What Dollar Tree’s Mixed Results Mean Going Forward

Dollar Tree Inc. (NASDAQ: DLTR) reported fiscal third-quarter results before markets opened Tuesday. The discount retailer posted $1.79 in earnings per share (EPS) and $6.32 billion in revenue, almost in line with the consensus estimates of $1.75 in EPS on revenue of $6.39 billion. The same period of last year reportedly had EPS of $1.93 and $6.21 billion in revenue.

During the latest quarter, enterprise same-store sales increased by 0.4%. Same-store sales for the Dollar Tree segment increased 1.4% on a constant currency basis (or 1.5% when adjusted to include the impact of Canadian currency fluctuations). Same-store sales for the Family Dollar segment decreased by 0.8%.

Looking ahead to the fiscal first quarter, Dollar Tree expects to see EPS in the range of $1.00 to $1.09 and revenue between $5.89 billion and $5.99 billion. Consensus estimates so far are calling for $1.20 in EPS and $6.03 billion in revenue.

Gary Philbin, president and CEO, commented:

I am proud of the team’s accomplishments in 2019, including the successful consolidation of our store support centers, the material acceleration in the Family Dollar store optimization program where we continue to see strong performance at renovated stores, and the initial launch of our Dollar Tree Plus! initiative. For the fourth quarter, despite the compressed holiday shopping season, we delivered positive comps for the enterprise, while managing margins and costs effectively to achieve adjusted earnings per share near the top of our guidance range. Our support functions are now working together in one location under one leadership team; which we expect will build greater collaboration, efficiencies and teamwork to enable us to support Dollar Tree and Family Dollar stores more effectively. Fiscal 2019 was a very important year for our organization to further develop the foundation to grow and improve our business.

Dollar Tree stock traded early Wednesday at $80.38, with a new 52-week range of $79.94 to $119.71. The consensus analyst price target is $101.83.

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