Dollar Tree Earnings Could be Offset by Lukewarm Guidance

Same-store sales rose 2.1% in the first quarter, a decent showing considering first-quarter sales in 2012 jumped 5.6%. Operating margin rose to 11.6% and gross margin also climbed to 35.2%.

The company guided second-quarter sales in a range of $1.81 to $1.86 billion and EPS at $0.52 to $0.57. Consensus estimates call for Dollar Tree to come in at the top end of both revenue and EPS guidance. The company’s first-quarter results came in within its earlier guidance, so it is not unreasonable to conclude that second-quarter results could be lower than analysts are currently estimating.

For the full year, Dollar Tree now guides revenues at $7.81 to $7.97 billion, again putting in a lower bottom and a somewhat higher top. EPS is guided at $2.61 to $2.77, which is higher than the company’s previous EPS estimate of $2.54 to $2.74. The consensus analysts’ estimates call for full-year revenues of $7.94 billion and EPS of $2.79.

The company’s CEO offered a bit of cheerleading:

Sales continued to grow, our earnings per share increased by 18% and we achieved the highest first-quarter operating margin in the Company’s history. Our stores are executing at a high level and we are well positioned with great assortments and the best values ever for Memorial Day, Graduation and an exciting summer selling season.

Dollar Tree’s shares are up 2.5% in premarket trading this morning, at $49.60 in a 52-week range of $37.12 to $56.81. Thomson Reuters had a consensus analyst price target of around $49.20 before today’s results were announced.