Dollar Tree's Profit, Margins Rise as Sales Climb

By Joshua Jamerson 

Dollar Tree Inc.'s profit shot up 41% in the latest quarter and margins expanded amid more shoppers coming to the retailer's stores -- and spending more while there.

Chief Executive Bob Sasser called the market for discount retail "the most attractive sector" of a struggling industry. Sales and traffic have been rising, a contrast to trends across the larger retail space.

Like rival Dollar General Corp., Dollar Tree generally has benefited recently from rising wages among core customers. Dollar Tree said it opened 584 new stores in 2016 as other retailers such as Macy's Inc. have detailed plans to shutter locations.

Same-store sales at Dollar Tree rose 2.3%, and same-store sales at Family Dollar locations edged up 0.2%. Dollar Tree bought rival Family Dollar in 2015 and keeps the store's banner for some locations. The company said same-store sales growth was driven by higher comparable customer count and average ticket.

Shares rose 4% to $79.89 in premarket trading.

Over all, for the quarter ended Jan. 28, Dollar Tree reported net income of $321.8 million, or $1.36 a share, compared with $229 million, or 97 cents a share, in the year-ago period.

Sales rose 5% to $5.64 billion. Analysts polled by Thomson Reuters expected per-share earnings of $1.32 on $5.62 billion in revenue.

Gross margin increased to 32.1% compared to 30.8% in the prior-year fourth quarter, helped by lower merchandise and freight costs.

For the year ending in January 2018, Dollar Tree estimates $4.20 to $4.56 a share in earnings on net sales of $21.94 billion to $22.33 billion. Analysts expected $4.49 a share in earnings on $21.89 billion in revenue.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

March 01, 2017 09:32 ET (14:32 GMT)

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