 percent increase over the previous year’s first quarter earnings of $0.71 per share.

Consolidated net sales came to $5.09 billion versus $2.18 billion in the same period one year ago, an increase of +133.6 percent. The substantial increase of $2.91 billion was attributed to the company’s acquisition of 7,248 Family Dollar Stores, as well as new Dollar Tree stores. The analyst consensus was for the company to report earnings of $0.80 per share on revenue of $5.1 billion in revenue.

Same store sale increased +3.4 percent on a constant currency basis from the previous year’s first quarter. With the impact of Canadian Dollar fluctuations, same store sales increased +2.2%. Family Dollar and new Dollar Tree stores had a +2.3 percent increase in same store sales on a constant currency basis, which was driven primarily by increases in customer transactions and the average ticket.

Bob Sasser, Dollar Tree’s Chief Executive Officer stated in the company’s press release that, “We have gotten off to a successful start to 2016. We continue to serve a loyal customer base by providing terrific values every day; we remain on schedule with our integration of Family Dollar; we are on track to achieve our stated synergy targets; and we are part of what I consider, in this economic environment, the most attractive sector in retail. Looking ahead, we are committed to growing and improving our Dollar Tree and Family Dollar businesses to better serve more customers, while delivering long-term value to our shareholders.”

Dollar Tree forecast consolidated net sales for the second quarter to be between $5.03 billion and $5.12 billion with diluted earnings per share of $0.66 to $0.72. For the full 2016 year, the company expects consolidated net sales of $20.79 billion to $21.08 billion versus a previously forecast range of $20.76 billion to $21.11 billion. Full year net income per diluted share is now expected to be between $3.58 and $3.80 compared to a previous guidance of $3.35 to $3.65.

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Published on May 26, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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