Merger Costs Hammer Dollar Tree Earnings, Boost Revenues

Retail

Published: September 1, 2015 8:15 am

Last Updated: April 28, 2020 1:35 am

Dollar Tree Inc. (NASDAQ: DLTR) reported second-quarter 2015 results before markets opened Tuesday. The discount retailer posted adjusted diluted earnings per share (EPS) of $0.67 on revenues of $3.01 billion. In the same period a year ago, Dollar Tree reported EPS of $0.61 on revenues of $2.03 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.62 and $3.04 billion in revenue.

Same-store sales rose 4.5% in the quarter, driven by increases in customer count and average ticket. Including the impact of Canadian currency exchange rates, same-store sales rose 2.4%.

Dollar Tree completed its acquisition of Family Dollar Stores on July 6, and including acquisition costs, the company posted a net loss of $0.46 per share. The adjusted EPS total excludes acquisition-related costs and the impact of an increase to the diluted share count of 8.3 million new shares.

In its outlook statement, Dollar Tree estimated net sales for the third quarter of 2015 to range from $4.78 billion to $4.87 billion, based on a low single-digit increase in same-store sales. For the full year, the company estimates consolidated net sales to range from $15.30 billion to $15.52 billion, based on a low single-digit increase in same-store sales. The company also said it is not providing EPS guidance for the third quarter or the full year due to the recently completed acquisition, the “significant integration issues” and the divestiture process.

The consensus analysts’ estimates for third-quarter EPS are $0.72 on sales and revenue of $4.91 billion, and the full-year EPS estimate is $3.36 on revenue of $15.57 billion.

The company’s CEO said:

We are now an organization with annual sales exceeding $19 billion, more than 13,800 stores across North America and a network of more than 145,000 associates. We remain confident in our ability to deliver $300 million in annual run-rate synergies by the end of the third year post-acquisition.

Dollar Tree’s shares traded down about 4.3% in premarket trading to $73.01. The current 52-week range is $53.70 to $84.22. Thomson Reuters had a consensus analyst price target of $85.77 before the results were announced. The highest price target is $98.00.

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