Dollar Tree Narrows Guidance but Still Expects Growth

Same-store sales rose 1.9% in the quarter when taking into account currency translation effects for the company’s Canadian stores.

Dollar Tree estimated second-quarter sales in the range of $1.97 billion to $2.02 billion and EPS in the range of $0.58 to $0.64. Consensus estimates call for EPS of $0.64 on revenues of $2.01 billion. For the full year, the company estimates revenues at $8.37 billion to $8.54 billion and EPS of $2.94 to $3.12. The consensus estimates call for EPS of $3.17 on revenues of $8.51 billion.

The company’s CEO said:

Our first quarter sales grew as the result of increases in both traffic and average ticket with our discretionary business growing slightly faster than consumables. Leading categories during the quarter included candy, check-out products, stationery and seasonal merchandise for Valentines and Easter.

Dollar Tree’s performance in the first quarter was just okay and the company has narrowed its guidance, lifting the bottom end a little and dropping the top. Same-store sales growth is projected in the low-single-digits, again not thrilling. What Dollar Tree seems to be doing well is managing analysts’ and investors’ expectations.

Shares were up about 5% in premarket trading, at $52.50 in a 52-week range of $47.70 to $60.19. Thomson Reuters had a consensus analyst price target of around $61.30 before the results were announced.

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