Retail

How Dollar Tree Earnings Are Weighing Down the Stock

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Dollar Tree Inc. (NASDAQ: DLTR) reported its fiscal fourth-quarter financial results before the markets opened on Tuesday. Ultimately the company has a solid outlook going forward in the fiscal first quarter, but this is being dragged down by missed earnings due to a stronger U.S. dollar.

The company had $1.01 in earnings per share (EPS) on $5.37 billion in revenue, compared to consensus estimates from Thomson Reuters of $1.07 in EPS on revenue of $5.41 billion. In the same period of the previous year, it posted EPS of $1.16 and $2.48 billion in revenue.

For the quarter, consolidated net sales increased by 116.7% from the same period last year. This increase is the result of $2.68 billion in sales from the Family Dollar segment and a same-store sales increase of 1.7% on a constant currency basis.

During the quarter, the company opened 128 stores, expanded or relocated 53 stores, closed 28 stores and divested itself of 325 Family Dollar stores.

In terms of the outlook, Dollar Tree expects EPS in the fiscal first quarter to be in the range of $0.75 to $0.83 and net sales to total between $5.05 billion and $5.12 billion. Consensus estimates call for $0.80 in EPS on $5.10 billion in revenue.

Dollar Tree CEO Bob Sasser commented:

I am proud of the Company’s performance in the fourth quarter and full year 2015. Through a challenging economic environment, we delivered sales of $5.37 billion, which was the mid-point of our fourth quarter guidance range, and our 32nd consecutive quarter of positive same-store sales. This was against a strong 5.6% comp from the prior year’s fourth quarter. Additionally, while not included in our comp calculation, for the second consecutive quarter, our Family Dollar banner delivered positive same-store sales increases each month during the quarter.

He continued:

2015 was a very successful year for Dollar Tree. I would like to thank all of our associates for their commitment and hard work throughout the year. We continued to serve our loyal customer base by providing terrific values every day; we successfully completed the acquisition of Family Dollar; we initiated, and remain on schedule with, the integration of our companies; and we are on track to achieve our stated synergy targets. Looking ahead, we are committed to growing and improving our Dollar Tree and Family Dollar businesses to better serve more customers, while delivering long-term value to our shareholders.

On the books, cash and cash equivalents totaled $736.1 million at the end of the quarter, compared to $864.1 million in the same period from last year.

Shares of Dollar Tree closed Monday down 1.7% at $80.25, with a consensus analyst price target of $85.46 and a 52-week trading range of $60.31 to $84.22. Following the release of the earnings report, the stock was down 4% at $77.04.

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