Dollar Tree's quarterly profit more than doubles

Send a link to a friend  Share

[November 22, 2016]  (Reuters) - Dollar Tree Inc, the biggest U.S. dollar-store chain after its acquisition of Family Dollar in 2015, reported a better-than-expected quarterly profit on Tuesday, helped by lower merchandise costs and freight expenses.

A man enters a Dollar Tree discount store in Garden City, New York, U.S., May 23, 2016. REUTERS/Shannon Stapleton
 

Shares of the company, whose same-store sales also beat expectations, were up 7.3 percent at $88 in premarket trading.

Dollar-stores have been expanding aggressively in recent years, taking market share from Wal-Mart Stores Inc <WMT.N> and other retailers, thanks to their smaller store sizes, improving product assortment and prices that start at $1.00.

However, Wal-Mart has been fighting back, spending heavily to entice shoppers to its stores with better-stocked shelves and reduced prices on key items such as food.

Dollar Tree's sales at stores open more than a year rose 1.7 percent in constant-currency terms, beating the 1.4 percent rise expected by analysts polled by researcher Consensus Metrix.

"We believe that these results demonstrate the Family Dollar acquisition is paying dividends and remains firmly on course in terms of the savings and benefits Dollar Tree promised investors," Neil Saunders, chief executive of research firm Conlumino, said in an email.

Dollar Tree's net income rose to $171.6 million, or 72 cents per share, in the third quarter ended Oct. 29 from $81.9 million, or 35 cents per share, a year earlier. The prior year included charges and mark downs on Family Dollar.

Excluding items, the company earned 81 cents per share, beating the average analysts' estimate of 78 cents, according to Thomson Reuters I/B/E/S. Net sales rose 1.1 percent to $5.00 billion, just short of the average estimate of $5.07 billion.

Dollar Tree completed the acquisition of Family Dollar in July last year, meaning the latest quarter is the first in which there is a true year-on-year comparison of combined company's performance.

(Reporting by Sruthi Ramakrishnan in Bengaluru; Editing by Anil D'Silva and Ted Kerr)

[© 2016 Thomson Reuters. All rights reserved.]

Copyright 2016 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

Back to top