Dollar Tree Posts Best Sales Figures Since 2011

By Chelsey Dulaney 

Dollar Tree Inc. posted its strongest quarterly sales growth at existing stores since 2011 as the discount retailer pushes forward with its $8.5 billion deal to buy Family Dollar Stores Inc.

Dollar Tree also bumped up its outlook for the year. The company now expects earnings of $2.97 to $3.04 a share, compared with its previous guidance of $2.94 to $3.06 a share. It now forecasts revenue of $8.52 billion to $8.58 billion, compared with its previous range of $8.44 billion to $8.55 billion.

Dollar Tree agreed in July to buy Family Dollar in a move to consolidate the market serving low-income shoppers and building a stronger competitor to rivals like Wal-Mart Stores Inc. The agreement sparked a rival $9.1 billion bid for Family Dollar from Dollar General Corp., which Family Dollar has rebuffed, claiming the antitrust risks are too high.

On Wednesday, Family Dollar delayed the shareholder vote on Dollar Tree deal as it awaits an update on the divestitures U.S. antitrust regulators will require to approve the deal. Dollar Tree has said it would be willing to divest as many stores as possible, or sensible, to get its deal done, and the companies amended their merger agreement to reflect that commitment.

Overall, Dollar Tree reported a profit for the quarter ended Nov. 1 of $133 million, or 64 cents a share, up from $125.4 million, or 58 cents a share, a year earlier. Excluding items, per-share earnings were 69 cents.

The company said the results included $14.3 million in costs tied to the Family Dollar deal.

Sales increased 11% to $2.1 billion.

The company had projected 61 cents to 66 cents a share in earnings on revenue of $2.02 billion to $2.07 billion

Gross margin narrowed 0.4 points to 34.6% on increased freight costs.

Sales at existing locations rose 5.9%, the company's 27th straight quarter of growth.

Looking to the current quarter, Dollar Tree said it expects earnings of $1.07 to $1.14 a share on revenue of $2.39 billion to $2.46 billion. Analysts polled by Thomson Reuters were expecting $1.13 a share in earnings and $2.45 billion in revenue.

Write to Chelsey Dulaney at [e-mail]

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