Dollar Tree Q3 Profit Down, But Revenues Beat View; Lifts 2015 Revenue Outlook

(RTTNews) - Discount retailer Dollar Tree, Inc. (DLTR) on Tuesday reported a 38 percent decline in profit for the third quarter from last year, reflecting costs related to the acquisition of Family Dollar Stores Inc. that more than offset strong revenue growth.

Adjusted earnings for the quarter missed analysts' expectations, while revenues beat their estimates. Looking ahead, the company raised its revenue forecast for fiscal 2015.

Dollar Tree completed its acquisition of bigger rival Family Dollar Stores, Inc. on July 6, 2015. Since that date, the company has been executing its integration plan.

The Chesapeake, Virginia-based operator of discount variety stores selling everything for $1 or less, reported net income for the third quarter of $81.9 million or $0.35 per share, down from $133.0 million or $0.64 per share in the prior-year quarter.

Adjusted earnings for the quarter were $0.38 per share, compared to $0.69 last year. On average, twenty five analysts polled by Thomson Reuters expected the company to report earnings of $0.53 per share. Analysts' estimates typically exclude special items.

Consolidated net sales for the quarter more than doubled to $4.95 billion from $2.10 billion in the same quarter last year and beat analysts' consensus revenue estimate of $4.84 billion.

The increase was the result of $2.67 billion in sales from the Family Dollar segment and same-store sales increase of 2.1 percent on a constant currency basis for the Dollar Tree segment. Same-store sales increased 5.9 percent in the prior-year period for the Dollar Tree segment.

Adjusted for the impact of Canadian currency fluctuations, same-store sales for the latest quarter increased 1.7 percent, driven by increases in customer count and average ticket.

Looking ahead to the fourth quarter, Dollar Tree forecast consolidated net sales of $5.32 billion to $5.42 billion, based on a low single-digit increase in same-store sales. The company projects adjusted cash earnings per share of $2.32 to $2.51 for the quarter.

The Street expects earnings of $1.14 per share for the quarter on revenues of $5.44 billion.

For fiscal 2015, Dollar Tree now forecasts consolidated net sales in a range of $15.45 to $15.55 billion, based on a low single-digit increase in same-store sales. Earlier the company forecast sales of $15.30 billion to $15.52 billion for the year, based on a low single-digit increase in same-store sales.

The Street expects revenues of $15.46 billion for the year.